“Stocks Dip On Stimulus Worries”

17 May

"What? The Fed might stop stimulus? That's ludicrous."

“What? The Fed might stop stimulus? That’s ludicrous.”

Dow: 15,233, -42 (-0.28%)        S&P 500: 1,650, -8 (-0.50%)

Had a tough Thursday?  At least you’re not a KFC fried chicken smuggler in the Middle East.  Wall Street struggled on Thursday too, with the Dow falling 42 points on worries about the Fed’s future stimulus plans. 

#1. Fed Presidents Speak Out Against More Stimulus

There’s a rift… in the House of Bernanke.  Three outspoken Fed Presidents have said that the Fed’s quantitative easing program to stimulate the economy has gone way too far and should be stopped – now.  These “hawks” are more concerned about inflation and keeping the money supply under control while other “doves,” like the Boston Fed prez, think the Fed needs to do even more for the economy (and we do more peace man).

Investors were freaking… cause nobody wants the Fed’s money-printing frenzy to stop.  The Fed’s “QE” quantitative easing programs (we’re at #3 since the crisis) help keep interest rates low to generate economic growth.  It also makes stocks look more attractive to investors because bond returns are driven so low by the low-interest rate environment.  

Although “improve considerably”… is still the Fed’s official stance, more investors are worried that the monetary stimulus of QE3 could end as soon as this summer.  Jitters caused markets to show some weakness Thursday.

#2. JC Penney Earnings Worse Than You Thought

Oh, the humanity… Wall Street wasn’t surprised that struggling retailer JC Penney (JCP) lost money during the quarter, but was stunned at the amount – $348 million vs the $163 million expected.  Shares dropped 1% on the news.

JCP, are you serious?… A year ago, JCP fired Mike Ullman and hired Ron Johnson as CEO.  Johnson was supposed to take what he did at Apple and translate it to the retail store.  Cha-ching.  (Psyche) Johnson’s plans failed.  A month ago he was fired, and Ullman was brought back to replace him.  Not a great start to the company you already failed once, Mr. Ullman.

Hope remains… JCP has taken out a $1.75 billion loan from Goldman Sachs to prepare for seasonal sales.  They also have been working on a new ad campaign designed to bring customers back in the store.  Big changed await JCP in 2013, but they must deliver if the company expects to reverse their 5-straight quarterly loss streak.

#3. Hot Tesla To Offer More StockIf you asked a Spaniard… they would say that Tesla Motor’s (TSLA) stock is en fuego!  The maker of luxury electric cars saw its stock jump another 8% Thursday by announcing a new stock offering.

Tesla is up over 57%… a week after announcing their first ever quarterly profit.  Since going public in 2010, the electric car company has had trouble attracting consumers to their environmentally friendly automobiles.  With such a high demand for the stock, Tesla is dishing out 2.7 million more shares as well as $450 million in convertible debt.

So much money… so few car options.  Tesla is planning on using the money to repay a massive $465 million loan from the Department of Energy.  The DOE gave the carmaker the loan in 2010 to make all electric plug in vehicles.  The result?  The Model S is the first zero-emission, zero-gas, full-size electric vehicle on the market.

#4. Weekly Jobless Claims Shockingly Pop

What happened?… After 4 straight weeks of weekly jobless claims dropping (like it’s hot) to their lowest level since 2008, the number of Americans filing for 1st time unemployment claims rose.  Jobless claims spiked by a hefty 32,000 this past week to reach 360,000 claims total – erasing all of the last month’s improvement with one big fat eraser (NYTimes).

The takeaway… is that these weekly figures tend to be more volatile than the monthly employment report you eagerly look forward to from the Labor Department.  While economists don’t have an explanation for this past week’s surprise jump (no seasonal factors or major corporate layoffs or asteroids), the big takeaway for investors was how this not-so-hot econ data will sit with the Federal Reserve as the central bank makes stimulus decisions.

Friday:

  • Hey brah, how you feeling about the economy: It’s the Reuters/UMich Consumer Sentiment Poll for May

 Copyright © 2013 MarketSnacks

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Markets Pop Despite Bad Euro News

16 May
sdac

“Here’s to ignoring Europe – and aggressively buying US stocks instead.”

Dow: 15,276, +60 (+0.40%)        S&P 500: 1,659, +8 (+0.51%) 

Insulting the king of Bahrain on Twitter?  That’s going to land you in jail (seriously) — but reading and forwarding your daily MarketSnacks to friends certainly won’t.  Check out why investor enthusiasm pumped the Dow up 60 points Wednesday (despite some painful European headlines).

#1. Google Shares Hit $900 on Music News

The time of the day is 9:35 AM EST… and the number is $900.  At that approximate moment, Google’s (GOOG) stock topped the $900/share mark (less than 3 months after hitting $800) because of a slew of announcements from Google’s nerd field day I/O conference. 

Watch out Pandora… Google introduced All Access, their version of a premium music streaming service.  All Access boasts new user-friendly features (Chicago Tribune), to compete with Pandora, Spotify, Amazon, and take a big leap out in front of Apple. 

Move the f**k over Siri… Google also released its answer to Apple’s voice search engine titled, “Conversation Search.”  Coming to Chrome browsers on mobile and desktop, users will be able to ask Google any question without having to touch a screen or keyboard — simply saying, “OK Google” brings up the search assistant. 

Adios MapQuest*… and “hola” to the new/improved Google Maps.  During the developers meeting Wednesday, Google announced they have completely redesigned Maps to be more user-friendly.  Coupled with 3D integration from Google Earth, Google Maps added an “Explore” feature to help you find local restaurants, attractions, and other tourist activities instead of asking the woman at the front desk. 

*To those still using MapQuest, please untie the sweatshirt around your waist and remove the schrunchie from your hair.  It’s time to grow up.

#2. European Economies Contract

Those 17 countries that use the Euro… are in an 18 month cold streak.  The euro countries Wednesday announced the gross domestic product (the most general gauge of economic output) for the first quarter, and overall the eurozone’s GDP shrank, again, for the sixth straight quarter by 0.2%.  The tallest of the european economic dwarfs was Germany, which squeaked out some growth, while the others got crushed, led by Greece.

Economic Contraction sucks… and should be avoided at all costs.  In the US we had two straight quarters of contraction after the financial crisis, which is the technical definition of a recession.  In Europe the debt crisis has caused the economies to stagnate for basically the last 5 years. Woof.



What’s the problem again?… the debt crisis, dummy.  A handful of countries are desperately trying to reduce their debt through austerity measures – cutting public spending by firing public workers and slashing benefits, which trickles through the economy. Also, despite efforts by the central bank to reduce interest rates, in countries not called Germany, banks are too afraid to lend to small businesses, so, yeah, things are still f***ed in Europe.

#3.

#3 John Deere Earnings Disappoint

“Take me for a ride on your big green tractor”… Sure thing Jason Aldean, but only if it’s not a John Deere.  Deer & Co (DE) dropped its 2013 earnings expectations a full percent Wednesday during their Q1 earning reports.

Their just “stuck in colder weather”… sang Zac Brown.  Not exactly, Zac.  Its cold and wet weather to be specific.  Due to the weather conditions, farmers have become reluctant to spend big on new equipment that they potentially may not use.  Farming equipment and crop prices have taken a beating so far in 2013.

The main concern… Analysts have been worried that the agricultural equipment cycle already peaked from the surge in sales post-recession.  The announcement today reinforced this belief, giving investors the chills and shrinking DE stock 4.4%.  

#4. Homebuilder Confidence Up — But Not Optimistic

Build on this… The National Association of Home Builders “confidence index” rose in May, but remains in slightly pessimistic territory (CNBC).  Although the housing market has been improving since early 2012, deep confidence among developers has stalled so far this year like a bad baseball game.

Why the not-so-smiley face?… Weather.  We didn’t know people were so soft, but according to the NAHB report, this cold spring has hurt construction efforts and homebuyer traffic.  The result?  A slowdown in the housing market’s recovery mojo. 

Thursday:

  • Some hefty housing data for ya: April Housing Starts & Building Permits
  • Your Thursday morning serving of Weekly Jobless Claims
  • 1st Quarter Earnings Reports: LG, Bank of Hawaii, Rent-A-Center, Six Flags…

MarketSnacks Fact of the Day:  The famous “black box” data recorders on commercial airlines are actually brightly colored (so they can be easily found in plane wreckage) and the 1st FAA-approved version was created by Lockheed (now weapons company Lockheed-Martin) in 1958.

 

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Markets Rise for 18th Straight Tuesday

15 May
ewfcw

Tuesdays have been super cute on Wall Street

Dow: 15,215, +124 (+0.82%)        S&P 500: 1,650, +17 (+1.01%) 

Big fan of Tuesdays?  We didn’t think so (3 days removed from Friday is a bunch).  But investors sure are fans.   The Dow‘s 124 point jump put an exclamation point on Wall Street’s bizarre 18th straight Tuesday gain.

#1. Sony Jumps on Hedge Fund Love

The legendary brain-musher… known as Sony (SNE) is awesome at making stuff that our parents hated (walkmans –> deafness, PlayStations –> obesity).  The problem for Sony though is those entertaining tech gems were straight out of the 90′s — and they haven’t made anything since.  Dan Loeb to the rescue!

Dan Loeb’s hedge fund… has bought up 6.5% of Sony shares, making it the biggest shareholder.  Know what that buys you? Power. Loeb thinks the colossal Japanese company needs to break up into two (DealBook) so that they can focus on core business.  The profitable entertainment arm (which brought us “Zero Dark Thirty” and A$ap Rocky) and their decaying electronics business.

A split Sony is a better Sony… according to Loeb.  The hedge fund manager believes that if separate, the goons over in the electronics department will stop hiding behind the profits of the stars in the entertainment department.  With more focus, the electronics business can step up to the challenge posed by Samsung, LG, and…X-box.

Loeb might get a spot on the board… since he owns so many shares (that makes investors happy).  The stock rose 10% Tuesday on news things might change.  And change is good, considering they just squeaked out their first annual profit in 5 years.

#2. Small Biz Confidence Pops in April

The good news… According to the monthly survey by the National Federation of Independent Businesses (NFIB), small business confidence jumped in April on the research group’s fancy, home-made index (WSJ).  Expectations that the economic recovery is picking up from the bodega-owners of America was well-appreciated news for investors Tuesday. 

However… despite the high-fiving and hugs in Mom-n-Pop shops nationwide, the report showed continued concern from small businesses over politics.  Small business owners feel like Capitol Hill dysfunction hasn’t helped legislation that should be targeting small businesses specifically.


Wednesday:

  • Straight out of the Big Apple – The NY Fed’s “Empire State” Manufacturing Survey

MarketSnacks Fact of the Day:  Oreo is the best selling cookie of the 20th century, producing over 500 billion cookies since its 1912 debut.

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Stocks Stall To Start Week

14 May
qer

Aggressive spring time gardening is seriously boosting retail sales figures

Dow: 15,092, -27 (-0.18%)        S&P 500: 1,634, +0 (+0.00%)

Apparently investors celebrated the market’s record-breaking performances last week a tad too hard over the weekend.  Despite some solid retail sales figures, the Dow dipped 27 points on Wall Street’s hungover Monday.

#1. April Retail Sales Rebound

They’re back, baby… After dipping 0.5% in March, retail sales bounced back by 0.1% in April, smacking pessimistic analyst expectations with a fistful of receipts.  That 0.1% may not look like much, but the rise was notably led by auto sales, which jumped by 1% last month like a pimped-out turbo Prius.

Interestingly… one of the core areas of sales for retailers was in building materials and garden equipment, which surged nearly 5% in April (CNNMoney).  Economists figure the combination of spring (despite these frigid freakin’ temperatures) and the improving housing market are bringing out Americans’ green thumbs (the MarketSnacks team is looking into the urban agriculture trend thing).

#2. Chinese Industrial Output Disappoints, Alcoa falls

It’s not a “shrinkage” problem… but global minded investors are so tough to please that April’s 9.3% growth in industrial output failed to ease concerns of a slowdown (Dealbook). Like any 20-something Yankee fan will tell you, it’s tough to adjust to “good” when you’re so used to “great”.  As recently as 2011 China’s economy was growing at 10+% per year, which is incredible, but these single digit growth numbers have rained on investors’ parade much of the past year.

Commodities and materials companies fell… since China’s the biggest consumer of construction goods in the world.  Alcoa (AA), a top steel maker with global footprint, dropped 1.9% on expected lower profits in China.

Tuesday:

  • Mom ‘n’ Pop Shop Love - it’s the NFIB Small Business Optimism Index

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The Best Damn Wall Street “Week in Review” Anywhere…

13 May
wef

Investors chilled in their weekend party suits after another banging week for stocks

Week of May 6th – May 10th:
Dow: 15,118 (+1% last week, +15.4% YTD)
S&P 500: 1,634 (+1.2% last week, +14.6% YTD)

Links Worth Snacking On:

The NHL and NBA playoffs demanding your attention?  So should the competitive sport of quarterly earnings reports on Wall Street.  Corporate news dominated the slow market week, pulling the Dow and S&P 500 up to record highs.
 
#1. Stock Winners…

Electric car dynamo Tesla enjoyed its 1st ever quarterly profit and their unorthodox CEO/bro cele-tweeted the landmark event.  Groupon’s earnings report impressed as it manages to cut costs to cope with reduced revenues (#dealfatigue, man).  More foot traffic from Epcot to the Magic Kingdom helped Disney dominate earnings expectations. And Warren Buffett’s Berkshire Hathaway rose after the frat-worthy annual shareholder meeting. 

#2. …And Stock Losers
We’re not gonna lie, most corporate headlines were pretty positive this week. But Cablevision still surprised with a 1st quarter loss as it restructures and spins off its AMC Networks into a separate publicly-traded company.  Plus AOL dipped after earnings missed forecasts (and we assume more people retired high school AIM screen names). 

#3. International Econ Data was Swell 

New heights for Chinese exports are impressing even home-grown Yao Ming – they’re huge.  Exports rose 14% in April vs. the year before, the data shows the world is buying more goods from China, a good sign that the global economy is humming.  And Germany’s industrial production rose 1.2% in March – the glimmer of hope in recession-ridden Europe. 

What MarketSnacks Is Checking Out This Week:

  • Monday - April Retail Sales, 1st Quarter Earnings Reports: Dick’s Sporting Goods, JC Penney…
  • Tuesday - NFIB Small Business Survey
  • Wednesday - NY Fed’s “Empire State” Manufacturing Survey
  • Thursday - Weekly Jobless Claims, April Housing Starts, Earnings:Kohl’s, Nordstrom…
  • Friday - Reuters/UMich Consumer Sentiment Survey for the 1st Half of May

MarketSnacks Fact of the Day:  Since September 2012, the mobile dating app Tinder has generated over 20 million matches.

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Stock Streak Runs Out Of Gas

10 May
qwef

“We got a groupon for a big bike. Redundant? Maybe.”

Dow: 15,083, -23 (-0.15%)        S&P 500: 1,627, -6 (-0.37%)

Hey, you can’t win ‘em all.  Stocks turned south after 5 straight positive and record-setting finishes for major stock market indices.  Despite some solidearnings reports, the Dow slipped 23 points Thursday as investors’ enthusiasm waned.

#1. Groupon Deals Impressive Earnings 

“Just kidding, I was fired today”… In case you haven’t been MarketSnacking, those were the infamous words of Andrew Mason, former CEO and founder of Groupon (GRPN) in February when the he was let go.  Board and investors alike were happy with the online deal site when quarterly results beat expectations, sending shares up over 11% Thursday (Mashable).
 
We know… you haven’t bought a Groupon in years (“2 tickets to the Avatarmovie premiere for $10?  Sick.”).  So why are investors pleased?   Groupon is undergoing a facelift and the good lookin’ numbers are coming from smaller than expected revenue losses, stock buybacks, and cutting costs. 
 
None of those sound good?… So, let us explain, Mr. Burgandy. First, by reducing costs, Groupon increases the bottom line, net income. Second, stock buybacks increase the earnings per share ratio (net income/outstanding shares) which is the most important number investors look at.  ”EPS” – what’s my share of the company’s profits?  That’s what it’s all about. 

#2. Tesla Hits 1st Quarterly Profit

Buzz-buzzzz… (that’s how electric cars sound, right?).  Sexy plug-in vehicle powerhouse Tesla (TSLA) jumped 24% Thursday on a hat-trick of a day: 1. They enjoyed their first ever quarterly profit after 10 years in the business; 2. Earnings topped analysts’ expectations; 3. And finally, they earned a ridiculously impressive top rating from Consumer Reports (Bloomberg).

The takeaway… is that it’s been a crazy year for the Cali-based firm.  Despite a controversial NY Times review of their star car (the “Model S”) hit the company hard this winter, Tesla’s revenues managed to leap from $30 million in the 1st quarter of last year to over $560 million in the 1st quarter of 2013.  That’s serious acceleration.

As a side note… today’s stock jump pushed Tesla’s market capitalization to $8 billion — passing Fiat’s market cap of $7.8 billion (by comparison, Toyota’s the world’s largest car co. with $200 bn market cap).  Since market capitalization is a measurement of value by multiplying the number of shares outstanding by the stock price, this is a pretty impressive feat.  And a nice little cherry on top.

Friday:

 

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Big Earnings Day Keeps Stocks Rallying

9 May
qerfw

“Make it rain, US corporations — Make. It. Rain.”

Dow: 15,105, +49 (+0.32%)        S&P 500: 1,633, +7 (+0.41%)

Just like mom used to say, when it rains…it f*&king pours.  A major day ofearnings reports powered the Dow up 49 points and the S&P 500 to an all-time high for the 5th straight trading session.  Cha-ching.

#1. Whole Foods Hammers Expectations 

The mystical powers… of eating organically are becoming even more popular in America.  Whole Foods Market (WFM) released down-right impressive earnings and the stock jumped 10% on the news.  Somebody give ‘em an all-natural cookie.

It’s not vudu… it’s tofu.  Actually, it’s tofu-vudu.  With a wave of their (handmade) wand, WFM announced a 2 for 1 stock split.  Coming later this month, instead of 185 million outstanding shares, there will be 370 million worth half the price.  Cheaper shares means easier access, and usually higher trading volume.

America’s healthiest grocery store… continues to lead the high-end grocery experience.  John Mackey, the famous CEO, believes the demand for overly-priced health food will continue to increase.  As a result, expectations for earnings across 2013 increased.  Nice Mackey.  Now you can charge us even more for our Annie’s macaroni.

#2. Green Mountain Coffee Roaster Soars

It’s called commitment… Starbucks (SBUX) announced today it was partnering with smaller Green Mountain Coffee Roasters (GMCR) by making K-Cup single portion coffee pods for another five years.  SBUX will increase the number of brands and flavors of Green Mountain’s patented Keurig coffee machine pods.  GMCR shareholders just let out a sigh of relief and toasted pints of their favorite maple syrup brew.  GMCR is up 16% since the announcement.  

Take that, David Einhorn… GMCR shares were once above $100, but in 2011 celerity investor David Einhorn said all of GMCR’s profits rely on the golden Keurig machine and the immaculate K-cups that bring steamy aromatic coffee to cubicles and waiting rooms everywhere–the problem was the patents expired in 2012 and without that protection, Einhorn predicted that profits would collapse when other firms could infringe into their precious single-serving coffee turf.  The stock plummeted.

Don’t call it a comeback… Green Mountain Coffee is up 16% now that investors see that SBUX can be a partner, instead of a threat.  SBUX did create its own competitor to GMCR’s machine, but this announcement is a show of support to the Green wonder of coffee.

#3. Int’l Econ News Helps US Markets

A little helping hand… never hurts.  While earnings news came in strong, international econ reports added a 5-Hour Energy-style kick to investor enthusiasm.  In Europe, industrial production in the Eurozone‘s strongest economy (take a bow, Germany) rose 1.2% in March (BBC) – the most notable positive sign in the region over the last month (thanks, Hans and Franz).

The other big news… came from across the other pond, courtesy of solid Chinese trade data (made in China).  Chinese exports rose nearly 15% in April from a year earlier (CNBC) – another confidence boost to investors who worried the world’s 2nd largest economy was losing some momentum over 2012.

Thursday:

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