Jan 21, 2010

Daily Markets - Financial News & Opinions

Daily Markets - Financial News & Opinions

Brinker Outdoes Zacks Consensus

Posted: 21 Jan 2010 12:10 PM PST

Brinker International, Inc. (EAT), the operator of Chili’s Grill & Bar, On The Border and Maggiano’s restaurants, recently reported second-quarter 2010 results that topped Zacks’ expectations, sending shares up 12.7% or $1.95 to close at $17.26 on Wednesday, despite the high teens fall registered in the top-line. The stock is up another 1.5% on Thursday.
Brinker's quarterly earnings of 29 cents a share outdid the Zacks Consensus Estimate of 22 cents, and climbed 7.4% from 27 cents … [visit site to read more]


China Can Stonewall Google, But Its “Great Firewall” Is Increasing Demand For Solutions That Get Around It

Posted: 21 Jan 2010 12:01 PM PST

China has been eager to portray itself as the winner in the recent global dustup with Internet-search giant Google Inc. (GOOG). At the very least, however, China wants it made clear that it wasn’t the loser.

Experts quoted in such state-run media outlets as Xinhua and The People’s Daily have derided Google for abandoning the largest and fastest-growing online community in the world, and forfeiting between $400 million and $600 million in annual revenue.

And while China’s top … [visit site to read more]

Obama Gets Tough On Wall Street

Posted: 21 Jan 2010 11:59 AM PST

Below are President Obama's remarks today on reforming the banking system, along with my interspersed comments and analysis of them.
THE PRESIDENT: Good morning, everybody. I just had a very productive meeting with two members of my Economic Recovery Advisory Board: Paul Volcker, who’s the former chair of the Federal Reserve Board; and Bill Donaldson, previously the head of the SEC. And I deeply appreciate the counsel of these two leaders and the board that they’ve offered as we have dealt … [visit site to read more]

Legg Mason Underperforms

Posted: 21 Jan 2010 11:57 AM PST

Legg Mason's (LM) third quarter earnings of 28 cents per share missed the Zacks Consensus Estimate of 31 cents per share as well as the 30 cents per share from the second quarter of 2010.
However, year-over-year the earnings came in substantially ahead of the loss of $10.59 per share reported in the third quarter of 2009 due to increased operating expenses and augmented compensation on higher revenues. This included 11 cents per share or $28.3 million in real estate lease losses. Net income … [visit site to read more]

Logitech Beats Estimates

Posted: 21 Jan 2010 11:43 AM PST

Logitech International (LOGI) reported third quarter 2010 earnings per share of 32 cents per share, beating the Zacks Consensus Estimate of 27 cents.
Sales for the quarter were $617 million, a decrease of 2% compared to $627 million in the same quarter last year. Excluding the favorable impact of exchange rate changes, sales decreased by 7%.
Logitech's retail sales were up 3% year over year, with sales up by 8% in the Americas and 6% in EMEA (Europe, Middle East, Africa) and down 17% in … [visit site to read more]

Comerica Tops Zacks Consensus

Posted: 21 Jan 2010 11:29 AM PST

Comerica Inc. (CMA) posted fourth-quarter results before the opening bell today. The company reported a net loss of $62 million, or 41 cents per share, compared to a net income of $3 million, or 2 cents per share in the year-ago period. However, the quarterly results came in ahead of the Zacks Consensus Estimate for a 50-cent-per-share loss.
Fully taxable equivalent net interest income increased 2.8% sequentially to $396 million. The increase was primarily driven by a 26 basis points … [visit site to read more]

Freeport McMoRan Outperforms

Posted: 21 Jan 2010 11:16 AM PST

The world's largest publicly traded copper company, Freeport-McMoRan Copper & Gold Inc. (FCX), reported fourth-quarter 2009 earnings of $2.15 per share, ahead of the Zacks Consensus Estimate of $1.59 per share. Earnings represented a significant turnaround from a $14 billion loss in the same quarter the previous year. Revenues more than doubled to $4.61 billion.
Phoenix-based Freeport-McMoRan has been showing signs of recovery. The company's earnings rose in the third quarter for the … [visit site to read more]

Are Hedge Fund ETFs The Wave Of The Future?

Posted: 21 Jan 2010 11:01 AM PST

Do you want your exchange traded fund (ETF) to provide market-beating performance? Well, one hedge fund provider is looking into a way to bring in more clients by enticing investors with a hedge-fund-type ETF that outperforms the market.

ETFs have pulled in more than $1 trillion in the last decade, up 46% in 2009 alone, but the funds have been mainly used as a cost-effective way of managing broad market risk instead of a source of market outperformance, reports Simon Nixon for The Wall … [visit site to read more]

KeyCorp Beats, Loss Shrinks

Posted: 21 Jan 2010 11:01 AM PST

KeyCorp's (KEY) fourth quarter loss from continuing operations of 30 cents per share was lower than the Zacks Consensus Estimate of a loss of 39 cents. This also compares favorably to a net loss from continuing operations of $1.07 cents in the prior-year quarter.
Results were primarily hurt by an increase in the provision for loan losses, write-downs of certain commercial real estate related investments and costs associated with other real estate owned (OREO). The downside also resulted … [visit site to read more]

Stimulating Depression Through Government Spending

Posted: 21 Jan 2010 10:57 AM PST

"China's lending curb sparks a rush for safety."
That's how The Financial Times describes what happened yesterday. Investors were more moved by fear than by greed. Dow sold off 112 points. Gold dropped $27. The dollar and bonds were up.
The first thing we note is that investors are idiots. They're looking for safety in the wrong places. Sell gold? Buy the dollar? And bonds?
It may be a good move in the short run…but this kind of safety is too dangerous for us.
The second thing that … [visit site to read more]

Southwest Airlines Outperforms

Posted: 21 Jan 2010 10:46 AM PST

Southwest Airlines Co. (LUV) declared encouraging fourth quarter 2009 financial results. Quarterly operating revenue of $2,712 million was down 0.8% year-over-year, but better than the Zacks Consensus Estimate of $2,644 million. Fourth quarter GAAP net income was $116 million or 16 cents per share compared to a GAAP net loss of $56 million or 8 cents per share in the prior-year quarter.
However, excluding special items, adjusted net income was $74 million or 10 cents per share compared to $61 … [visit site to read more]

Forex Trading: USDJPY At Key 100 Day MA Level And 38.2% Retracement Level.

Posted: 21 Jan 2010 10:34 AM PST

The market is testing the 100 day moving average and the 38.2% retracement at the 90.34 and 90.37 levels.  The price has paused here as it accesses the buying and selling interest. Someone is likely to push it one way or the other from here. Be … [visit site to read more]

Fifth Third Reduces Loss, Beats

Posted: 21 Jan 2010 10:32 AM PST

Fifth Third Bancorp (FITB) has reported a fourth quarter loss of 20 cents per share. Results are well ahead of the Zacks Consensus Estimate of a loss of 31 cents. The company had incurred a loss of $3.78 per share a year earlier.
The results were driven by an improvement in credit trends. Charge-offs were low and provisions for loan losses were down. There was also an improvement in interest margin. Excluding the benefits from the Visa Inc. (V) transaction in the prior quarter, the company … [visit site to read more]

Union Pacific Beats On Lower Cost

Posted: 21 Jan 2010 10:17 AM PST

Union Pacific Corp.'s (UNP) fourth quarter earnings of $1.08 per share were ahead of the Zacks Consensus Estimate of $1.04. However, this compares unfavorably with earnings of $1.31 per share in the prior-year quarter.
The deterioration in Union Pacific's results from the prior-year quarter was largely due to a decline in revenues from the weak global economy and a related decline in rail traffic. However, a decline in total operating expenses, pricing gains, lower diesel fuel prices and … [visit site to read more]

Forex Trading: EURUSD Holds The 1.4083 Level

Posted: 21 Jan 2010 10:15 AM PST

As per the prior post(SEE PRIOR POST HERE)  the market squeezed up above 1.4417 to test the highs again, then sold off back through the support to test  the 1.4083 support level in volatile trading. No with the price at 1.4101, the market is unsure whether to hate the US dollar or hate the Euro for all its shortcomings.  When all else fails fundamentally, follow the technical levels.   They remain the 1.4117 and the high for the day at 1.4136-40 and below a the 1.4083 … [visit site to read more]

Video: Market Movers: KEY, FIT, NTRS, MS, SBUX

Posted: 21 Jan 2010 10:15 AM PST

The latest news and information on U.S. stocks that are moving the market. … [visit site to read more]

Should You Invest In Public Online Stock Trading Companies?

Posted: 21 Jan 2010 10:01 AM PST

Charles Schwab (SCHW) has recently cut the commission rates for online trades of equities and non-Schwab exchange-traded funds (ETFs) regardless of the retail investor's account size and trading frequency. Schwab's base commission rate is lower than those of E*Trade (ETFC), Fidelity and TD Ameritrade (AMTD). Additionally, Schwab is not charging commission on trades of the eight ETFs the firm has recently launched.

Motives behind Schwab's Moves

Clearly, Schwab is making these … [visit site to read more]

Markets Shun Bearish Sentiment…For Now

Posted: 21 Jan 2010 10:00 AM PST

During yesterday's trading session, the stock markets of the world served up something a little different from what has become "standard fare." The markets served up losses – large ones in China, biggish ones in Europe and noticeable ones in the Americas. The Dow Jones Industrials slumped 112 points, which was only about half as bad as its worst losses of the day. Taking a slightly longer time frame into consideration, the Dow is zero for the last eight trading days…and not very far … [visit site to read more]

FMC Tech In PBR Subsea Deal

Posted: 21 Jan 2010 10:00 AM PST

Oil drilling equipment maker FMC Technologies Inc. (FTI) announced the receipt of an $80 million contract from Brazilian energy giant Petroleo Brasileiro S.A. (PBR), or Petrobras S.A. The deal calls for FMC Technologies to provide subsea service systems to Petrobras.
 
The company said that the contract, which is effective through 2012, includes supply of storage, maintenance, commissioning and offshore services for subsea and topside control systems and drill pipe riser … [visit site to read more]

Video: USD Mixed As Stocks Tumble

Posted: 21 Jan 2010 09:56 AM PST

The U.S. dollar turned lower vs. the JPY, and traded mixed against the high-yielding currencies. U.S. stocks fell sharply in mid-day trade. … [visit site to read more]

Novartis Offer Inadequate For Alcon

Posted: 21 Jan 2010 09:40 AM PST

Eye care company Alcon, Inc. (ACL) announced that its Independent Director Committee recently responded to Novartis AG's (NVS) proposal to acquire its minority publicly traded shares. The Committee referred to the proposal as "grossly inadequate” and "fundamentally flawed”.
 
Earlier this month, Novartis had announced that it intends to gain full ownership of Alcon. Novartis will initially complete its April 2008 agreement with Nestlé S.A. whereby it will acquire a majority … [visit site to read more]

The Solar Energy Sector: Profit From The “Solar Shift” With These Five Firms

Posted: 21 Jan 2010 09:34 AM PST

Thursday, January 21, 2010: Issue #1180
"Skill to do comes of doing." – Ralph Waldo Emerson
This simple statement fits the progress of the solar energy sector over the past 50 years.
In terms of that filtering down to solar stocks, however, the progress is more intermittent. The solar energy sector was one of the bright investment spots in 2007 and 2008, but was conspicuously absent from the big rally of 2009.
A closer look reveals that there isn't actually too much holding the sector … [visit site to read more]

Seagate’s Encouraging Numbers

Posted: 21 Jan 2010 09:22 AM PST

Seagate Technology Inc. (STX) reported second quarter 2010 earnings per share of 105 cents, exceeding the Zacks Consensus Estimate of 65 cents.
 
Revenue
 
The company reported revenues of $3 billion up 33.3% from the year-ago period and 14% sequentially. The increase in revenue can be attributed to very strong demand for the company's high end products in both the notebook and desktop markets. In addition, the enterprise market experienced the second consecutive quarter of double … [visit site to read more]

Total System Beats By A Penny

Posted: 21 Jan 2010 09:05 AM PST

Yesterday, Total System Services Inc. (TSS) reported fourth quarter as well as full-year earnings for fiscal 2009.
 
Quarterly Results
 
The company also known as TSYS earned 31 cents per share from continuing operations in the fourth quarter as opposed to 34 cents in the year-ago quarter. The decline in quarterly profit was mainly attributable to a drop in revenues from electronic payment processing services. Furthermore, the quarterly earnings was below the Zacks consensus … [visit site to read more]

Forex Trading: EURUSD Moves Sharply Higher On Dollar Selling

Posted: 21 Jan 2010 09:04 AM PST

The EURUSD moved above the 1.4117 level up to the high for the day at 1.4136 (high price at 1.4138).   The price holding the level with stocks moving off the lows has pushed the  EURUSD back below 1.4117.
The price will likely be largely tied to the stock market this afternoon. IF there is a key technical level the 1.4117 is it. Below, watch the 1.4083 level which is 200 bar MA on the 5 minute chart (green line in the chart above). ON the topside a break of the 1.4117 will need … [visit site to read more]

A Decade Of Hot Commodities

Posted: 21 Jan 2010 09:00 AM PST

We've updated our popular Periodic Table of Commodity Returns, and the headline news should come as no surprise – 2009 was a complete turnaround from the sector's 2008 performance.
Commodities (as measured by the Reuters-Jefferies CRB Index) rose 24 percent in 2009, the largest single-year increase since the early 1970s.
In 2008, only one of the 14 commodities in the table finished positive – gold, up a scant 5.8 percent – while five finished with losses exceeding 50 percent, led by … [visit site to read more]

Initial Jobless Claims Rise

Posted: 21 Jan 2010 09:00 AM PST

The data on the Initial Claims for Unemployment Insurance this morning was disappointing. Initial jobless claims rose by 36,000 to 482,000. This caused the 4-week average to rise by 7,000 to 448,250. It was the first increase in the 4-week average since August 15th, when it stood at 571,000.
The 4-week average peaked back in April at 658,750, and as the chart below (from http://www.calculatedriskblog.com/) shows, it has been in a steep decline ever since. Despite this week’s setback we have … [visit site to read more]

ONEOK Raises Payouts

Posted: 21 Jan 2010 08:47 AM PST

The Board of Directors of ONEOK Inc. (OKE) has raised the quarterly dividend by 4.8% to 44 cents per share of common stock from 42 cents per share. The dividend is payable on February 12, 2010, to shareholders of record at the close of business on January 29, 2010.
 
This dividend increase is consistent with the company's long-term dividend target payout of 60% to 70% of recurring earnings, as well as an expected increase in distribution from its master limited partner ONEOK Partners … [visit site to read more]

UnitedHealth Beats Estimates

Posted: 21 Jan 2010 08:36 AM PST

UnitedHealth Group's (UNH) fourth quarter earnings of 81 cents per share were well ahead of the Zacks Consensus Estimate of 73 cents. Results were also ahead of the prior-year period's earnings of 60 cents. The better-than-expected results reflected strong contributions from the health services businesses and the public and senior health benefits program.
For the full year, revenue rose to $87.14 billion from $81.19 billion in the prior year. Earnings per share came in at $3.24, ahead of … [visit site to read more]

Mack-Cali Refinances Loan

Posted: 21 Jan 2010 08:31 AM PST

Mack-Cali Realty Corp. (CLI), a fully integrated real estate investment trust (REIT), has recently refinanced a $150 million secured loan with the Prudential Insurance Company of America, the insurance division of Prudential Financial Inc. (PRU), a premier financial service provider in the U.S.
 
The refinanced loan also included VPCM LLC, a wholly owned subsidiary of Virginia Retirement System, as co-lender. The loan is scheduled to mature on January 15, 2017, and bears an interest … [visit site to read more]

Initiating PXD As Neutral

Posted: 21 Jan 2010 08:18 AM PST

Ahead of the fourth quarter results scheduled to be released on February 2, we have initiated coverage on Pioneer Natural Resources Company (PXD) with a Neutral recommendation and a $51 target price.
 
Irving, Texas-based Pioneer is an independent oil and gas exploration and production company. The Spraberry oil field in West Texas, the Hugoton gas field in Southwest Kansas and the West Panhandle gas field in Texas Panhandle anchor the company's asset base.
 
Given its oil growth … [visit site to read more]

Setback For Merck

Posted: 21 Jan 2010 08:03 AM PST

Merck (MRK) received a setback recently with respect to one of its pipeline candidates, vicriviroc. The drug did not meet the primary efficacy endpoint in two late stage studies (phase III) with HIV patients who have already been treated with other medication. Following this, Merck has shelved its plan to seek marketing approval for the drug.
Earlier, results from a mid-stage trial of vicriviroc in treatment-experienced patients found that the drug was being well tolerated and was effective … [visit site to read more]

Goldman Sachs Reports Big Beat

Posted: 21 Jan 2010 07:51 AM PST

Goldman Sachs Group Inc.'s (GS) fourth quarter 2009 earnings of $8.20 per share were significantly ahead of the Zacks Consensus Estimate of $5.18. Results reflected strong performance in investment banking and increased inflows which offset the weak performance in the trading operations. The company also reported a significant drop in expenses on a sequential basis.
GAAP net income in the fourth quarter of 2009 was $4.8 billion compared to $3.0 billion or $5.25 per share in the prior … [visit site to read more]

Forex Trading: Risk In Sovereign CDS Will Be A Major Driver Of FX Trends In 2010

Posted: 21 Jan 2010 07:50 AM PST

EURUSD finds itself under relentless selling pressure this week (touching a low of 1.4033) as Greek bond yields continue to rise and the cost of insuring against sovereign default in Greece creeps further upwards. The yield on Greek Sovereign 2yr bond has surged to 4.96% having been around 1.70% at the end of September, and the cost of CDS (insurance premium to protect against default) has risen to 344 basis points.

In layman’s terms, that means for every EUR 1m of Greek government bonds, an … [visit site to read more]

Hormel Initiated As Neutral

Posted: 21 Jan 2010 07:44 AM PST

We have recently initiated coverage on Hormel Foods Corporation (HRL), a leading manufacturer and marketer of various meat and food products, as Neutral.
 
Hormel has strengthened its position through acquisitions, which is expected to be its fundamental growth strategy in the future. Given the company's strong balance sheet and management's track record of successful acquisition and integration of businesses over the years, we expect acquisitions to play a key role in its … [visit site to read more]

ProShares Launches Ultra Treasury ETFs (UBT, UST)

Posted: 21 Jan 2010 07:41 AM PST

ProShares made an addition to its line of leveraged fixed income products on Thursday, launching the Ultra 7-10 Year Treasury (UST) and Ultra 20+ Year Treasury (UBT). UST seeks daily investment results that correspond to 200% of the daily performance of the Barclays Capital 7-10 Year U.S. Treasury Index, while UBT will seek to deliver daily amplified returns on the Barclays Capital 20+ Year U.S. Treasury Index.
ProShares has offered the UltraShort 7-10 Year Treasury (PST) and UltraShort … [visit site to read more]

Starbucks Reports Strong Q1

Posted: 21 Jan 2010 07:40 AM PST

Starbucks Corporation (SBUX) reported first quarter results with earnings of 33 cents per share. Earnings were 5 cents above the Zacks Consensus Estimate of 28 cents per share, and were up 120% compared to 15 cents in the prior-year quarter. The strong results were driven by continued innovation and implementation of efficient cost structure.
Net revenues for the quarter increased 4.1% year-over-year to $2.7 billion, primarily due to a 4% increase in comparable stores sales and the positive … [visit site to read more]

Stalking Japanese Small Cap ETF

Posted: 21 Jan 2010 07:39 AM PST

From a technical perspective, I seem to be much more enamored these days with Japanese equities as opposed to US equities, which are highly overbought and over subscribed too.

I last highlighted Japanese equities on December 17, 2009, when we took a look at the i-Shares MSCI Japan Index Fund (symbol: EWJ). Since this mention, EWJ has outperformed the S&P500 by about a 2 to 1 margin - not bad in a difficult tape. My reasons to be bullish on EWJ continue to be: 1) the “next big thing” … [visit site to read more]

Why Obama Is Now (finally) Getting Tough On Wall Street

Posted: 21 Jan 2010 07:34 AM PST

President Obama is now, finally, getting tough on Wall Street. Today he's giving his support to two measures critically important for making sure the Street doesn't relapse into another financial crisis: (1) separating the functions of investment banking from commercial banking (basically, resurrecting the Depression-era Glass-Steagall Act) so investment banks can't gamble with insured commerial deposits, and (2) giving regulatory authorities power to limit the size of big banks so they … [visit site to read more]

El Paso Reports Year-end Reserves

Posted: 21 Jan 2010 07:30 AM PST

El Paso Corporation (EP) reported that its total proved reserves at year-end 2009 increased 8% to 2.75 trillion cubic feet equivalent (Tcfe), including its 48.8% interest in Four Star Oil & Gas Company. Proved reserves at the end of 2008 totaled 2.55 Tcfe. 

The company's total reserve additions during the year were 573 billion cubic feet equivalent (Bcfe), with a reserve replacement ratio of 212%. Total company reserve replacement costs were $2.04 per million cubic feet … [visit site to read more]

Forex Trading: EURUSD Fall Sharply. No Real Reason Except Stocks Being Hit.

Posted: 21 Jan 2010 07:28 AM PST

The EURUSD fell like a stone. Stocks are getting hit and talk of breaking trendline support in the major indices may lead to further pressure.  When stocks decline, it looks like a flight into the US dollar may once again be the modus operandi. 

 Watching 1.4045 support now.  This was target from the daily. See earlier post for the chart of the daily. (CLICK … [visit site to read more]

An Amazing 4th Quarter For Chinese GDP

Posted: 21 Jan 2010 07:26 AM PST

There was another day of dollar strength, in this switch from risk assets to dollar denominated assets… Again, I question the mental giants behind all this, for the US is what caused this problem… And now traders turn to the US? Oh well, sure seems like it would be different if I were in charge! Of course, a LOT of things would be different if I were in charge! But that's a discussion for another day!
Front and center this morning we have the news overnight from China that their fourth … [visit site to read more]

Video: NYSE Opening Bell Market Monitor: GS, EBAY, XRX

Posted: 21 Jan 2010 07:22 AM PST

The latest in news, commentary, and information on what’s moving the US equities markets. … [visit site to read more]

Forex Trading: EURUSD Slows As 1.4117 Resistance Approached

Posted: 21 Jan 2010 07:19 AM PST

The EURUSD slowed and found early sellers as the 1.4417 level of resistance approached. The pair has corrected down to the 200 bar MA and if this can hold, another move to test the resistance area may be in the cards for the day.  A move below the 200 bar MA at the 1.4087 level could see a move back to the 1.4075 level.  Look for cautious … [visit site to read more]

Northrop Wins Saudi Contract

Posted: 21 Jan 2010 07:15 AM PST

Northrop Grumman Corporation (NOC) was awarded a contract to continue the modernization and training of the Saudi Arabia National Guard (SANG). The five-year, cost-plus-award-fee hybrid contract has a potential value of $550 million. 

Under the terms of the contract, Northrop Grumman's subsidiary Vinnell Arabia LLC will provide U.S. Army-based doctrine and military training as well as logistics and support services to SANG. Work will be performed throughout the Kingdom of Saudi … [visit site to read more]

The Most Important Thing To Remember As An Investor In Oil

Posted: 21 Jan 2010 05:00 AM PST

By Chris Mayer

We really don’t know as much about the oil market as we think we do.

There are many numbers out there, but most of these involve a lot of guesswork. For example, we really don’t know just how much oil the world will need. The U.S. Department of Energy says we’ll need 106.6 million barrels a day by 2030, but how does it know? It can’t know. It can’t know what the world will look like in 2030.

We don’t really know how much oil we’re discovering or how much will actually come to … [visit site to read more]
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