We’re struck today by what looks like another “disconnect” in the stock market, manifested in Boeing (BA) shares, which rallied nearly 4% and contributed almost 21 upside points to the DJIA. BA’s gain alone easily kept the DJIA from closing in negative terrain.
But BA reported 1Q profit fell 15% (but not as much as feared), and the company trimmed full-year EPS view, reflecting special charge for loss of health-care related tax benefits. Backlog also fell slightly and revenue was down almost 8%.
But that’s not the disconnect.
Investors buying BA shares today didn’t pay much mind to the action in the airline sector (y’know, Boeing’s customers), where stocks got hammered as carriers like American (AMR) and AirTran (AAI) continue to post losses; AMR’s was wider vs year ago while AAI’s narrowed.
AMR CEO Gerard Arpey said while the carrier made progress on revenue, “we were simply unable to overcome the challenge of the global economic environment coupled with once-again escalating fuel prices.”
Sounds a bit gloomy; AMR shares fell 9.2% to close at $7.77.
- Don’t dismiss the notion that retail spending is being partly driven by homeowners strategically defaulting on mortgages, even though it’s hard to quantify exactly hoe many people are “spending the mortgage,” Paul Jackson writes at HousingWire.
- Small businesses, which have led job creation in previous recoveries, may be finally contributing to job growth now as the economy rebounds, Atlanta Fed’s macroblog says.
- “The Squid has been living for years off the simple fact that, like the fabled IBM of yore, no-one ever got fired (or sued) for picking Goldman Sachs,” the Epicurean Dealmaker notes. “That calculus has been changed,” and everyone knows it.
- Google’s (GOOG) recent acquisition of secretive early-stage start-up Agnilux ranks as the “most curious” deal in its history, Digital Daily blogger John Paczkowski says.
- Picking apart Apple’s (AAPL) blowout earnings, Silicon Alley Insider’s Dan Frommer says Apple’s iPhone business is growing much faster internationally than it is in the US.
- Lots of merger chatter swirling swirling around UAL Corp’s (UAUA) United Airlines. And while a deal might make sense for operational reasons, Footnoted’s Theo Francis notes the company has made it “substantially more attractive” for its top executives to seal a deal.
- Facebook’s launching an ambitious plan to essentially take over the Internet.
- Looks like Adobe (ADBE has finally given up on getting Flash on the iPhone. “We will still be shipping the ability to target the iPhone and iPad in Flash CS5,” Mike Chambers, Adobe’s principal product manager for the Flash platform, writes on his blog. “However, we are currently not planning any additional investments in that feature.”
- Investors take note: A stock-market indicator with a good long-term record has flashed a buy signal.
US stocks close mixed, with weakness in health-care and financial sectors weighing on the market. DJIA gains 8 to 11125, marking its third straight day of gains. Index has risen in nine of the last 10 sessions. S&P 500 falls 1 to 1206 and Nasdaq Comp rises 4.3 to 2505.
Losses were muted as United Technologies (UTX) jumped 3.7% on better-than-expected earnings and Boeing (BA) rose 3.9% as it anticipates additional aircraft orders this year. Apple (AAPL) jumps 6% on, you guessed it, blowout earnings.
With earnings in full swing there’s lots to digest after hours.
Both Chipotle Mexican Grill (CMG) and Starbucks (SBUX) issue quarterly reports ahead of estimates, helped by stronger sales, offering more evidence of a consumer recovery. Customer traffic was up at both companies. In after-hours trading, CMG up 4.9% to $133; SBUX up a fraction at $25.42.
But Qualcomm (QCOM) couldn’t match heightened Wall Street expectations. Despite raising its fiscal full-year forecast, the estimates still fell below what analysts were looking for. FY3Q estimate, meanwhile, looks soft, with earnings flat to slightly below expectations. QCOM shares off 7.6% at $39.37 after hours.
And eBay shares were off more than 7% in late trading after providing disappointing 2Q earnings and revenue guidance.
(Paul Ziobro and Roger Cheng contributed to this post.)
Lots of chatter about Sen. Chris Dodd’s financial reform bill floating around the blogosphere this week. Here’s a look at what three academics have to say about the issue.
- Proposed financial reform legislation is missing one big aspect: effective reform for ratings agencies, University of Oregon economics professor Mark Thoma writes. In particular, “the incentive to provide high ratings to encourage future business,” he says. True, part of the legislation is directed at the ratings agencies. “But it doesn’t get at the main problem, which is the incentive to tell its customers what they want to hear, i.e. the incentive to deliver higher ratings than deserved,” Thoma says. “For some reason ($$$???), the ratings agencies seem to be escaping the legislative and regulatory attention they ought to be receiving.”
- The bill is a “very modest step” in right direction, but it’s missing three key aspects to help prevent another Wall Street meltdown, writes former labor secretary and UC Berkeley economics professor Robert Reich. He says trading of all derivatives should be required on open exchanges, Glass-Steagall should be re-instituted in its entirety, separating commercial banks from investment banks and big banks should be capped at $100B in assets. “Wall Street doesn’t want these three major reforms because they’d cut deeply into profits, and it’s using its formidable lobbying clout with both parties to prevent these reforms from even from surfacing,” Reich says.
- The proposed bill misses one main thing: “the idea of a better, more intelligent and more accountable Congress,” writes George Mason economics professor Tyler Cowan. “The upshot is that bank regulation is a tough slog: it depends on the quality of the bureaucracy and the periodic attention of a somewhat responsible Legislature,” he says. “It is like a chess game whereby the private sector eventually finds a way around most of the binding regulations.” Too much attention is being placed on the new regulations, he adds. But “it’s the daily reality of regulation that matters and right now the US Congress simply isn’t up to the job.”
Posted by Paul Vignaon April 21, 2010 Markets /
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Newswires telecom reporter Roger Cheng reports:
Build a better dog collar, and the world will beat a path to your wireless packages.
Those old standby metrics for wireless carriers just aren’t reliable as they used to be.
Take AT&T, which reported a record 1.9 million net customer additions for the first quarter, up from a 1.2 million net gain from a year ago. Impressive, right? It’s less so when you consider that much of the growth—1.1 million—was driven by connected devices, or any non-cellphone with a cellular connection, like an e-reader, which chip in far less revenue than your average phone bill.
The most common examples of connected devices are e-readers and netbooks, but the Apple iPad will be also be counted in the second quarter once the 3G version launches on April 30. While there has been a lot of noise about wireless dog collars (really, we’re talking about actual dog collars that use a wireless signal,) a significant amount of the applications are found in businesses such as inventory tracking systems or vehicle monitoring.
AT&T has been aggressive with the business, and it’s paid off with strong growth in the first quarter.
Wall Street’s looking great, but until the financial sector’s results illustrate strength in more than just trading revenue, the ultimate strength of the sector, and the consumers and businesses it’s supposed to be serving, remains suspect. Elsewhere, Greece continues to twist in the wind.
A picture of an empty storefront taken in March, of 2009. It's still empty.
Something crystallized in my mind the other day, and while I’m not sure of its significance, it seems telling to me.
I’ve noticed lately that the vast majority, I think all really, of the store fronts that I’ve noticed going back a year ago that were empty…are still empty. These include spaces in New Jersey and Manhattan. I just haven’t seen any new businesses opening up in the past year, and I wonder how many new businesses really are opening up.
There’s a big space at the corner of 42nd and 6th Avenue in Manhattan that has been sitting empty since at least last June (John said he thinks some of the empty storefronts he’s seen on 5th Avenue have been filled recently.) And that’s about as prime a piece of retail space as exists in this world, it’s a huge (that might be part of the problem) space, looking out onto both 6th Avenue and 42nd Street, right across from Bryant Park. But nobody seems to want it.
And the storefronts around my New Jersey home that have closed over the past year have all remained empty. I can’t think of one that’s found a new tenant.
This ties in with comments Bank of America’s CEO Brian Moynihan made during their conference call for first-quarter earnings. On the commercial side, Moynihan said, loan balances are down “fairly dramatically, and that is due to customer demand. There’s no other explanation. That’s because customers are not feeling the need to draw on our lines because they don’t see economic demand.”
He added that while they’re still not sure, things seem better than a quarter ago, and if the economy stabilizes here, they expect to see their draw-down rate improve.
The nation’s industrial companies, and the transportation companies that move the stuff they make, is showing some signs of a rebound, as we point out in today’s Upshot column in The Wall Street Journal:
Higher profits and brighter outlooks at industrial manufacturers and shipping firms are casting new light on a budding upturn in America’s manufacturing heartland.
Improved orders and even a few spot-price increases are allowing these companies to deliver profits that beat year-earlier results and topped Wall Street estimates. Industrial and aerospace component maker Parker Hannifin Corp. nearly tripled last year’s profit for the quarter ended March 31 as sales rose 12%.
The first signs of stronger demand after years of cost-cutting is lifting results at Illinois Tool Works Inc., J.B. Hunt Transport, Eaton Corp., and logistics supplier Landstar System Inc. “We’re really seeing strength in every quarter of the world,” said Alexander Cutler, chief executive of Eaton.
Quarterly earnings reports remain front and center today as key influence for US stocks. AT&T, Boeing, McDonald’s, Morgan Stanley and Wells Fargo just a few of the names set to report before the opening bell. United Technologies already out, with 1Q profit up 20%, though sales fell 1.3%.
Once again, economic data calendar’s void of anything notable, though activity picks up tomorrow with March PPI and existing home sales.
US dollar has strengthened since yesterday, dollar index recently at 81.15; oil and gold both still slightly higher. Asian markets rally overnight; European stocks are lower. S&P futures down 1.50, DJ futures down 21. Ten-year higher, yield at 3.78%.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
It doesn’t look like George Zimmer is going to be able to guarantee it, anymore. The founder of Men’s Wearhouse has been fired from his own company, the clothier announced today. Click here to read the announcement. “The Board expects to discuss with Mr. Zimmer the extent, if any, and terms of his ongoing relationship […]
