- More than 80% of companies that reported earnings have topped analysts’ estimates. But don’t get too giddy. “After all, ‘better than expected’ could simply reflect the low level of the underlying estimates and the strength of the actual data,” Pragmatic Capitalism says.
- Is fresh, massive stimulus via QE2 really necessary? The Reformed Broker blogger Josh Brown isn’t so sure. He notes companies continue to report decent earnings. And more disturbing is the fact that “outside of home prices, inflation is becoming more and more of a reality…The propping up of the dead and the dying via federal spending and zero percent rates is not warranted with markets and prices rebounding elsewhere.”
- On the other hand, the risks of not engaging in QE2 are too great, James Picerno writes at The Capital Spectator. “Calling on the Fed to stand pat risks repeating the mistakes of monetary history,” he says. “We have to deal with the pressing threats as they arrive, and worrying about runaway inflation today is
premature, and perhaps more than a little dangerous. The day for fighting that battle will come. But not now.”
- Credit Suisse notes much of the earnings season move for equities might be over, despite the fact that there’s plenty of reports still to come. “Our Portfolio Strategy team finds the bulk of the impact of earnings on market performance seems to occur in the first two weeks of earnings season, which ends today,” firm says, according to MarketBeat.
- As the reviews pour in regarding Windows Phone 7 devices, so far so good for Microsoft (MSFT). NYT’s Bits blog posts a roundup of reviews. The new lineup of phones are getting “overwhelmingly positive reactions,” blog says. “It’s still unclear if this will translate into sales or make it possible to attract customers away from existing platforms.”
- Hulu’s considering slashing price of Hulu Plus — its subscription service still in beta mode — to $4.95 per month from $9.95, MediaMemo blogger Peter Kafka reports, citing sources.
- Latest iPad rival hits the market. H-P releases its $800 touchscreen tablet computer.
- FCC weighs in on the Cablevision/News Corp dispute over Fox.
- Deal Journal’s Shira Ovide looks at the best and worst deal Apple ever made.
- WSJ profiles the state of Jay-Z’s empire, the rap monger who’s worth an estimated $450 million.
Blue-chip stocks finish the week slightly lower as investors acted with caution ahead of the weekend’s G-20 meeting.
DJIA edged down 14 points (0.1%) to 11132, but close up for the week, its third straight weekly gain and seven of the last eight. DJIA’s up 9.7% over the last eight weeks. For Friday, AmEx dropped 3.1% and Verizon fell 1.3%, leading the index lower as both earnings topped expectations but still failed to please investors.
S&P 500 gained 2.8 points (0.2%) to 1183 and tech-heavy Nasdaq Comp rose 20 points (0.8%) to 2479.
Still fresh off my Tim Geithner rant this morning (and I know you disagreed, Raymond; respectfully accepted,) the following comments from Andy Xie, who used to be an economist for Morgan Stanley, struck a chord with me. It gets to the point I was making about the hypocrisy of Geithner’s letter to the G20. Xie points out that the biggest aggressor in the currency war is the U.S.
The world seems full of smoke ahead of a world currency war. The weapon of choice is quantitative easing, a.k.a. QE. If you print a trillion, I’ll print a trillion. Of course, he and she will too. No change in exchange rates after a trillion? Let’s do it again, QE2. If you listen to people like Geithner, the end of the world is quite near. Rich people everywhere are buying gold for a little peace of mind, not just the Chinese. They are literally trucking it by the ton or two home. When currency values vanish in a QE melee, at least the rich have the gold to stay rich.
If you listen to American pundits, politicians or government officials, it’s all China’s fault. China is far from perfect. Its currency policy certainly isn’t. But it is not the cause for the world’s ills. The U.S. is by far the biggest source of uncertainty and the initiator of the QE war. Its elite created the biggest financial bubble since 1929, even removing regulations designed to prevent it, and left the U.S. economy in shambles after its burst. The same people want to find a quick cure to hold onto their power. Unfortunately, there is no quick cure.
Here’s an bonus link: Harrison takes a more optimistic turn on Geithner’s letter than I did. A balanced take and worth the read.
Posted by Steven Russolilloon October 22, 2010 Earnings, Economy, Markets /
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Another stellar quarterly report for Chipotle late yesterday as it keeps racking in the profits and watching its stock price surge higher. Shares hit fresh all-time high and were recently up 15% at $206.16.
Wall Street analysts, which keep gushing over Chipotle, had fun writing their post-earnings reports. Newswires’ Christopher Dieterich dishes the deets:
The Street goes heavy on food-pun superlatives in digesting Chipotle’s (CMG) 3Q earnings. Janney says “robust Q3 EPS drowns naysayers in a vat of guacamole.” The Denver-based chain posted a 44% sequential EPS gain after its largest same-store sales gain in three years. Jefferies says, “holy guacamole”; Morgan Stanley notes “fully stuffed results.” Those that played it straight were no less bullish. Davidson says transactions increased 10%, and average tickets got a boost from more group orders. Firm raises 18-month target to $220 from $200, sets 5-year target at $300.
Posted by Paul Vignaon October 22, 2010 Earnings, Markets /
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Not much going on in the markets, today, to be honest. Investors are waiting to see if anything comes out of this G20 meeting that would either support or further undermine the dollar. Meanwhile, the earnings parade continues, with Verizon and Honeywell headlining today. Also, we take a look at coffee, and suss out whether or not you can expect to pay more for a cup of joe anytime soon (um, yes, you can.)
Posted by Paul Vignaon October 22, 2010 Earnings, Economy /
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Yeesh, so busy today’s writing Monday’s Upshot column that I forgot to post today’s.
Today’s column looks at the truckers, which we’ve done in the past as well, since the industry tends to provide a good read into the state of the economy. The companies are doing well for themselves, more due to the fact that so much capacity has been taken offline, as in there are less trucks on the road, that the companies are able to command higher prices.
But some of them haven noted that their momentum eased off in the third quarter compared to the second. That seems to be borne out by other indicators. We’ll have to see where that all goes, but until hiring picks up and wages start rising, for real, it’s probably not going very far.
From the column:
Truckers look as if they have something most companies yearn for right now: the power to raise prices.
Big trucking companies including J.B. Hunt Transport Services Inc., and Landstar Systems Inc. have been reporting solid profits for the third quarter, and their outlooks for the rest of the year are similarly optimistic.
But that doesn’t necessarily spell strong growth in the economy, as truckers are benefitting from dramatic past cuts in capacity that are now meeting an uptick in demand. The combination is leading to better pricing and stronger profits.
Ahead of the G20 meeting of finance ministers in Seoul, the U.S. Treasury Secretary, Tim Geithner, sent a letter to all his compatriots, in which he urged them to end competitive forex policies. Now, on the one hand, he’s right. All this competitive devaluation business isn’t ultimately good for anybody. It’s destabilizing. But on the other hand, it’s like..I mean…it’s…wow.
That’s like the mob calling for an end to competitive extortion, and no, I’m not comparing the Treasury to the mob. I’m saying it takes an incredible amount of gall to ask other people to stop doing something you yourself are doing, enthusiastically. The hypocrisy just jumps off the page and smacks you right in the face.
Here’s the gist of it, from Newswires’ Geoffrey Smith:
Members of the Group of 20 industrial and developing nations should “commit to refrain from exchange rate policies designed to achieve competitive advantage by either weakening their currency or preventing appreciation of an undervalued currency,” Mr. Geithner said in a letter to his counterparts in the G-20 ahead of meeting them in South Korea tomorrow.
Stocks generally higher in Asia overnight, European markets edging lower, US dollar a shade positive and premarket mood for US stocks looks subdued.
Oil’s gaining, gold easing a bit. Economic data calendar is empty, while torrent of 3Q earnings reports lets up a little. Amazon reported late yesterday, no major surprises, but shares are down 3% premarket.
Notables reporting this morning include Verizon and Honeywell, HON already out; says it’s raising 2010 EPS view to $2.52, but that’s in line with Street expectations. Shares up a little in light premarket action.
S&P futures up 1.80, DJ futures up 13. Ten-year note lower, yield at 2.55%.
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 […]
David Oreck, founder of a well-known maker of vacuums and air purifiers, says he’s upset his namesake company is in bankruptcy. He says Nashville, Tenn.-based Oreck Corp. was a perfectly profitable company when he sold his stake in it to a private equity firm in 2004. He blames the firm, New York-based American Securities Capital […]
