This week brings a small flurry of end-of-the-calendar-quarter earnings reports. And for the most part, the expectations of the analysts surveyed by Thomson Reuters aren't very high. Companies expected to report declining earnings in the most recently concluded quarter include America's Car-Mart Inc. (NASDAQ: CRMT), Bed Bath & Beyond Inc. (NASDAQ: BBBY), ConAgra Foods Inc. (NYSE: CAG), Jabil Circuit Inc. (NYSE: JBL), Jackson Hewitt Tax Service Inc. (NYSE: JTX), Monsanto Co. (NYSE: MON), and Sonic Corp. (NASDAQ: SONC).
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The week in preview: End-of-quarter earnings expectations: Nike, Oracle, Walgreen ...
Markets are up, but what about housing?
The major indices continued to rally into the close Monday, after spending most of the day down substantially. The Dow ended the day up fractionally and the S&P 500 was down less than one point. Institutional money continues to enter the markets, says Jim Cramer, and that has limited the size and duration of pullbacks.
Even as the uncertainty comes out of the markets, the clarity that replaces it is tepid at best. But with the S&P 500 resting at seven-month highs, one troublesome sector has badly lagged: housing and home-building stocks.
Cramer on BloggingStocks: The seductive pull of the early cycle
TheStreet.com's Jim Cramer is seeing signs of a coming boom, but he's still being cautious here.
If you had to define the early cycle, if you had to outline what stocks should be soaring coming out of a recession into a boom and which ones should be faltering, you would have to say the action in this market in the last month is the quintessential behavioral pattern.
What are the components of the early cycle? First, it's the homebuilders. As is typical coming out of a recession, the stocks precede the bottom of housing. That's exactly what's happening with the lowest permits and highest affordability and best mortgage rates and massive inventory. Everywhere, except on Wall Street reporting, the bottom is bursting out. When you read the lead story in the Sunday Philadelphia Inquirer, and it is all about the thousands of prospective homebuyers heading south to pick up condos and homes for half of what they were worth two years ago -- or even less -- and you know that virtually no one has broken ground in the Sunshine State in a year, you can bet that the bottom's actually behind us. This housing market has wiped out all but the most stable private builders and even the public ones are merging as we know from Pulte (NYSE: PHM) (Cramer's Take) and Centex (NYSE: CTX) (Cramer's Take). So, in the next cycle, you can see some profitability developing year over year even though the new homes don't have much margin because the foreclosed homes next door are going for a song. And don't believe this won't change the dynamic of future foreclosures. In most areas, rent is higher than the interest on mortgages, so you will find that second or third job needed to stay in your home. The incentive structure's radically different than a year ago.
If you had to define the early cycle, if you had to outline what stocks should be soaring coming out of a recession into a boom and which ones should be faltering, you would have to say the action in this market in the last month is the quintessential behavioral pattern.
What are the components of the early cycle? First, it's the homebuilders. As is typical coming out of a recession, the stocks precede the bottom of housing. That's exactly what's happening with the lowest permits and highest affordability and best mortgage rates and massive inventory. Everywhere, except on Wall Street reporting, the bottom is bursting out. When you read the lead story in the Sunday Philadelphia Inquirer, and it is all about the thousands of prospective homebuyers heading south to pick up condos and homes for half of what they were worth two years ago -- or even less -- and you know that virtually no one has broken ground in the Sunshine State in a year, you can bet that the bottom's actually behind us. This housing market has wiped out all but the most stable private builders and even the public ones are merging as we know from Pulte (NYSE: PHM) (Cramer's Take) and Centex (NYSE: CTX) (Cramer's Take). So, in the next cycle, you can see some profitability developing year over year even though the new homes don't have much margin because the foreclosed homes next door are going for a song. And don't believe this won't change the dynamic of future foreclosures. In most areas, rent is higher than the interest on mortgages, so you will find that second or third job needed to stay in your home. The incentive structure's radically different than a year ago.
Continue reading Cramer on BloggingStocks: The seductive pull of the early cycle
Before the Bell: Wall Street is on a roll -- for now
Investors are expecting Wall Street to continue its recent winning ways.
Stocks are poised to open higher as investors await March retail sales data and the weekly unemployment report. Markets in Europe and Asia were higher.
Retail sales, though weak, may not be as bad as investors had feared. According to the Wall Street Journal, "Wal-Mart Stores and a select group of its discounting peers have helped retail sales exceed modest expectations every month since December, and that streak likely will continue."
Continue reading Before the Bell: Wall Street is on a roll -- for now
Closing Bell: Up, Down, Up... What the heck? (AA, BBBY, CSCO, JNPR, PHM, CTX, S)
This was one of those days that if you just looked at a large group of stocks you would have no feel for the closing bell levels. The FOMC Minutes from the March 17 to March 18 meeting were given some of the blame for the late day sell-off, although if you have to read one-month old data to get insight into a post-Fed action event explaining it... then something is wrong. Hence the late-day recovery after that. The reality is that traders are still using any excuse to take a profit or to lighten up after a four-week run, and there are still buyers out there to meet them. Here were today's unofficial closing bell levels:
Dow 7,837.11 +47.55 (0.61%)
S&P 500 825.16 +9.61 (1.18%)
Nasdaq 1,590.66 +29.05 (1.86%)
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Continue reading Closing Bell: Up, Down, Up... What the heck? (AA, BBBY, CSCO, JNPR, PHM, CTX, S)
Options Update: Pulte volatility low into purchase of Centex
Pulte (NYSE: PHM) and Centex (NYSE: CTX) agreed to merge, creating America's largest homebuilding company. CTX shareholders will receive 0.975 PHM common shares for each CTX they own. The combined company will have a market cap of $4.1B with $3.4B in cash on its balance sheet. PHM April option implied volatility is at 93, May is at 97; below its 26-week average of 102, according to Track Data, suggesting decreasing price movement.
Centex April option implied volatility is at 108, May is at 118; near its 26-week average according to Track Data, suggesting non-directional price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Cramer on BloggingStocks: In the great tug of war, China wins
TheStreet.com's Jim Cramer says stocks you'd sell on America alone are buys when you consider that great engine in Asia.
Here's some real tension. The best stocks to play China with may be the worst stocks to own here. Look at Freeport (NYSE: FCX) (Cramer's Take) yesterday, which did that giant and hugely successful secondary. There is no doubt in my mind that housing starts won't even get to 600,000 this year, not after that travesty of a stimulus bill -- or when considering the reaction expressed by the stocks of Lennar (NYSE: LEN) (Cramer's Take) and Pulte (NYSE: PHM) (Cramer's Take) and, perhaps most hobbled, Centex (NYSE: CTX) (Cramer's Take).
There is also no doubt that China's stock market being up 35% means that Freeport's Asian arm, the biggest, will soon be getting huge orders.
Here's some real tension. The best stocks to play China with may be the worst stocks to own here. Look at Freeport (NYSE: FCX) (Cramer's Take) yesterday, which did that giant and hugely successful secondary. There is no doubt in my mind that housing starts won't even get to 600,000 this year, not after that travesty of a stimulus bill -- or when considering the reaction expressed by the stocks of Lennar (NYSE: LEN) (Cramer's Take) and Pulte (NYSE: PHM) (Cramer's Take) and, perhaps most hobbled, Centex (NYSE: CTX) (Cramer's Take).
There is also no doubt that China's stock market being up 35% means that Freeport's Asian arm, the biggest, will soon be getting huge orders.
Continue reading Cramer on BloggingStocks: In the great tug of war, China wins
Analyst upgrades, downgrades and initiations: COST, LPL, SWCEY, AKAM, LEAP
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Analyst upgrades:- Baird upgraded Carlisle (NYSE:CSL) to Outperform from Neutral and lowered their target to $25 from $33 following the company's Q4 results citing attractive valuation and solid execution.
- Citigroup upgraded Talbots (NYSE:TLB) to Hold from Sell on valuation as they believe the company's cash flow is improving and does not expect the company to face bankruptcy in next three years.
- Jefferies upgraded shares of Spectra Energy (NYSE:SE) to Hold from Underperform on valuation following the company's Q4 results and raised their target price to $15 from $11.75.
- Costco (NASDAQ:COST) was upgraded to Buy from Neutral at UBS.
- AU Optronics (NYSE:AUO) and LG Display (NYSE:LPL) were upgraded to Buy from Neutral at Banc of America/Merrill.
- Alpha Natural (NYSE:ANR) was raised to Buy from Hold at Natixis.
Continue reading Analyst upgrades, downgrades and initiations: COST, LPL, SWCEY, AKAM, LEAP
Earnings preview: Homebuilders Centex, Pulte Homes, and DR Horton
Given last week's news that new home sales have plunged and that new home prices continue to fall, what is Wall Street expecting from homebuilders Centex Corp. (NYSE: CTX), Pulte Homes Inc. (NYSE: PHM), and DR Horton Inc. (NYSE: DHI) when they report quarterly results this week?
Analysts surveyed by Thomson Reuters anticipate that Dallas-based Centex will report that it narrowed its net loss in its fiscal third quarter to $3.27 per share. In the same period of last year, the loss was $7.94 per share. Revenue in the third quarter is expected to total $895.3 million, down 53.0% from last year. For the full year, the loss is expected to reach $7.36 per share on revenue of $4.0 billion, which compares to a $21.69 per share loss on $8.3 billion in sales in 2008. Centex has posted bigger-than-expected losses in the past five quarters. So the consensus recommendation of analysts remains to hold CTX, though the long-range EPS growth forecast is 9.0%. The share price has fallen 20.0% just since the beginning of the year, and it is 70.7% lower than it was a year ago. Centex suspended its quarterly dividends back in October.
Continue reading Earnings preview: Homebuilders Centex, Pulte Homes, and DR Horton
Today's technical outlook: Financials hold the key
Despite the overwhelming tide of bad news from Q4 earnings reports, stocks not only held above the support line at Dow 8,000 and S&P 500 800 Monday, but the stochastic indicator on both the NYSE Composite Index and the Nasdaq issued buy signals.
Our other internal indicators are still oversold, and the CBOE Volatility Index (VIX) fell to 45.69 and appears to be headed lower -- which is generally a bullish sign.
The key, however, to moving the markets higher could be the financial stocks.
This week, a number of closely watched banks, such as Dow members American Express (NYSE: AXP) and Wells Fargo (NYSE: WFC), will report earnings. The expectation for all of these former finance powerhouses is low, so upside surprises could have a positive impact on the Dow.
Continue reading Today's technical outlook: Financials hold the key
Stocks in the news: GM, F, JPM, KBH, TM, FNM, MO, HUN, AAPL, HON ... (update)
General Motors Corp. (NYSE: GM) and Ford Motor Co. (NYSE: F) may get help from the Bush administration. President Bush said in an interview today that "an abrupt bankruptcy for the autos could be devastating for the economy." He signaled he may use TARP funds for that, but didn't provide a timeline or other details. GM shares are up 4.8% in premarket, Ford's shares are up 2%. Shares of both opened about 3% higher.
Goldman Sachs Group Inc. (NYSE: GS) and Morgan Stanley (NYSE: MS) probably will report fourth-quarter losses this week on shrinking asset values and a decline in fees for businesses. But even the deep cost cutting measures the investment firms -- now turned banks -- may not help help shareholders enough as the companies face another year of slumping revenue. The demand for their services is and will continue to be limited in what is the worst financial crisis since the Great Depression. GS shares are down 2% in premarket trade.
Banco Santander (NYSE: STD), Nomura (NYSE: NMR) and Royal Bank of Scotland (NYSE: RBS) are among the victims ex-Nasdaq Chairman Bernard Madoff' $50 billion Ponzi scheme. Santander said its customers had an exposure of around $3.1 billion, while Japan's Nomura has an exposure of around $302 million. STD shares are down 1.5% and RBS shares up 1.7% in premarket trade.
[Update 10:00 am:
Huntsman Corp. (NYSE: HUN) shares were down about 35% a little after the open after it has ended its $6.5 billion agreement to be taken over by Hexion Specialty Chemicals Inc. and agreed to a $1 billion legal settlement.
Apple Inc. (NASDAQ: AAPL) shares were down about 4% a little after the open on a downgrade. Goldman Sachs downgraded the iPhone and Mac maker to Neutral from Buy due to deteriorating consumer spending.
JPMorgan (NYSE: JPM) shares slumped nearly 6% after a Merrill Lynch analyst downgraded JPM to Underperform from Neutral.
Honeywell (NYSE: HON) shares gained nearly 7.5% after the manufacturer affirmed a lower 2009 outlook and said it expects profits to fall 6% to 16% as the deepening global recession hits markets it serves.]
Goldman Sachs Group Inc. (NYSE: GS) and Morgan Stanley (NYSE: MS) probably will report fourth-quarter losses this week on shrinking asset values and a decline in fees for businesses. But even the deep cost cutting measures the investment firms -- now turned banks -- may not help help shareholders enough as the companies face another year of slumping revenue. The demand for their services is and will continue to be limited in what is the worst financial crisis since the Great Depression. GS shares are down 2% in premarket trade.
Banco Santander (NYSE: STD), Nomura (NYSE: NMR) and Royal Bank of Scotland (NYSE: RBS) are among the victims ex-Nasdaq Chairman Bernard Madoff' $50 billion Ponzi scheme. Santander said its customers had an exposure of around $3.1 billion, while Japan's Nomura has an exposure of around $302 million. STD shares are down 1.5% and RBS shares up 1.7% in premarket trade.
[Update 10:00 am:
Huntsman Corp. (NYSE: HUN) shares were down about 35% a little after the open after it has ended its $6.5 billion agreement to be taken over by Hexion Specialty Chemicals Inc. and agreed to a $1 billion legal settlement.
Apple Inc. (NASDAQ: AAPL) shares were down about 4% a little after the open on a downgrade. Goldman Sachs downgraded the iPhone and Mac maker to Neutral from Buy due to deteriorating consumer spending.
JPMorgan (NYSE: JPM) shares slumped nearly 6% after a Merrill Lynch analyst downgraded JPM to Underperform from Neutral.
Honeywell (NYSE: HON) shares gained nearly 7.5% after the manufacturer affirmed a lower 2009 outlook and said it expects profits to fall 6% to 16% as the deepening global recession hits markets it serves.]
Continue reading Stocks in the news: GM, F, JPM, KBH, TM, FNM, MO, HUN, AAPL, HON ... (update)
Stocks in the news: GM, F, BAC, MER, EBAY, AAPL, YHOO, DHI, KBH ...
General Motors Corp. (NYSE: GM) -- as it runs short of cash and attempts to raise $4 billion from asset sales, GM has asked real estate agent Jones Lang LaSalle for help in raising up to $257 million from the sale and leaseback of some of its European offices and other property assets, as well as inquired about its options regarding the Renaissance Center, the Detroit skyscraper complex that serves as its headquarters, the Financial Times reported.
Meanwhile, adding insult to injury, GM has asked the U.S. Federal Aviation Administration to prevent public tracking of a jet it leases.
Ford Motor Co. (NYSE: F) is also ignoring public outcry and is so far resisting pressure to cut the salary of its chief executive. Maybe asking emergency help from the federal government requires that large compensation...
Staying with automarkers, Deutsche Bank analyst Rod Lache said the scales are tipping in favor of a federal bailout from GM and Ford, MarketWatch said. GM traded 12% higher and Ford shares were 15% higher in the first minutes of trade.
Bank of America (NYSE: BAC) -- The Federal Reserve Board officially approved BAC.'s acquisition of Merril Lynch (NYSE: MER) on Wednesday in a $50 billion deal first announced in September. BAC shares were nearly 3% higher and MER's over 4% higher in the first few minutes of trade.
Meanwhile, adding insult to injury, GM has asked the U.S. Federal Aviation Administration to prevent public tracking of a jet it leases.
Ford Motor Co. (NYSE: F) is also ignoring public outcry and is so far resisting pressure to cut the salary of its chief executive. Maybe asking emergency help from the federal government requires that large compensation...
Staying with automarkers, Deutsche Bank analyst Rod Lache said the scales are tipping in favor of a federal bailout from GM and Ford, MarketWatch said. GM traded 12% higher and Ford shares were 15% higher in the first minutes of trade.
Bank of America (NYSE: BAC) -- The Federal Reserve Board officially approved BAC.'s acquisition of Merril Lynch (NYSE: MER) on Wednesday in a $50 billion deal first announced in September. BAC shares were nearly 3% higher and MER's over 4% higher in the first few minutes of trade.
Continue reading Stocks in the news: GM, F, BAC, MER, EBAY, AAPL, YHOO, DHI, KBH ...
Cramer on BloggingStocks: Recent moves finally address housing
It's been right to be more than the average bear for months now. But if you believe that housing played some role in the downturn, then you have to believe that the latest moves are very meaningful for that trashed market.
We have had two major problems in housing: affordability and the ease and cost of mortgage money. We got news this week that ameliorated both difficulties, and we cannot sniff at them as much as it has paid to sniff at everything else that has been done.
First, the government's buy of GSE paper revives a moribund market and ends a lot of federal indecision. If you recall when the government confiscated the Fannie (NYSE: FNM) (Cramer's Take) and Freddie (NYSE: FRE) (Cramer's Take) preferreds and therefore made FNM paper more dangerous, the government at the same time said that it would make mortgage rates come down, presumably by buying a ton of Fannie/Freddie paper. Instead it made a half-hearted effort by buying about $25 billion in paper and then disappeared!
Continue reading Cramer on BloggingStocks: Recent moves finally address housing
Cramer on BloggingStocks: 'Cheap' is meaningless
TheStreet.com's Jim Cramer says tons of stocks look like good buys, and they go down all the time.
All weekend I heard it. Stocks have gotten too cheap. Put 'em away cheap. Don't worry about 'em cheap. To which I say, stocks are only cheap if the companies make it. Stocks are only cheap if the bondholders don't claim them.
Every day I see cheap stocks. Ford (NYSE: F) (Cramer's Take) reported this morning. Ridiculously cheap. How cheap is Sprint (NYSE: S) (Cramer's Take), for heaven's sake? Did you see the Sunrise Senior Living (NYSE: SRZ) (Cramer's Take) numbers? That stock should show up when you enter "cheap stock" in Google. Except Las Vegas Sands (NYSE: LVS) (Cramer's Take) comes up.
When Warren Buffett says stocks are cheap, or Jeremy Grantham or Steve Leuthold or Jeremy Siegel, it's very heartening. You just want to go out there and buy cheap stocks like CBS (NYSE: CBS) (Cramer's Take) and Williams-Sonoma (NYSE: WSM) (Cramer's Take) and Ann Taylor (NYSE: ANN) (Cramer's Take) and Talbots (NYSE: TLB) (Cramer's Take).
All weekend I heard it. Stocks have gotten too cheap. Put 'em away cheap. Don't worry about 'em cheap. To which I say, stocks are only cheap if the companies make it. Stocks are only cheap if the bondholders don't claim them.
Every day I see cheap stocks. Ford (NYSE: F) (Cramer's Take) reported this morning. Ridiculously cheap. How cheap is Sprint (NYSE: S) (Cramer's Take), for heaven's sake? Did you see the Sunrise Senior Living (NYSE: SRZ) (Cramer's Take) numbers? That stock should show up when you enter "cheap stock" in Google. Except Las Vegas Sands (NYSE: LVS) (Cramer's Take) comes up.
When Warren Buffett says stocks are cheap, or Jeremy Grantham or Steve Leuthold or Jeremy Siegel, it's very heartening. You just want to go out there and buy cheap stocks like CBS (NYSE: CBS) (Cramer's Take) and Williams-Sonoma (NYSE: WSM) (Cramer's Take) and Ann Taylor (NYSE: ANN) (Cramer's Take) and Talbots (NYSE: TLB) (Cramer's Take).
Continue reading Cramer on BloggingStocks: 'Cheap' is meaningless
Cramer on BloggingStocks: I won't get excited this time
TheStreet.com's Jim Cramer says the scope of this crisis needs to be recognized. The real deal is upon us. The October session that we always seem to get, the one that looks like we need intraday Fed meetings and lifelines to banks and a flood of liquidity and ... oops, we've already done that!
Yep. So often we have had the real hideous looks, only at the last minute to have the darned defeat we need to start over be defeated by some optimistic yahoos who come out of the woodwork and say, "buy, buy, buy!"
I don't want it to happen this time. We have to have some recognition that Ford (NYSE: F) (Cramer's Take) and GM (NYSE: GM) (Cramer's Take) and Chrysler matter and that they are all teetering, that the Boeing (NYSE: BA) (Cramer's Take) strike is going to soon shut down the part of American manufacturing that is not auto and that housing took a step down last month of unfathomable proportions. If you don't believe me, go read the Ryland (NYSE: RYL) (Cramer's Take) release: cancellations spiked up again! We will not hold those July lows that now make the HGX housing sector index run up look like a total ploy to make us feel better. When are Horton (NYSE: DHI) (Cramer's Take) and Pulte (NYSE: PHM) (Cramer's Take) going to merge anyway!
Continue reading Cramer on BloggingStocks: I won't get excited this time
Biotech ETFs: Best bets on health care reform
Cramer on BloggingStocks: The world's been waiting for the new GM 
Dell fights Taiwanese authorities over pricing mishaps
