February 23, 2009

Better Trades US News

After opening with promise, the markets slipped back into their old trading habits within an hour of the opening bell, as investors try to cope with news from Citigroup Inc. (C) that the government might increase their ownership stake within the struggling bank. By converting the 25% stake of preferred shares into common stock, the government could own upwards of 40%.

Furthermore, Federal regulator made it known early this morning that they are willing to infuse additional capital into the nation’s banks, including the situation with Citigroup. Although, the government is stern about leaving banks within the private sector, there may be a need for the regulators to step-in in a provisional term in order to right the ship.

In company news, Campbell Soup Co. (CPB) announced early Monday morning that the company’s profits for the 2Q declined as the stronger dollar affected profits in overseas markets. Operating as a global manufacturer and marketer of high quality, branded convenience food products, Campbell recorded quarterly earnings of $233M, or $0.64 per share, down nearly 15% from last year’s earnings of $274M, or $0.71 per share. Overall sales for the period slipped as well, sliding from $2.22B to $2.12B, a nearly 5% drop. Analysts were looking for a quarterly profit of $0.64 per share on $2.21B in sales.

Like many other food companies, Campbell has had to increase their prices to off-set operating costs as commodity prices continue to cut into profits. Looking forward to 2009 results, the company is anticipating yearly earnings of $2.24 per share, while analysts are expecting $2.12 per share. Annual sales are projected to come in between $8.24B and $8.32B, with analysts predicting yearly revenues of $7.96B. Despite citing yearly earnings ahead of analysts’ projections, shares of CPB were down by the close, losing $0.82, or 2.8%, to close at $28.63 per share.

Another well-known company reporting earnings today was Garmin Ltd. (GRMN), which traded opposite of the markets, adding nearly 9% to its value today. As a designer, manufacturer, and marketer of navigation and communications equipment for a variety of markets, including aviation, marine, automotive, cellular, OEM, and general recreation, Garmin confirmed 4Q results before the opening bell that saw their profits decline by nearly half as sales decreased.

For the period, GRMN posted net earnings of $157.7M, or $0.78 per share, compared to last year’s results of $307.3M, or $1.39 per share. Overall sales declined amidst the weakening economy, falling form $1.22B to $1.05B, a decrease of nearly 14%. Analysts were looking for the maker of GPS units to record quarterly earnings of $0.98 per share on sales of $1.12B. Even with earnings coming in below expectations, shares of GRMN jumped over 7% during today’s session, adding $1.11 to close at $16.28 per share.

Following reports that OPEC has reached their previously stated production cut rate of 4 million barrels per day, the crude markets advanced to begin the day, but retreated heading into the close. By the close of trading today, the price for a barrel of light, sweet crude for April delivery slipped $1.59 to settle at $38.44 per barrel.

In additional NYMEX trading, gasoline futures dropped $0.03 to $1.0433, while heating oil slipped $0.02 to $1.1754 a gallon. Natural gas for March delivery gained $0.007 to $4.097 per 1,000 cubic feet.

Within the Forex markets, the U.S. Dollar ended the afternoon session mixed against the major currencies, as the 16-nation Euro traded lower versus the greenback, buying $1.2713, down from Friday’s price of $1.2841. Meanwhile, the British pound advanced against the Dollar, buying $1.4486, up from last week’s price of $1.4442. Finally, opposed to the Japanese yen, the Dollar increased to 94.60, up from Friday’s closing price of 93.10.

In additional currency trading, the Dollar inched higher to 1.2516 Canadian dollars from 1.2484, and advanced to 1.1671 Swiss francs from 1.1548.

As the major indices continued their foray into negative territory to start the week off, the bond markets benefits from investors placing their capital in the safety of government-backed securities. By the close, the benchmark 10-year note increased 4/32 to 99 24/32 as its yield declined to 2.77% from Friday’s 2.79%. Additionally, the 30-year note gained as well, adding 24/32 to 99 17/32, as its yield slipped to 3.52%, down from last week’s close of 3.56%. Finally, the 2-year note remained flat on the day, trading at 99 27/32 with a yield of 0.95%.

By the sound of the closing bell, the markets were down more than 3.4% each, with the big news coming from the S&P, which hit a low during the session that has not been seen since April of 1997. With the sentiment of investors deflated, the Dow slipped to a level not reached since October 1997.

At the close, the Dow Jones Industrial average dropped 250.89 points, or 3.41%, to end the day at 7,114.78, while the broader market indicators concluded the day in the red as well. The S&P 500 index, coming of its intraday lows, finished the day down 26.70 points, or 3.47%, at 743.35, off its low of 742.37, while the NASDAQ composite index slipped by 53.51 points, or 3.71%, to end the day at 1,387.72.

2009 Better Trades Article

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BRIAN MULLIN