March 13, 2009

Better Trades US News

In a week that has seen the markets post substantial gains, the final trading day of the week seemed tamed in comparison. With multiple days of 3%-, 4%- and 5%-plus gains, Friday’s session teetered in and out of positive ground for much of the day before concluding in the green. Ending the day higher, the major indices extended their three-day gains. All three markets were up less than 1% each by the close.

In economic news, the country viewed the U.S. trade deficit slip to its lowest levels in three years in the month of January, receding to $36B. The reading came in down nearly 10% from December’s reading and marking its lowest stage since October 2002. Coming in better than the $38B deficit that economists were anticipating, the drop was accredited to the decline in imports for crude oil, which dropped 25.2% to $11.9B, its lowest range since February 2005. Weakened demand in appliances, autos, and heavy machinery also contributed to the deficit’s decline.

During the month, exports of goods and services declined 5.7% to $124.9B, the lowest since September 2005, as demand for domestic products such as farm goods, autos and aircraft weakened. As for imports, they declined at a steeper rate, falling 6.7% to $160.9B, the lowest since March 2005. If the current deficit continues to average $36B for the remainder of the year, the annual deficit could come in at $432B for 2010, a decline of 36.5% from the $681.1B deficit in 2008.

The other economic data released today was a report from the Reuters/University of Michigan Surveys of Consumers, which showed that the nation’s sentiment of consumers advanced unexpectedly. March’s reading of 56.6 was slightly better than the previous month’s reading of 56.3, and higher than the 55.0 economists were predicting.

However, the index measuring consumers’ assessment of the current economic condition retreated to a reading of 62.3, down from February’s reading of 65.5. As for inflation, one-year expectations advanced to 2.2% in March from February’s 1.9%, while the 5-year projections slipped to 2.8%, down from 3.1%.

Friday’s slate of company’s earnings was slim as the earnings season starts to wind down. Of the few that reported, a handful managed to post solid gains. Leading the way was Sun Communities Inc. (SUI), which owns, operates and finances manufactured housing communities concentrated in the Midwestern & Southeastern U.S. In their quarterly report, the company posted a net loss of $18.5M, or $1.01 per share for the 4Q, compared to a loss of $10.5M, or $0.57 per share from a year ago. Despite the increased loss, overall sales increased during the period, climbing from $59.3M to $63.2M, an increase of 6.6%. Analysts were looking for SUI to post a loss of $0.72 per share. With 2009 earnings per share coming in ahead of expectations, between $2.84 and $2.92 with analysts looking for $2.84 per share, shares of SUI surged in trading. By the close, SUI added nearly 16%, or $1.42, to end the week at $10.52 per share.

Another big gainer in the markets today was EV Energy Partners (EVEP), which is an upstream partnership focused on acquiring and operating oil and gas properties located primarily in Ohio, West Virginia and Northern Louisiana. For the 4Q, EVEP posted a profit of $145.45M, or $6.88 per share, in contrast to last year’s loss of $11.9M, or $0.78 per share during the 4Q. Quarterly results included a $134M unrealized gain, which helped bolster the bottom-line. Meanwhile, revenues increased year-over-year, from $39.43M to $41.1M, an increase of more than 4%. Analysts, on average, were anticipating earnings of $0.70 per share on sales of $49.05M. At the close, shares of EVEP were up 9%, adding $1.38, to conclude the session at $15.26 per share.

Finally, A.C. Moore Arts & Crafts Inc. (ACMR), an operator of arts and crafts superstores that offer a vast assortment of traditional and contemporary merchandise for a wide range of customers, announced early Friday morning that the company recorded a loss for the 4Q amidst the weakening consumer environment. For the period, ACMR booked a loss of $13M, or $0.64 per share, versus a profit of $4.65M, or $0.23 per share from a year ago. The company’s end results were affected by charges related to store closing that took away $0.27 per share from the bottom-line. Quarterly sales retreated as well, falling from $177.27M to $165.03M, a decrease in revenues of nearly 7%. Shares of ACMR were battered in trading, losing 10%, or $0.14, to end the week at $1.26 per share.

Following a surge in the price of crude after Thursday’s trading session, the final session of the week was tamed in comparison, as the price for a barrel of light, sweet crude for April delivery declined $0.78 to settle at $46.25. Earlier in the session the price reached and intraday high of $48.14 a barrel. In additional NYMEX trading, gasoline for April delivery added $0.006 to $1.35 a gallon, while heating oil dropped $0.03 to $1.1961 a gallon. Natural gas for April delivery declined $0.07 to $3.926 per 1,000 cubic feet.

Treasuries ended the trading session mixed as investors pondered remarks from Chinese Premier Wen Jiabao that the U.S. should not devalue the Dollar by excessive lending. Currently, China owns more than 6%, or $727B, of the U.S.’s total debt outstanding of $10.9 trillion. While bonds were down, they were small in comparison to the markets massive losses over the past weeks. By the sound of closing bell, the benchmark 10-year note was lower by 1 8/32 to 98 8/32 while yielding 2.95%. Additionally, the 30-year note was down 25/32 to 96 24/32, yielding 3.67%. Meanwhile, the 2-year was higher by the close, adding 3/32 to 99 26/32 as its yield slipped to 0.97%.

Within the Forex markets, the sentiment after China’s boisterous comments, the Dollar slipped in value against the major global currencies. By late afternoon, the 16-nation Euro advanced against the greenback, buying $1.2918, up from Thursday’s price of $1.2862, while England’s paper increased versus the Dollar as well. The British pound bought $1.3979, up from the previous day’s closing price of $1.3909. Against the Japanese yen, the Dollar retreated as well, falling from 97.99 the day before to 97.96.

In additional currency trading, the greenback dropped to 1.1863 Swiss francs from 1.1880 late Thursday, and slipped to 1.2714 Canadian dollars from 1.2788.

By the sound of the closing bell, the Dow Jones Industrial average, after being up 8.2% heading into Friday’s session, added 53.93 points, or 0.75%, to close the week at 7,223.98, while the broader market indicators concluded the day in positive ground after posting solid gains throughout the week.

At the close, the S&P 500 index was higher by 5.80 points, or 0.77%, to end at 756.55, but not before advancing 9.9% over the week. Lastly, the tech-heavy NASDAQ finished the session in positive territory as well, gaining 5.40 points, or 0.38%, to close at 1,431.50, having been up 10.2% since the start of the week.

2009 Better Trades Article

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BRIAN MULLIN