March 24, 2009

Better Trades US News

Coming off a monumental push forward in the equity markets in which the major indices gained more than 6% by the close of Monday’s session, it came as no surprise that Tuesday saw the markets pull back. After a report from the government in which upwards of $1 trillion in bad assets will be purchased from banks in order to get them lending again, sellers reentered the markets, pushing the indices down 1.5% by the close.

In a government report released earlier this morning, the Federal Housing Finance Agency revealed their findings that home prices in the U.S. dropped 6.3% in January. Today’s reading comes in sharp contrast to December’s increase in prices of 1.7%. The current report is calculated by using mortgage loans bought or guaranteed by federally controlled mortgage companies Freddie Mac (FRE) and Fannie Mae (FNM). Since its peak in April 2007, the index is down nearly 10%.

With only a handful of companies announcing quarterly results this morning, the first to bat was Carnival Corp. (CCL), which posted a 10% increase in 1Q net income. Carnival, which is one of the world's largest multiple-night cruise companies, offers a broad range of cruise brands serving contemporary cruises of the vacation market, premium cruises and luxury cruises. In a report early this morning, the company announced that net income was $260M, or $0.33 per share, compared to a profit of $236M, or $0.30 per share. During the period, overall revenues slipped more than 9%, from $3.2B to $2.9B. On average, analysts were looking for the company to post quarterly earnings of $0.19 per share on total sales of $2.87B. In Tuesday’s trading, shares of CCL were down nearly 3%, losing $0.67, to end the session at $22.64 per share.

Also on the list of companies reporting today was McCormick & Co. (MKC), which is a diversified specialty food company and a global leader in the manufacturing, marketing and distribution of spices, herbs, seasonings, flavorings and other specialty food products to the entire food industry. Before the opening bell, the company confirmed that net income advanced in the 1Q, helped by an acquisition of the Lawry’s seasonings business from Unilever PLC last August. For the period, MKC posted net earnings of $57.7M, or $0.44 per share, versus a profit of $51.4M, or $0.39 per share from a year ago, an increase of more than 12%. Meanwhile, revenues for the quarter decreased from $724M to $718.5M, a decline of nearly 8%. Analysts, on average, were looking for the spice company to post earnings of $0.44 per share on total sales of $755.41M. Looking ahead, the company reaffirmed 2009 earnings forecast, still anticipating annual earnings between $2.24 and $2.28 per share, just under analysts’ prediction of $2.30 per share. Despite the solid quarterly report, with guidance below expectations, shares of MKC plunged more than 9% by the close, falling $3.18 to end the day at $30.26 per share.

Making it known before the opening bell, Williams-Sonoma, Inc. (WSM), a specialty retailer of products for the home, operated their retail segment by selling its products through its three concepts, Williams-Sonoma, Pottery Barn and Hold Everything. Reporting on the company’s 4Q performance, WSM stated that the company’s profit during the period plummeted more than 90% year-over-year, resulting in a reduction of their workforce and shuttering underperforming stores. Net income came in at $12.19M, or $0.12 per share, in sharp contrast to the previous year’s profit of $124.56M, or $1.15 per share. Total revenues declined as well during the quarter, falling from $1.37B to $1.01B, a decrease in sales of nearly 27%. In the meantime, analysts were expecting the specialty retailer to post earnings of $0.16 per share on total revenues of $976M. For 2009, the company offered guidance to shareholders that a loss for the year is expected, ranging between $0.05 and $0.15 per share, with sales in the range of $2.8B and $2.95B. On average, analysts are expecting a yearly profit of $0.16 from WSM, on total revenues of $2.98B. Shares of Williams-Sonoma advanced in trading on Tuesday, adding $0.18, or 1.6%, to conclude the session at $11.37 per share.

Lastly, Commercial Metals Co. (CMC), which operates in three, segments, manufacturing, recycling, and marketing and trading, with activities primarily concentrated around metals related activities such as recycling and the buying and selling of fabricated metals. For the 2Q, CMC booked a loss of $35.3M, or $0.32 per share, compared to a profit of $39.8M, or $0.34 per share from a year ago. Quarterly sales slipped as well, declining by 28%, from $2.25B to $1.65B. Analysts were anticipating a profit of $0.03 per share on total revenues of $1.88B. In addition to the recent loss, the company is also forecasting a weakened year ahead, as demand for services continues to decline. Commercial Metals is also anticipating a loss in the upcoming 3Q, albeit less than the loss in the 2Q. By the sound of the closing bell, shares of CMC were up more than 7%, gaining $0.78, to close the trading day at $11.84 per share.

A day after the price of oil tested the $55 per barrel mark, the crude markets took a step backwards following the markets’ lead downwards. Although the markets surged on Monday, it is still difficult to see whether the economy has taken a much-needed turn, leaving demand for crude still up in the air. By the close of trading today, the price for a barrel of light, sweet crude for April delivery added $0.18 to settle at $53.98 per barrel. Monday’s contract reached above $54 a barrel before sliding back to $53.80 at the close.

In additional NYMEX trading, gasoline for April delivery gained $0.0145 at $1.5026 a gallon, while heating oil added $0.0298 at $1.4996 a gallon. Natural gas increased by $0.053 to $4.347 per 1,000 cubic feet.

Treasuries traded mixed Tuesday, following yesterday’s decline as investors prepare themselves for another influx of supply by the Treasury Department. In addition to the government’s plan to purchase more than $1 trillion in bad debts from banks, the Treasury will auction some $40B in 2-year notes later this week. By the sound of the closing bell, the benchmark 10-year note added 2/32 to 100 26/32 with its yield slipping to 2.65%, down from Monday’s 2.66%. Meanwhile, the 30-year note jumped 1 3/32 to 97 17/32 with a yield of 3.63%, down from the previous session’s 3.70%. Finally, the 2-year inched lower, losing 1/32 to 99 29/32 with its yield increasing to 0.91%, up from 0.89%.

Within the Forex markets, the U.S. Dollar concluded the late afternoon session mixed as the markets and investors alike are taking their time digesting news about the bank bailout plan. Heading into early evening trading, the 16-nation Euro declined against the greenback, buying $1.3467, down from last night’s price of $1.3627. A week ago, the Euro reached as high as $1.37 versus the Dollar. The British pound advanced against the Dollar, buying $1.4671, up from Monday’s price of $1.4550. The greenback did manage to gain value against the Japanese yen, buying 97.70, up from 96.89 late Monday.

n additional Forex trading, the Dollar climbed to 1.1315 Swiss francs from 1.1239 last night, and advanced to 1.2302 Canadian dollars from 1.2276 the day before.

At the close of Tuesday’s session, the Dow Jones Industrial average dropped 1.49% to end at 7,660.21, after adding nearly 500 points, or 6.8%, the day before. The broader market indicators concluded the session in the red as well, following Monday’s surge.

With the sound of the closing bell, the S&P 500 index dropped 2% to 806.35, following yesterday’s surge of more than 7%, while the tech-heavy NASDAQ composite index retreated by nearly 2.4% to close at 1,518.52, the day after posting a gain of nearly 7%.

2009 Better Trades Article

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BRIAN MULLIN