Friday, October 23, 2009

Morning Note...

Futures slightly higher this morning on the back of better-than-expected earnings from MSFT (+8% premkt), AMZN (+15% premkt), COF (+8% premkt), WHR (+3% premkt), and HON (+2% premkt).  Very light day on the economic front – Existing Home Sales due at 10am only.  Earnings continue to drive the market higher…thus far 83% of S&P companies that have reported have beaten estimates.  Bernanke said financial conditions have improved but that the Fed will conduct more comprehensive reviews of banks.  Across the pond, UK GDP unexpectedly dropped by 0.4%, leading to speculation quantitative easing by the Bank of England will continue for some time. 

Some anecdotal thoughts on the “Capital of the Universe” after a few days in NYC… restaurants seem as full as ever, but there seem to be more retail store fronts available than ever, and even on prominent shopping boulevards like Fifth Avenue… one odd observation – it seems much easier to get around the city these days.  There is less foot traffic, and less vehicle traffic.  It’s easy to catch a cab, even at peak times.  (And most New Yorkers will agree that’s a rarity.)  This morning, for example, I caught a midtown taxi right away, and it took minutes to reach 48th and 5th… Looking around, I noticed less delivery trucks, less municipal trucks, etc.  All the things that used to hold up cross-town traffic especially were diminished.  So what is the takeaway?  First, and foremost, a few random thoughts from 4 days in Manhattan does not a firm thesis make.  Second, however, one could argue that bustling restaurants yet anemic “nuts and bolts” basic delivery or “underbelly of the economy” action might cause one to wonder if the consumer is still plugging away while businesses continue cutting back.  There’s a gap there somewhere.  Taking it a step further, I might conclude that the consumer spending in the restaurant remains blind to the “real economy,” or perhaps in denial.  Or perhaps they are still spending on “keeping up appearances” dinners but not elsewhere.  Of course, as someone once told me: “to the man with only a hammer, every problem looks like a nail.”  In other words, that conclusion fits too neatly with my current “world view.”  As a result, it’s biased and probably wrong.  Regardless, walking around the city these days certainly gets you thinking…

POT tgt lowered at Soleil.  Barclays Capital ups VLO, Deutsche Bank ups ITRI, Goldman Sachs ups BCH, Janney Montgomery Scott ups AMZN, JPMorgan ups MSO, Keefe, Bruyette & Woods ups WFSL, Piper Jaffray ups HWAY, SMH Capital ups ATPG, BEXP, EAC, EXXS, HK, HNR, KWK & RRC, Thomas Weisel ups MRX, UBS ups RBCN, Wells Fargo ups PNC, William Blair ups RNOW, B. Riley & Company cuts IBKC, Bank of America Merrill Lynch cuts CB, Bernstein cuts MRX, Goldman Sachs cuts BAP & BBD, RW Baird cuts CRL, SMH Capital cuts CRZO, Robinson Humphrey cuts CYBS, UBS cuts SE.

Asia higher overnight.  Europe over 1% higher.  USD +25bps.  Gold +75bps.  Oil +10bps. 

Brightpoint News: 

Brightpoint PreMarket (yest close/premkt/% change/volume):

S&P 500 PreMarket (last/% change prior close/volume): 
AMAZON.COM INC        93.4500            109.85  +17.55%
MICROSOFT CORP       26.5900            29.38    +10.49%
CAPITAL ONE FINA       38.3300            41.85    +9.18%
CA INC                         23.9100             22.25    -6.94%
BROADCOM CORP-A    30.7300            28.67    -6.7 %
BIOGEN IDEC INC         47.2300            45.00    -4.72%
WHIRLPOOL CORP       73.5400            76.78    +4.41%
COMPUWARE CORP    7.1000              7.40      +4.23%
MEMC ELEC MATER    15.4300             14.80    -4.08%
T ROWE PRICE GRP    49.1100             50.95    +3.75%
CHUBB CORP               53.7900             51.95    -3.42%
BURLINGTON NORTH    84.6200            81.83    -3.3 %
SALESFORCE.COM      62.6700            64.61    +3.1 %
DELL INC                      15.4300             15.90    +3.05%
GAMESTOP CORP-A    25.2400             25.97    +2.89%
CIGNA CORP                28.9200            29.74    +2.84%
MBIA INC                      5.2000              5.34      +2.69%
CIENA CORP                13.4600            13.80    +2.53%
TELLABS INC                6.7800             6.95      +2.51%
ELECTRONIC ARTS      19.9600             20.46    +2.51%
MICRON TECH              7.6000             7.79      +2.5 %

Today’s Trivia:  By what simpler name is deoxyribonucleic acid known?

Yesterday's Answer:  Lithium is one of the lightest metals known, and is used nuclear reactors, batteries, and for the treatment of manic depression.

Best Quotes:We said Thursday we weren't going to succumb to Chicken Little analysis based on one day's trading, let alone a single hour.  With the benefit of hindsight, we're glad we felt that way.

On Thursday the market made up all that had been lost on Wednesday and a little bit more.  Notably, it returned to its familiar ways and rallied late in the session, garnering added strength no doubt from short sellers covering their positions.

The end result was that the S&P 500 gained 1.1% and is now showing a net gain of 5 points, or 0.5%, for the week.

The early leaning this morning in the futures trade suggests the market is due to start today's session on a higher note.

There is good reason for that as the positive earnings surprises continue to flow.

Microsoft (MSFT) is the big headliner at the moment, having topped expectations by $0.08 and gliding past revenue estimates, although its revenue of $12.92 billion was still down 14.2% year-over-year.  Shares of MSFT are indicated to open about 8.0% higher.

Microsoft will be a heavy source of support for the major indices. will do its fair share of lifting, too. beat earnings estimates by $0.12 and guided its fourth quarter revenue projection above the consensus estimate.  Shares of AMZN traded up as much as 15% in the wake of its report.

Other earnings standouts include Capital One (COF; beat by $0.80), Western Digital (WDC; beat by $0.31), Chubb (CB; beat by $0.29), Fortune Brands (FO; beat by $0.16), and American Express (AXP; beat by $0.06).

The list of positive surprises goes on and on, not just today, but for the entire week.

We don't know if that means analysts have been simply woefully bad with their estimates or whether it reveals how mismanaged companies were if they still have so much room to cut expenses.”

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