Futures are ~70bps higher this morning largely on in-line jobless claims and better-than-expected German unemployment and Eurozone confidence data. Initial Jobless Claims for the week ending July 24th were 457k vs. the 460k expectation. This is also lower than last week’s 468k reading. Continuing Claims for the week ending July 17th came in at 4.565M vs. the 4.5M expectation. Overseas,
’s unemployment picture improved slightly and fell by a seasonally adjusted 20,000 jobs. Further, Euro-Area July Economic confidence rose to 101.3 vs. the 99.0 expectation, which is actually the highest reading in two years. (Really? A two-year high? Does that pass the sniff test to everyone? It was not alcohol- and World Cup-fueled or anything? Seems a bit odd…) Note that UBSS cut Germany stocks to Neutral this morning. In earnings news, Visa (V; flat) beat and reaffirmed forward guidance. Oil giant Exxon Mobil (XOM; +70bps) beats on the highest profits since 2003. Kellogg (K; -4%) misses and guides lower. Agriculture giant Bunge (BG; -8%) missed on all fronts. Tyco (TYC) reported better-than-expected. Walter Industries (WLT; -2%) also beat. Tech company Akamai (AKAM; -6%) reports in-line. Ameriprise Financial (AMP; +4%) beat on earnings and revenues. Biotech firm Celgene (CELG; +3%) beat by 3c and raised guidance. Consumer staples giant Colgate-Palmolive (CL; -5.5%) beat by a penny but misses on revenues. Citrix Systems (CTXS; +10%) beats by 3c and guides revenues higher. Lincoln National (LNC; +2%) beats by 6c and reports revenues that are in-line with estimates. Rating’s firm Moody’s (MCO; +2.4%) beats and reaffirms forward guidance. LSI Logic (LSI; -5%) reports in-line but guides lower. Graphics maker NVIDIA (NVDA; -8%) guides lower. Symantec (SYMC; -9%) reports in-line and guides lower. Avon Products (AVP; +3%) beat by 3c. Mead Johnson Nutrition (MJN; -1%) beat and raised guidance. Q2 GDP data is due tomorrow. U.S.
Regarding GDP, great note from the guys at Hedgeye this morning (longer than I usually post, but worth a glance…bold emphasis on tomorrow’s GDP and next week’s unemployment mention is mine):
I think I have become way too cynical, but it's getting harder for me to believe what I hear and read about the outlook for 2H10. I normally give people the benefit of the doubt, but signs of the early stages of a renewed economic downturn are everywhere. Yet, given what we read during the current earnings season, corporate
is not tuned in to the same channel or at least they don't want to fess up to it. America
This is what I'm seeing - a weakening labor market, softening consumer confidence, softening housing activity and retail sales, and an intensifying trade deficit - the early stages of a renewed economic decline.
I'm not alone because in my back pocket I have the FX market, the bond market and the
consumer all seeing what I see. For the time being, equity investors willingly believe what they want to. US
Currencies are a leading indicator for a country's health and the US dollar is getting crushed. The DXY is down 4.8% over the past month and looks to be down 4 of the last five days (trading down 72 bps today at the time of writing).
While the dollar is getting crushed the EURO has rallied 7.0% (trading up 67 bps at the time of writing). Knowing that a country's currency is a leading indicator for a country's health, what are the MACRO headlines in Europe today - European confidence in the economic outlook rose to the highest in more than two years in July and German unemployment declined for a 13th straight month as an export-led recovery gathers strength.
Tomorrow, what will the headlines look like for the
We'll get the BEA's overstated estimate of Q2
GDP. Bloomberg is showing a consensus estimate of 2.5% for the second-quarter, down from the 2.7% as reported for the first-quarter (and downward revisions are likely). In 2Q10, a slower growth rate would be consistent with recent underlying MACRO data points. I believe that risks are fairly high that the reported growth will surprise the consensus on the downside. US
The following week we will get the July labor numbers and there is a good chance that they will be softer than an already soft consensus. Bloomberg is posting expectations of a 100,000 decline in monthly payrolls. I believe that number includes layoffs of temporary and census workers in July, which will be roughly 144,000 (per Census reporting). This implies little or no growth in nonfarm payrolls, ex-census workers. In June, payrolls declined by 125,000, gaining 100,000 ex-census. Bloomberg also has the unemployment rate estimate at 9.6%, up from June's 9.5%.
Yesterday, the FED provided a very consistent message about the current consumer trends:
Philadelphia - Most retailers said warm weather boosted sales of summer apparel, but sales of big-ticket appliances, remained weak. "The consumer is still cautious and looking for value."
Cleveland - Purchases of apparel and food products are doing well, while spending on discretionary items has weakened.
Richmond - A contact at a large home and garden chain reported that impulse buying fell, and that home remodeling purchases had scaled back dramatically as consumers "splurged small." Overall, according to our District survey, big-ticket purchases and shopper traffic plummeted.
Atlanta - Although most merchants have reported improved conditions since the beginning of the year, the outlook among retailers was more subdued than in previous months.
Chicago - While spending on food and other necessities rose, spending on home-related and luxury items decreased.
St. Louis - Contacts in education services, air transportation support services, and the casino industry announced plans to decrease operations and lay off workers.
Minneapolis - In South Dakota, a mall manager noted that recent sales were mixed; consumers remained cautious as traffic continued to be driven by promotions.
The most bullish commentary came from the
region. I'm not sure what to do with that, knowing that California is in a financial mess, though comparisons are likely easier in that region. San Francisco
In the last month, the corporate earnings season (and corporate storytelling) has driven the S&P 500 and the Consumer Discretionary index higher, up 2.9% and 2.6%, respectively. This market rally has occurred against the backdrop of sluggish macro headlines, but over the last three months, Consumer Discretionary was the second worst performing sector (-9.8%) next to Energy (-11.1%). As Keith always says, markets don't lie, people do.
Function in disaster; finish in style
BCAP ups SLF, WSM. BARD ups DST. SocGen ups BA. CTXS raised at CITI/DBAB. FBC raised at FBRC. SYMC cut at FBRC. AMZN introduces the $139 Kindle. AMAG misses by 5c. ARRS misses by 1c.
ASIA beats by 3c. CML beats by 3c. CML beats but guides lower. CVD reports in-line but guides lower. DRYS beats by 8c. ESRX beats by 1c and guides in-line. GMR misses by 10c. HRC beats by 14c. HS beats by 40c. IDCC beats by 12c. ITRI beats by 25c. IPG beats by 5c. MPWR beats by 2c. NETL beats by 6c. NEWP beats by 8c. NLY misses by 3c. OII beats by 17c and guides higher. SKX beats by 38c. TER beats by 22c. TGI beats by 26c. UAM reports in-line. VPRT beats by 1c but guides lower. WIRE beats by 23c.
S&P 500 PreMarket 8:30am (last/% change prior close/volume):
CITRIX SYSTEMS 51.85 +9.55% 120475
SYMANTEC CORP 13.33 -9.13% 794787
INTERPUBLIC GRP 9.00 +9.09% 8300
TERADYNE INC 11.06 +8.33% 40922
NVIDIA CORP 9.29 -8.29% 2587493
AKAMAI TECHNOLOG 41.06 -6.75% 299115
COLGATE-PALMOLIV 78.99 -5.81% 138865
LSI CORP 4.47 -5.7 % 14900
KELLOGG CO 48.75 -5.38% 33287
GENZYME CORP 71.43 +5.05% 134021
AUTOMATIC DATA 40.27 -4.35% 800
CELGENE CORP 54.92 +3.92% 26470
CONSOL ENERGY 37.20 -3.65% 3581
SOUTHWEST AIR 12.40 +3.25% 7820
GOODYEAR TIRE 12.31 +3.01% 3300
NOVELLUS SYS 28.01 +2.83% 300
HERSHEY CO/THE 47.68 +2.74% 100
CIENA CORP 13.53 +2.58% 300
VARIAN MEDICAL S 56.00 +2.51% 500
Today’s Trivia: 5% of all people have an extra what?
Yesterday's Answer: Oak trees are most commonly struck by lightning.
Best Quotes: Shout out to all the guys who remember Trader Monthly and who pointed out that its publication signified the greed and excess that typically marks the “top of the market”…
Trader Monthly’s Lane Gets Stuck in His Own ‘Jealousy Machine’
2010-07-28 23:00:01.7 GMT
Review by James Pressley
July 29 (Bloomberg) -- Magazine maker
Randall Lane built a career out of what he came to call “the jealousy machine.”
Then the machinery chewed him up and spat him out, as he shows in “The Zeroes,” a farcical memoir of how Lane’s Trader Monthly and other glossy tributes to financial stars made him a Wall Street insider and lost him $530,000.
Lane, a former
bureau chief for Forbes, didn’t set out to become a cheerleader for hubris. He began his trip into the land of high rollers with an offhand idea from a Canadian-born trader, Magnus Greaves: Why not create a publication devoted to the buy-and-sell set? Washington
Advertisers would love the homogenous audience of alpha males earning six figures or more, Lane figured. Traders, for their part, would warm to a publication that glamorized their work, winnings and silver Ferraris.
Over some Bass ales at Tao in midtown
, Lane got Greaves, his business partner, to sum up what motivates the desk jockeys with the Franck Muller watches. Then Lane distilled the trading ethos into six words scribbled on a cocktail napkin: “See It, Make It, Spend It.” Manhattan
It was 2004, and the slogan soon spawned content ranging from trading strategies to the joys of gluttony, including a column called “The 5,000 Calorie Meal.” A driving force would be the desire of big earners to know how they were doing relative to their peers, a preoccupation Lane first encountered while reporting for the Forbes 400 list.
“Most of all, we would feed the anxiety, by publishing and celebrating, what the top dogs made -- the Trader Monthly 100.”
Maybachs and Moet
Before long, their upstart Doubledown Media LLC was throwing parties featuring Maybachs, Moet & Chandon bubbles, lithe dancers on a trapeze, and a faux James Brown in gold lame.
By 2007, Doubledown would add a boxing match for charity at
’s Hammerstein Ballroom, where traders from Goldman Sachs Group Inc. and Bear Stearns Cos. slugged it out before guests dressed in Armani tuxedos and Brioni suits. As Lane gazed at the pugilists, ring-card girls and roaring crowd, he settled on an apt name for the decade, “the Zeroes.” New York
“Wall Street’s breathless pursuit of zeroes, that easy money mentality, had permeated every aspect of our culture,”
Lane writes. “In my role as Wall Street’s scorekeeper, I too had fallen prey to the mind warp.”
As that last comment suggests, Lane presents himself as the dazed victim of “the kind of greedfest that comes along only once every thousand years.” Yet he also fed the bonfire, as Doubledown added more magazines extolling indulgence and finance, including Dealmaker, Private Air and the Cigar Report.
Lane faults and excuses himself by turns. On one occasion, he allows John Travolta to nix more than 100 photos taken for a cover shot of Private Air. On another, he asks his lifestyle editor to avoid criticizing advertisers’ products.
“I knew this was a long way away from my days at Forbes, but I also knew that the other option was bankruptcy.”
His ultimate self-pardon: He grew up in a suburban house abutting the Rockefeller estate in
New York’s . “My middle-class nose had been pressed up firmly to the glass of American wealth and power from birth.” Westchester County
Keeping up with the moneyed class proves a dicey business for Lane, whose quest to keep Doubledown afloat draws him into a circle of characters that could have come straight out of a potboiler. Trader Monthly’s first big advertiser was Refco Inc.
Chief Executive Phillip Bennett, who was later sentenced to 16 years in prison for cheating investors out of $2.4 billion.
Pop artist Peter Max turns up to paint portraits of hedge- fund heavies including John Paulson. Baseball star-turned- stock-picker Lenny Dykstra arrives with a business plan and multiple laptops. A source called the Candyman -- Lane’s Deep Throat on what hedgies are earning -- expects to be treated to a “proper” night out, at a strip club where the bill runs to almost $10,000.
The gossipy narrative proceeds apace with the lacquered language favored by magazine writers. Characters don’t just eat and drink, they “tuck into”
sole and “throw back” Dover
Chopin vodka. Yet Lane can be vivid, as when he describes short seller James Chanos, “his lips pursed as if he were passing an oddly shaped kidney stone.”
It’s hard to feel sorry for Lane, even when the meltdown forces Doubledown to file for Chapter 7 liquidation in February 2009. Yet he’s right to note that Wall Street hasn’t changed its ways just because his magazines are no longer around to glorify the excesses. For those who still wonder what got into Americans during the decade of housing helium, this beach read of a book is a fine place to start.
“The Zeroes: My Misadventures in the Decade Wall Street Went Insane” is from Portfolio (359 pages, $27.95).