Archive for April 22nd, 2008
Posted by: in Housing
Filed under: Earnings reports, Economic data, Oil, DJIA, Housing, Recession
 The Dow was down as much as 150 points this day as oil rose, the dollar fell and corporate earnings were mixed at best. As of 1:15, the Dow is at 12,684, down 140.
Bad news for the equities markets seems to be popping up just about everywhere you look. Not even good earnings from McDonald’s (NYSE: MCD) could cut through the gathering economic gloom, and Mickey D’s is down on lower same store sales despite the good earnings news.
Oil flirted with a record $120 a barrel, while gold was up $6 to $924. Banks are still looking deeply troubled as the housing market bubble keeps deflating. And the dollar fell through the $160 mark against the euro for the first time ever.
It may be that the reality of a recession is starting to sink in among traders. Of course, there are plenty of bears out there who are saying ‘I told you so’. Rising oil prices and the falling dollar are two sides of the same coin: a declining American economy. While traders have not given in completely, they are nervous. “We’re in a day-to-day assessment of how good earnings season is, and right now there’s more bad news than good news — the parade has been less positive than we’ve anticipated.” So stated Art Hogan, chief market analyst at Jefferies & Co. The implication is that we haven’t seen anything yet. A few more weak earnings reports, and there’s no telling how far this market could drop.
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Posted by: in Housing
Filed under: International markets, Bad news, Housing
Royal Bank of Scotland stated it will sell 12 billion pounds or $23.9 billion worth of new shares to boost capital, Bloomberg News reported Tuesday.
RBS (NYSE: RBS) has suffered from capital depletion following loan and related credit mark-downs, and as a result of its $114 billion purchase with Banco Santander (NYSE: SAN) and Fortis of ABN Amro.
Shares of RBS fell 30 cents to $7.19 on the news in Tuesday morning trading. Shares have declined more than 45% since October 2007.
RBS stated it expects a massive increase in the expected losses it faces on its portfolio of poorly performing loans and assets, including U.S. subprime mortgages and leveraged loans to private equity deals, The Financial Times reported Tuesday. The bank said these additional writedowns would reach about $11.8 billion — three times the losses the bank has already recorded.
Worst not behind banks?
C. Leonard Bauer, independent stock analyst, told BloggingStocks Tuesday RBS’s re-capitalization decision will renew concerns that the worst of the mortgage and related asset-backed default issue might not be behind the major banks. “For about a week the market was riding a wave of decent karma after Citigroup’s latest writedown wasn’t as bad as expected. It provided investors with the hope that the second wave of writedowns wouldn’t be as large as the first,” Bauer stated. “Now, I’m not so sure.” Bauer added that he does not have a rating on RBS, nor own any of the bank’s shares.
Bauer added that because many had previously believed RBS had enough capital, the bank’s announcement will probably raise concerns of additional mark-downs in the U.K.’s banking sector. RBS is Britain’s second largest bank.
“The RBS news is like a shot to the body. It’s a shareholder hit, U.K. regional economy hit, and a hit to the global economy,” Bauer stated. “In terms of the mortgage writedown issue we’re not where we were in January [2008], but RBS’s announcement does raise additional questions about banking sector health heading into the third quarter.”
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Posted by: in Housing
Filed under: Earnings reports, Economic data, Oil, DJIA, Housing, Recession
The Dow was down as much as 150 points this day as oil rose, the dollar fell and corporate earnings were blended at best. As of 1:15, the Dow is at 12,684, down 140.
Bad news for the equities markets seems to be popping up just about everywhere you look. Not even good earnings from McDonald’s (NYSE: MCD) could cut through the gathering economic gloom, and Mickey D’s is down on lower same store sales despite the good earnings news.
Oil flirted with a record $120 a barrel, while gold was up $6 to $924. Banks are still looking deeply troubled as the housing market bubble keeps deflating. And the dollar fell through the $160 mark against the euro for the first time ever.
It might be that the reality of a recession is starting to sink in among traders. Of course, there are plenty of bears out there who are saying ‘I told you so’. Rising oil prices and the falling dollar are two sides of the same coin: a declining American economy. While traders haven’t given in absolutely, they are nervous. “We’re in a day-to-day assessment of how good earnings season is, and right now there’s more bad news than good news — the parade has been less positive than we’ve anticipated.” So said Art Hogan, chief market analyst at Jefferies & Co. The implication is that we haven’t seen anything yet. A few more weak earnings reports, and there’s no telling how far this market could drop.
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Posted by: in Housing
Filed under: Bad news, Economic data, Housing, Recession
 Sales of existing homes fell slightly in March 2008, the National Association of Realtors announced Tuesday, as resales continued to lag amid the nation’s worst housing slump in more than 15 years. It was the fourth existing home sales decline in the last five months.
Sales advanced at a 4.93-million-unit annualized pace in March 2008, the NAR said. Economists surveyed by Bloomberg News had expected March 2008 existing home sales to register a 4.95-million-unit annualized rate. The February 2008 existing homes sales statistic was revised to a 5.03-million-unit annualized pace.
Regionally, March 2008 existing home sales fell 6.5% in the Midwest, 3.5% in the South, and 2.2% in the West. Sales roses 2.2% in the Northeast.
Meanwhile, the U.S. median home price plummeted 7.7% to $200,700 on a year-over-year basis. The median price was $217,400 a year ago.
Equally significant, home inventories rose 1.0% to 4.06 million units, a 9.9-month supply at the current sales pace. A typical, healthy housing market has an inventory of 3-4 months.
The existing home sales statistic is considered a lead economic indicator because the metric tracks actual signings for the month reported, in this case, March 2008.
Economic Analysis: A poor March 2008 existing home sales statistic. Existing home sales remain weak, indicative of an economy in recession and a housing market where potential buyers expect future price declines, and hence postpone home purchase decisions. Further, if sluggish home sales persist, that will make it very hard for the U.S. economy to resume an sufficient growth rate in Q3 2008.
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Posted by: in Housing
Filed under: International markets, Bad news, Housing
Royal Bank of Scotland stated it will sell 12 billion pounds or $23.9 billion worth of new shares to boost capital, Bloomberg News reported Tuesday.
RBS (NYSE: RBS) has suffered from capital depletion following loan and related credit mark-downs, and as a result of its $114 billion buy with Banco Santander (NYSE: SAN) and Fortis of ABN Amro.
Shares of RBS fell 30 cents to $7.19 on the news in Tuesday morning trading. Shares have declined more than 45% since October 2007.
RBS said it expects a huge increase in the expected losses it faces on its portfolio of poorly performing loans and assets, including U.S. subprime mortgages and leveraged loans to private equity deals, The Financial Times reported Tuesday. The bank said these additional writedowns would reach about $11.8 billion — three times the losses the bank has already recorded.
Worst not behind banks?
C. Leonard Bauer, independent stock analyst, told BloggingStocks Tuesday RBS’s re-capitalization decision will renew concerns that the worst of the mortgage and related asset-backed default issue might not be behind the major banks. “For about a week the market was riding a wave of decent karma after Citigroup’s latest writedown wasn’t as bad as expected. It provided investors with the hope that the second wave of writedowns would not be as big as the first,” Bauer stated. “Now, I’m not so sure.” Bauer added that he does not have a rating on RBS, nor own any of the bank’s shares.
Bauer added that because many had previously believed RBS had enough capital, the bank’s announcement will probably raise concerns of additional mark-downs in the U.K.’s banking sector. RBS is Britain’s second largest bank.
“The RBS news is like a shot to the body. It’s a shareholder hit, U.K. regional economy hit, and a hit to the global economy,” Bauer said. “In terms of the mortgage writedown issue we’re not where we were in January [2008], but RBS’s announcement does raise additional questions about banking sector health heading into the third quarter.”
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Posted by: in Housing
Filed under: Before the bell, Earnings reports, Microsoft (MSFT), Yahoo! (YHOO), McDonald’s (MCD), AT and T (T), duPont(E.I.)deNemours (DD), Texas Instruments (TXN), Economic data, Housing
 Stock futures were mostly lower Tuesday morning after Texas Instruments gave a disappointing outlook and as investors awaited earnings from McDonald’s, AT&T and other large caps as well as housing data.
U.S. stocks ended mixed Monday as oil prices hit new record highs and Bank of America reported a 77% profit decline. The Dow industrials losing 24 points, or 0.19%, and the S&P 500 down 2 points, or 0.16% while the the tech-heavy Nasdaq Composite rose 5 points, or 0.21%.
This morning investors will focus on March existing home sales reading. Economists forecast the pace of sales again fell in March despite showing a rise in February. That rise could have been attributed to the largest housing price drop and no one called a bottom to the housing crisis back then. The March data will show if indeed that was the beginning of a trend, but most likely it will show continued decline in the housing market.
With Texas Instruments’ bleak outlook, much of today’s trading will be swayed by the housing data, the outcome of earnings from the massive companies as well as oil prices, which have already set a new record Tuesday of over $118 a barrel. Meanwhile retail gas prices reached over $3.50 a gallon.
Texas Instruments (NYSE: TXN) has reported a 28% rise in first-quarter profit after the close Monday. However, as has become increasingly more common, the chipmaker’s outlook disappointed Wall Street. TXN shares were down almost 2% in premarket trading.
Already this morning, DuPont (NYSE: DD), a Dow component, posted a better-than-expected earnings of $1.19 billion, or $1.31 a share, a 26% increase over the same period last year. Revenue was up 7% to $8.77 billion. Analysts were expecting Dupont to earn $1.28 a share. Not only that, but DuPont mostly reaffirmed its full-year profit guidance.
Two more Dow components, AT&T (NYSE: T) and McDonald’s (NYSE: MCD) are scheduled to report earnings before the opening bell, while the giant portal company Yahoo (NASDAQ: YHOO) is due to report after the close. With Yahoo! having to give an answer to Microsoft (NASDAQ: MSFT) shortly, many see these upcoming earnings report as crucial to the company’s future.
Other than earnings news, Royal Bank of Scotland (NYSE: RBS) said Tuesday it is forced to raise $23.9 billion in new capital to cover its additional losses of $11.7 billion tied to mortgages. Seems banks aren’t out of the woods yet.
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Posted by: in Housing
Filed under: Bad news, Economic data, Housing, Recession
Sales of existing homes fell slightly in March 2008, the National Association of Realtors announced Tuesday, as resales continued to lag amid the nation’s worst housing slump in more than 15 years. It was the fourth existing home sales decline in the last five months.
Sales advanced at a 4.93-million-unit annualized pace in March 2008, the NAR stated. Economists surveyed by Bloomberg News had expected March 2008 existing home sales to register a 4.95-million-unit annualized rate. The February 2008 existing homes sales statistic was revised to a 5.03-million-unit annualized pace.
Regionally, March 2008 existing home sales fell 6.5% in the Midwest, 3.5% in the South, and 2.2% in the West. Sales roses 2.2% in the Northeast.
Meanwhile, the U.S. median home price plummeted 7.7% to $200,700 on a year-over-year basis. The median price was $217,400 a year ago.
Equally significant, home inventories rose 1.0% to 4.06 million units, a 9.9-month supply at the current sales pace. A typical, healthy housing market has an inventory of 3-4 months.
The existing home sales statistic is considered a lead economic indicator because the metric tracks actual signings for the month reported, in this case, March 2008.
Economic Analysis: A poor March 2008 existing home sales statistic. Existing home sales remain weak, indicative of an economy in recession and a housing market where potential buyers expect future price declines, and hence postpone home purchase decisions. Further, if sluggish home sales persist, that will make it very hard for the U.S. economy to resume an sufficient growth rate in Q3 2008.
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Posted by: in Housing
Filed under: Before the bell, Earnings reports, Microsoft (MSFT), Yahoo! (YHOO), McDonald’s (MCD), AT and T (T), duPont(E.I.)deNemours (DD), Texas Instruments (TXN), Economic data, Housing
Stock futures were mostly lower Tuesday morning after Texas Instruments gave a disappointing outlook and as investors awaited earnings from McDonald’s, AT&T and other big caps as well as housing data.
U.S. stocks ended blended Monday as oil prices hit new record highs and Bank of America reported a 77% profit decline. The Dow industrials losing 24 points, or 0.19%, and the S&P 500 down 2 points, or 0.16% while the the tech-heavy Nasdaq Composite rose 5 points, or 0.21%.
This morning investors will focus on March existing home sales reading. Economists forecast the pace of sales again fell in March despite showing a rise in February. That rise could have been attributed to the largest housing price drop and no one called a bottom to the housing crisis back then. The March data will show if indeed that was the beginning of a trend, but most likely it will show continued decline in the housing market.
With Texas Instruments’ bleak outlook, much of today’s trading will be swayed by the housing data, the outcome of earnings from the big companies as well as oil prices, which have already set a new record Tuesday of over $118 a barrel. Meanwhile retail gas prices reached over $3.50 a gallon.
Texas Instruments (NYSE: TXN) has reported a 28% rise in first-quarter profit after the close Monday. However, as has become increasingly more common, the chipmaker’s outlook disappointed Wall Street. TXN shares were down nearly 2% in premarket trading.
Already this morning, DuPont (NYSE: DD), a Dow component, posted a better-than-expected earnings of $1.19 billion, or $1.31 a share, a 26% increase over the same period last year. Revenue was up 7% to $8.77 billion. Analysts were anticipating Dupont to earn $1.28 a share. Not only that, but DuPont mostly reaffirmed its full-year profit guidance.
Two more Dow components, AT&T (NYSE: T) and McDonald’s (NYSE: MCD) are scheduled to report earnings before the opening bell, while the giant portal company Yahoo (NASDAQ: YHOO) is due to report after the close. With Yahoo! having to give an answer to Microsoft (NASDAQ: MSFT) shortly, many see these upcoming earnings report as crucial to the company’s future.
Other than earnings news, Royal Bank of Scotland (NYSE: RBS) said Tuesday it is forced to raise $23.9 billion in new capital to cover its additional losses of $11.7 billion tied to mortgages. Seems banks aren’t out of the woods yet.
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Posted by: in Housing
Filed under: Earnings reports, Bad news, Citigroup Inc. (C), Bank of America (BAC), Economic data, Housing
Royal Bank of Scotland (NYSE: RBS) made an anticipated announcement that it would raise $12 billion because of losses. According to Reuters, the money is “to cover a potential 5.9 billion pound writedown on the value of toxic assets and help rebuild a stretched balance sheet.”
The fact that one of Europe’s largest money center banks has to raise so much capital is probably not a good sign for massive U.S. banks like Citigroup (NYSE:.C) and Bank of America (NYSE:.BAC). The asset mix at RBS is likely not terribly different from most other huge financial institutions.
There have been concerns that if the housing market continues to fall and credit problems move to consumer debt and automobile loans that the writeoffs at banks could spike up again. Those who hoped that the worst was behind U.S. banks might well be wrong.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Earnings reports, Products and services, Marketing and advertising, AT and T (T)
 AT&T Inc. (NYSE: T) today posted strong first quarter results thanks to the continuing popularity of the iPhone and its capability to squeeze more savings from the BellSouth merger.
Net income rose to $3.46 billion, or 57 cents a share, from $2.85 billion, or 45 cents. Sales climbed 6% to $30.7 billion. On an adjusted basis, profit was 74 cents. The results matched the estimates of analysts surveyed by Thomson Financial, which in this market is good news. Shares of the telecommunications company were trading up in early morning market action.
“Revenue growth continues to ramp, we have good momentum across key growth areas, major cost initiatives are on track, and our operational results reinforce the confidence we have in our outlook,” said Chief Executive Randall Stephenson in the earnings release.
Among the highlights:
- Total wireless revenue increased 18.3% year-over-year to $11.8 billion. Wireless service revenue, which excludes handset and accessory sales, grew 17.1% to $10.6 billion. Growth was driven by strong subscriber gains and continued improvement in ARPU (average monthly revenues per subscriber).
- Wireless data revenues grew 57.3% to $2.3 billion, reflecting surging demand for World wide web access, e-mail, messaging, data access and media bundles.
- The first quarter net gain in wireless subscribers totaled 1.3 million. AT&T ended the quarter with 71.4 million subscribers.
- AT&T’s broadband revenue grew 13.2% in the first quarter to $1.4 billion.
- Total video connections, which include AT&T U-verse service and bundled satellite television service, increased by 264,000 to 2.6 million.
The mean price target of Wall Street analysts is $44.39, well above where it currently trades. Perhaps investors are anticipating the next earnings report to show signs of a slowdown.
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