Tuesday, April 17, 2007

Morning Market Comment

Economic data is giving the markets a boost this morning. Stock futures moved out of the red after the 8:30 releases. The main focal point is the Core CPI which rose by just .1% in March, vs the .2% gain as weakening housing price gains and a drop in apparel prices kept the core under control. Still, overall CPI was up by a larger than expected .6 percent as energy costs continue to surge. Housing starts, permits rise 0.8% in March which was a bit above expectations for both. At 9:15: Industrial output falls 0.2% on lower utility usage.

So with no nasty March surprises so far, there's a sense of relief and it looks like the punch bowl comes out in limited form this morning once again. This is expiration week and the bias is clearly to the call option side on the OEX. Above 670 is a good place for the bulls and could spark buy programs on Friday.

The ebb and flow of earnings season continues and is having a positive impact (see last night's notes for other companies that announced after the bell).

  • Wells Fargo (WFC) posted earnings a penny better than expected at 66 cents a share.
  • US Bancorp (USB) with a 2c miss.
  • Johnson and Johnson (JNJ) came through with $1.16 vs expectations for $1.04 and beat on top line by $500 mln. Didn't Cramer recently pan JNJ earnings potential? Yikes.
  • EMC was inline.
  • Northern Trust (NTRS) beat by 5c with earnings at 79c
  • TD AmeriTrade (AMTD) came up short: earnings of 23 vs 24c consensus. Top line miss of more than $10 mln and guidance as low as 92c of FY07 vs ests of 1.09. OUCH.
  • Dow Jones (DJ) posted 24c EPS vs estimates of 19 and sees 07 EPS growth of as much as 40%.
  • California based East West Bancorp (EWBC) beat by 8c and said it expects to book NO provisions for loan losses in 2007. Wow.

A few quick analyst comments of note:

  • Lehman downgrades semiconductor capital equipment to neutral. This includes names like EGLS which was downgraded to Underweight. NVLS, TER and CSCO which cut to Equal Weight.
  • Analysts continue to defend Apple: Added to Focus List at AMTR with a $145 target.

Maybe it should be - Leave It To The "BAD" Hands People? $2.8 Million Verdict Against Allstate (ALL).

Microsoft learned long ago, if you can't beat 'em in the market place either buy 'em or sue 'em. Mr. Softee and AT&T are going after Google and its DoubleClick designs

In the Forex, inflation data in the UK has sparked quite a reax as well: British pound breaks through $2 after inflation readings.

Gold in check at $695. 10 yr treasury up 6/32nds yield at 4.71. Crude oil back above $64.

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