Morning Greek
Greek Factor: -2
We are sorry to be the bearer, but this morning's stock market news wire offered nothing but the bad sort. First and foremost, Consumer Confidence sank well below expectations and is 15 points down from this past May. This drove trading into the ground after the 10:00 AM report release, but stocks have since recovered. This stock market news report also covers all the day's corporate news drivers, the Home Price Index, Investor Confidence Report, international wire, weekly same-store sales data and DC doings.
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Stock Market News
We highlighted the importance of the two consumer confidence metrics in our weekly copy published yesterday. We're sorry say the first of the two critical barometers of consumer well-being gave the signal to jump ship today. The Dow has since recovered from its 10:00 AM cue, but we suggest the consumer confidence metric will only garner increasing attention as the day progresses. Home prices are not offering what we would view as good news either, and investor confidence is in the tank as well, based on State Street's report. Thus, the stock market news wire is a bloody one today.
Consumer Confidence
Greek Factor: -2The Conference Board reported on a deep loss in Consumer Confidence at 10:00 AM ET Tuesday. This September measurement of consumer mood fell well lower than economists' expectations, dropping to 48.5, from 53.5 at last check. Economists expected a mark of 52.0, so this is all-inclusive terrible news (absolute and relative). Worst of all, confidence is down about 15 points since May. Given the importance of the consumer mood on the US economy, this factor is overwhelmingly the most important data point of the day Tuesday and should drive stocks down into the close.
Home Prices
Greek Factor: -1Redundant as it may be, the S&P Case Shiller Home Price Index was reported this morning for the month of
July (and yes we are entering October). Both the 10-City and 20-City Composites showed moderating paces of growth on a year-to-year basis. Growth moderated to 4.1% and 3.2% for the 10 and 20-city measures, respectively. 16 MSAs posted year-over-year increases in price, which (reminding you) was not very hard to accomplish. On a month-over-month basis, sales also moderated on average to 0.8% and 0.6% for the 10-City and 20-City Composites, respectively. 12 of the 20 measured cities posted growth, which means that 8 posted declines in home prices in July.
"A normalized market that includes the absence of government stimuli might also reflect the fact that about 20% of Americans are not earning satisfactory income to spur spending, and banks are not lending to them nor anybody else very easily."
While the economists behind this data hedged by calling for a flattening of home prices, we remind how process works. Just like most economists or people who would like to protect their jobs or reputation, Blitzer and Shiller
seem to be simply reflecting the
current situation in their analysis (and by current, I mean three months late, based on this data). We suggest investors remember that the laws of momentum typically call for a slowing before a stop and then reversal. A normalized market that includes the absence of government stimuli might also reflect the fact that about 20% of Americans are not earning satisfactory income to spur spending, and banks are not lending to them nor anybody else very easily.
Investor Confidence
Greek Factor: -1State Street (NYSE: STT) reported on Investor Confidence at 10:00 AM. Investor Confidence fell further in September, to 88.0, from 92.1 in August and 96.5 in July. The news was even worse than the headline indicates, with North American confidence dropping 7.3 points.
ICSC Weekly Sales
Greek Factor: 0The International Council of Shopping Centers (ICSC) was first to the wire on Tuesday with its regular Weekly Same-Store Sales Report. Sales recovered off a Labor Day impacted comparison from the week before, where sales fell 1.4% week-to-week. We expect future weeks to offer less noisy data, and this week's report covering the period ended September 25 showed a 0.4% weekly gain. Sales were 3.6% higher against the prior year comparable, but look to coming weeks for clearer comps. That said, we may have forgotten some factor from the prior year period here that perhaps weighed on sales in September 2009 (last week also showed 3.3% growth). Redbook showed sales increased 2.5% year-over-year in the latest weekly period.
DC Doings
Greek Factor: -1In DC, the Senate Budget Committee will examine the outlook for the economy and fiscal policy. This should make for an interesting political scuffle, as Republicans forget their sins of the past and point to Democrats as culprits behind recent deficits. There's a tough political debate in progress now, a fundamental struggle between fiscal prudence posturing and economic stimuli storm trooping. Meanwhile, the Senate Judiciary Committee examines ways to restore anti-fraud and anti-corruption laws post the Supreme Court decision regarding Enron's Jeffrey Skilling.
International Markets
Greek Factor: -1Dollar/Euro: The British Pound slid Tuesday on a Bank of England (BOE) official's statement pointing to his backing of more asset purchases. The euro rose against the dollar on the news, to its highest level since April. The euro is also still benefiting from rising Federal Reserve concern about the US economy and plans for further stimulus in the US.
Ireland: The Irish government is coming under increased pressure heading into the coming year, as it will likely implement further cuts in its December 7 budget. The Irish are currently awaiting the Central Bank of Ireland's most recent estimate of the cost of restructuring nationalized Anglo Irish Bank Corp. (NYSE: AIB).
North Korean leaders met in a rare gathering that provided some insight into Kim Jung-il's succession plan. He appointed his youngest son to the position of General.
Corporate Drivers
Greek Factor: +1Coca-Cola (NYSE: KO) announced plans to invest $1 billion in the Philippines over a five year span. KO shares are relatively unchanged on the news.
Wal-Mart (NYSE: WMT) proposed the $4.6 billion purchase of South African wholesaler Massmart Holdings, but an important labor group stands opposed to the deal. WMT shares are down fractionally on the potential deal.
Southwest Airlines (NYSE: LUV) announced a deal to acquire
AirTran Holdings (NYSE: AAI) for $1.4 billion. Both stocks are trading up fractionally on the news.
Walgreen's (NYSE: WAG) shares are up nearly 9% on its stronger than expected fiscal quarter numbers.
Endo Pharmaceuticals (Nasdaq: ENDP) announced a deal to acquire Quality Pharmaceuticals from Apax Partners for $1.2 billion. Its shares are up +9% on the news.
The corporate news wire covers Hewlett-Packard's (NYSE: HPQ) analyst meeting. Barnes & Noble (NYSE: BKS) shareholders meet to vote on whether to give power to a group of directors headed by investor Ron Burkle. Look for EPS reports from Avatech Solutions (Nasdaq: AVSO), Cubic Energy (AMEX: QBC), Landec Corp. (Nasdaq: LNDC), Media Sciences International (Nasdaq: MSII), Misonix (Nasdaq: MSON), ModusLink Global Solutions (Nasdaq: MLNK), Napco Security Systems (Nasdaq: NSSC), Pro-Dex Inc. (Nasdaq: PDEX), Radiant Logistics (Nasdaq: RLGT), Sealy (NYSE: ZZ), SMSC (Nasdaq: SMSC), Sutor Tech Group (Nasdaq: SUTR) and Walgreen (NYSE: WAG).
JMP Securities LLC Healthcare Focus Conference will feature presentations by Atricure (Nasdaq: ATRC), Celgene (Nasdaq: CELG), Halozyme (Nasdaq: HALO), and Pharmerica (NYSE: PMC), Acadia (Nasdaq: ACAD), Rural/Metro (Nasdaq: RURL), Stereotaxis (Nasdaq: STXS), Vivus (Nasdaq: VVUS), Sangamo BioSciences (Nasdaq: SGMO), MannKind (Nasdaq: MNKD), Pharmasset (Nasdaq: VRUS), Orexigen Therapeutics (Nasdaq: OREX), Accuray (Nasdaq: ARAY), Delcath Systems (Nasdaq: DCTH), Myriad Genetics (Nasdaq: MYGN), Biodel (Nasdaq: BIOD), Uroplasty (Nasdaq: UPI), Inverness Medical (NYSE: ALR), Cardiovascular Systems (Nasdaq: CSII), Keryx Biopharmaceuticals (Nasdaq: KERX), NeurogeseX (Nasdaq: NGSX), Salix (Nasdaq: SLXP), Cyberonix (Nasdaq: CYBX), Inhibitex (Nasdaq: INHX), Cadence Pharma (Nasdaq: CADX), Celsion (Nasdaq: CLSN), Chemed (NYSE: CHE), Intermune (Nasdaq: ITMN), Amedisys (Nasdaq: AMED), OraSure (Nasdaq: OSUR), Senesco (AMEX: SNT), Bionovo (OTC: BNVID).
The Bank of America Merrill Lynch Power & Gas Leaders Conference brings presentations by American Water Works (NYSE: AWK) and Xcel (NYSE: XEL), Dominion Resources (NYSE: D), Duke Energy (NYSE: DUK), Ameren (NYSE: AEE), Consolidated Edison (NYSE: ED), Wisconsin Energy (NYSE: WEC), PG&E (NYSE: PCG), PPL (NYSE: PPL).
The Bank of America (NYSE: BAC) Merrill Lynch Banking & Insurance Conference brings presentation by the Royal Bank of Scotland (NYSE: RBS), Apartment Investment Management (NYSE: AIV), Digital Realty Trust (NYSE: DLR), Home Properties (NYSE: HME), ProLogis (NYSE: PLD).
The Telsey Advisory Group Consumer Conference brings presentations by International Game Technology (NYSE: IGT) and Jos A. Bank Clothiers (Nasdaq: JOSB), Penn National Gaming (Nasdaq: PENN), Wendy's/Arby's (NYSE: WEN), Blue Nile (Nasdaq: NILE), Gymboree (Nasdaq: GYMB), The Children's Place (Nasdaq: PLCE).
The Davidson & Co. Engineering & Construction Conference brings KBR (NYSE: KBR), Fluor (NYSE: FLR), Michael Baker (AMEX: BKR), Mueller Water Products (NYSE: MWA), Hill International (NYSE: HIL), McDermott International (NYSE: MDR), EMCOR (NYSE: EME), Jacob's Engineering (NYSE: JEC), Dycom (NYSE: DY), Granite Construction (NYSE: GVA), Willbros (NYSE: WG), Mastec (NYSE: MTZ), Chicago Bridge & Iron (NYSE: CBI), Orion Marine (NYSE: ORN), Primoris (Nasdaq: PRIM) to the table.
Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.
The day's premarket buzz is born of yesterday's driver, QE2, and inaction this morning by the BOE and ECB. As the European banks often take their time in acting, this allows the Fed to get the desired result, or one of them, in a weakening dollar this month. The dollar has already weakened ahead of the QE2 policy statement, but it might have gained today if the ECB or BOE countered US Fed action. Thus, the increase in jobless claims is somewhat muted this morning, since we would look ahead to job gains and not expect them yet (or the Fed would). I'll have more to say about the impact of QE2 in the near future.
