Tag Archives: Markets coverage
by Liz Hester
Remember when the market was peaking? Well, it seems that all that optimism on corporate performance was misplaced. Several companies have reported earnings that missed analysts estimates, prompting investors to pair back exposure to stocks.
Let’s start with the Wall Street Journal’s coverage of the market:
Technology and consumer stocks led the market’s decline following a basket of lackluster earnings reports.
The Dow Jones Industrial Average fell 63 points, or 0.4%, to 14559, in late trading Thursday. The Standard & Poor’s 500-stock index slid nine points, or 0.6%, to 1543, on pace for its lowest level since early March. The Nasdaq Composite Index sank 40 points, or 1.3%, to 3164.
Stocks have seen big swings this week, alternating between gains and losses, starting with Monday’s 266-point decline, the Dow’s biggest of the year. Tuesday’s rebound was nearly washed away by Wednesday’s 138-point drop for the blue chips.
Quarterly earnings reports from a host of major corporations set the tone of trading.
Through Thursday morning, first-quarter earnings growth for 82 of the S&P 500′s companies had declined 0.4%, according to FactSet, on pace to mark the second year-over-year decline in earnings in the past three quarters. Meanwhile, corporate revenue is expected to rise 3.2% in the first quarter, well below growth of 6% in the first quarter last year, according to S&P Capital IQ.
“The revenue side of the equation looks challenged on the whole,” said Bill Stone, chief investment strategist at PNC Asset Management Group. “That’s a testament, unfortunately, to a global economy that continues to struggle.”
Reuters decided that the declines were due to “weak economic data” and said it was the third day of losses:
Stocks fell on Thursday for the third day this week after data showed signs of slower growth ahead for the U.S. economy, while bearish technical signals added to doubts about the market’s strength.
Bloomberg led with earnings, but included the Philadelphia region manufacturing numbers, then returned with context about the quality of earnings this season.
Stocks kept losses after a measure of manufacturing in the Philadelphia region expanded at a slower pace and the index of U.S. leading indicators unexpectedly declined for the first time in seven months. The S&P 500 fell below its 50-day moving average for the first time this year. That level, currently at around 1543, is watched by some analysts to gauge the trend of the market.
Almost 30 companies in the S&P 500 were scheduled to post results today. Of the 82 that have reported since the season began, 74 percent have beaten analysts’ estimates for profit and 49 percent have exceeded sales forecasts, according to data compiled by Bloomberg. Analysts project first-quarter results dropped 1.4 percent, the first contraction since 2009.
The Chicago Board Options Exchange Volatility Index (VOL), or VIX, increased 4.9 percent to 17.31. The gauge briefly erased losses for the year after climbing as much as 10 percent. The VIX, which moves in the opposite direction to the S&P 500 about 80 percent of the time, reached a six-year low in March and has since risen 53 percent.
“When we were heading into this earnings season, the estimates had come down, but the S&P itself was still in a situation where sentiment was high and correcting,” Sam Turner, a fund manager with Richmond, Virginia-based Riverfront Investment Group LLC, said in the phone interview. His firm manages $3.7 billion. “That can play itself out with a consolidation.”
And for the international perspective, let’s look at the Financial Times, which said investors were worried about global growth prospects:
Equity and commodity markets in the US and Europe had a choppy time as investors struggled to shake off lingering concerns about the prospects for global economic growth.
Gold also experienced a fresh bout of volatility but managed to keep intact its recovery from a two-year low struck earlier this week. The yellow metal was up 0.8 per cent to $1,387 an ounce, although silver edged back slightly.
The latest economic reports out of the US did little to quell worries that a slowdown could be under way.
The Philadelphia Federal Reserve’s April survey of manufacturing activity weakened slightly while the index of leading indicators for March also fell. Meanwhile, initial jobless claims edged up slightly last week – the survey period for the Bureau of Labour Statistics’ April non-farm payrolls report.
“The spring and summer dips in economic activity that dominated 2011 and 2012 look to be repeating this year again,” said Steven Ricchiuto, chief economist at Mizuho Securities USA.
The data kept alive the sense of uncertainty in the markets prompted earlier in the week by unexpectedly weak Chinese GDP figures, some worrying numbers from Germany and the International Monetary Fund’s downgrade to its 2013 global growth forecasts. Indeed, Andrew Kenningham at Capital Economics argued that the IMF’s projections – while far from bullish – still looked too optimistic.
Either way, seems some of that investor optimism is heading out the door and money is being pulled out of the markets. No matter what you blame it on, it seems the stock market party might be over.
by Chris Roush
Dan Solin writes for The Huffington Post that CNBC “Mad Money” host Jim Cramer‘s talk at the recent Society of American Business Editors and Writers’ conference in New York was full of misstatements, including when he said he was among the “best of the best.”
Solin writes, “If Cramer was really ‘the best of the best,’ he would disclose the puny odds of ‘beating the market’ by relying on his stock and funds picks and those of his colleagues. If you are relying on his advice, you are chasing rainbows. Instead, you should heed the advice of Jonathan Clements, the former personal finance columnist at The Wall Street Journal, who said: ‘It’s the big lie that, repeated often enough, is eventually accepted as truth. You can beat the market. Trounce the averages. Outpace the index. Beat the street. An entire industry strokes this fantasy.’
“It’s your choice. You can follow the bloviating hype of Cramer or the sound research of William F. Sharpe and many others. Which do you think is really ‘the best of the best’?”
Read more here.
by Chris Roush
Drawing from the Journal’s global pool of reporting, MoneyBeat explains, critiques and analyzes trends and news stories in finance, markets and deal-making.
The new blog brings together six of the Journal’s most widely read blogs, including MarketBeat, The Source, Overheard and all the Deal Journals across the globe, into a single, integrated hub of news and analysis.
The blog’s tone, content and writing style is designed to complement the Journal’s outstanding financial coverage by delving deeper into the world of markets and finance and bringing out the personalities behind the news, from deal-makers to hedge fund giants and private-equity titans.
“MoneyBeat is a one-stop shop for everybody interested in finance and markets, no matter where they are around the world,” said Gerard Baker, managing editor of The Journal, in a statement. “With its vast network of journalists and editors, the Journal is uniquely positioned to deliver lively, round-the-clock news and analysis from the U.S., Asia and Europe. MoneyBeat is an indispensable companion for anybody who cares about markets and finance.”
MoneyBeat is overseen by former Deal Journal and MarketBeat editor Stephen Grocer.
by Liz Hester
This week could be a big one for the markets given all the expected news. Could all that mean it’s the end run for stocks?
Here’s the story from the Wall Street Journal:
With U.S. companies set to begin reporting first-quarter results on Monday, big investors are shaking off lukewarm profit forecasts and gloomy economic data and betting that central-bank action will help keep stocks rolling.
A handful of corporate and government reports this week could shed light on whether such optimism is justified.
Aluminum giant Alcoa Inc. is scheduled to kick off U.S. earnings season Monday afternoon, followed by retailer Bed Bath & Beyond Inc. on Wednesday and two of the nation’s biggest lenders, J.P. Morgan Chase & Co. and Wells Fargo Co., on Friday.
Later this week, the Federal Reserve will release minutes of its March policy meeting, possibly giving investors fresh insight into its plans for interest rates and its “quantitative easing” program of bond purchases. Last Friday’s jobs report, which showed slow job growth in March and an exodus of workers from the labor force, may make Fed officials especially cautious about pulling back on easy-money policies.
On Friday, the Commerce Department is scheduled to release its retail-sales report for March. Those figures may show whether consumers’ surprising resilience this year is likely to persist. Consumer spending has been relatively robust in the first two months of the year, despite a Jan. 1 increase in payroll taxes. But the disappointing March employment report could signal mounting pressure on pocketbooks—and, in turn, on retailers.
The numbers could push stocks even lower after one of the worst weeks in a while, according to Reuters:
Stocks ended their worst week this year with losses on Friday after a weaker-than-expected jobs report undermined confidence in the economy and first-quarter earnings growth.
The jobs data, which showed employers hired at the slowest pace in nine months, was the latest in a series of disappointing economic reports.
Companies begin to report quarterly earnings next week, which is likely to be another concern for investors in light of recent economic data. Analysts’ estimates for earnings growth in the first quarter have fallen since late last year, according to Thomson Reuters data.
“I think earnings season could be less than stellar again. Given market performance to date, we could see some softness in the market because we’ve generated some healthy returns already,” said Natalie Trunow, chief investment officer of equities at Calvert Investment Management, which has about $13 billion in assets.
Stocks had been rallying on the Fed’s promise to keep providing stimulus and on mostly improving U.S. economic data. The S&P 500 is up 8.9 percent since the start of the year.
The S&P 500 was down 1 percent for the week. All but three of the S&P 500′s 10 industry sectors posted declines.
I find these types of market stories and preview a much more interesting way to set the tone for the week ahead than just listing upcoming Treasury auctions and economic data in a table. But they do present a problem for journalists who essentially have to try and predict the future. They do have some clues.
Here’s the WSJ again:
Analysts surveyed by data provider FactSet predicted first-quarter profits will decline 0.6% from a year earlier among companies in the Standard & Poor’s 500-stock index. If they are right, corporate earnings will fall from the year-earlier period for the second time in three quarters.
Yet many fund managers remain optimistic that stocks will continue their record-setting run. The Dow Jones Industrial Average is up 11% for the year following Friday’s close at 14565.25. Bullish investors see signs the U.S. economy will continue a slow expansion, creating jobs, boosting incomes and bolstering corporate profits.
“The Fed’s unconditional support of asset prices has made people more confident,” said David Ellison, a portfolio manager with Hennessy Funds, which oversees around $3 billion. “But my bet is that the economy is getting better.”
U.S. companies have allowed some optimism to creep into their forecasts, but their tone remains cautious. Concerns about still-high unemployment, budget debates in the U.S. and depressed prospects in Europe have been a counterweight to an improving housing market and better prices on petroleum products.
I guess we’ll find out the answer to these questions soon enough.
by Liz Hester
I’ll bet Jon Corzine wishes he never said yes to the top job at MF Global. After a pretty good run at Goldman Sachs and as governor of New Jersey, he could have written a book, milked the speaker circuit, or simply enjoyed his millions. But no, he had to run another company, but this time, he didn’t do such a good job.
Here’s the story from the Wall Street Journal:
A risky business strategy as well as “negligent conduct” by former Chief Executive Officer Jon S. Corzine and his management team contributed to the unraveling of MF Global Holdings Ltd., a new report said Thursday.
The report, released by Louis J. Freeh, the trustee for MF Global Holdings, laid much of the blame for the company’s 2011 bankruptcy at Mr. Corzine’s feet, accusing him of implementing trading strategies with minimal oversight and exceeding board-approved limits for some European trades the company made under his stewardship.
The brokerage Mr. Corzine was trying to turn around was doomed due to “inadequate systems” and a trading strategy that had “fatally flawed” capital and liquidity assumptions, said the 174-page report, filed in U.S. Bankruptcy Court Thursday morning.
Mr. Freeh planned to bring a lawsuit alleging breaches of fiduciary duty against former MF Global executives including Mr. Corzine, but held off to join settlement talks instead, according to the report and a person familiar with Mr. Freeh’s thinking.
Mr. Freeh agreed to postpone filing any suit until a mediator in a related MF Global civil case could complete his work, the person added. Mr. Freeh and other attorneys representing customers of the firm hope that settlement talks will result in faster distributions of payments to all parties.
The New York Times coverage took a slightly different angle, focusing on the potential lawsuits and legal actions that could be brought against Corzine and his team:
The 124-page report filed in federal bankruptcy court early Thursday leveled its sharpest critique at Mr. Corzine, the former chief executive who was once the governor of New Jersey. Expanding on similar reports issued last year by Congressional investigators and another bankruptcy trustee, Mr. Freeh claimed that the C.E.O. ignored warning signs that the firm was in a precarious position even as he placed a risky bet on European debt.
While the bonds were not by themselves to blame for felling MF Global, the bet unnerved MF Global’s investors and ratings agencies. And when the firm spun out of control in October 2011, it grabbed money from its customers in a futile bid for survival. Mr. Freeh argued that the breach, still the subject of a broad law enforcement investigation, could have been prevented.
“Corzine and management knew, or should have known, that these factors were contributing to a precarious liquidity position that ultimately spelled disaster for MF Global,” Mr. Freeh wrote in the report.
A spokesman for Mr. Corzine did not immediately comment. Federal authorities have not accused him of any wrongdoing.
But as Mr. Freeh weighs his next step, a range of legal avenues are available for him to pursue. He could join an earlier lawsuit against Mr. Corzine and other executives, teaming up with the firm’s customers and the trustee overseeing the return of money to customers. Alternatively, Mr. Freeh could file his own case against Mr. Corzine.
The lawsuit, which could help Mr. Freeh recover money for MF Global’s creditors, would likely hinge on what Mr. Corzine knew about the firm’s mounting problems. Mr. Freeh’s report suggests he knew plenty.
Bloomberg added these specifics on the financial collapse of the brokerage:
The parent company of brokerage MF Global Inc. filed for bankruptcy on Oct. 31, 2011, after a wrong-way $6.3 billion trade on its own behalf on bonds of some of Europe’s most- indebted nations. The company, once run by former New Jersey Governor and Goldman Sachs Group Inc. Co-Chairman Corzine, listed assets of $41 billion and debts of $39.7 billion.
During the last week of October 2011, MF Global needed to rely on its Operations, Risk, and Treasury Department systems, which were fatally flawed, Freeh found. Corzine and other members of his management team, including Chief Operating Officer Bradley Abelow and Chief Financial Officer Henri Steenkamp knew about their deficiencies many months before, and their failure to address them contributed to the company’s demise, Freeh found.
Freeh estimates the losses to MF Global and its finance subsidiary were from $1.5 billion to $2.1 billion.
That’s a lot of potential liability. While Corzine certainly isn’t talking, there was one piece of information missing in these stories. I want to know how many CEOs of bankrupt companies have actually had to pay anything to the trustee. I’m sure there are some examples out there. What about Enron or some of the other spectacular collapses?
The problem for the trustee and anybody else thinking of suing them is that it’s going to be hard to prove who knew what and when they knew it. I certainly don’t have high hopes for a successful lawsuit.
by Chris Roush
Tim Annett, the acting chief of The Wall Street Journal‘s markets coverage, sent out the following announcement on Tuesday morning:
It’s not often that we get a chance to bring someone back for an encore. But I’m delighted to announce that Michael Driscoll will be rejoining the Markets desk starting today after a successful stint running stock-market coverage for Dow Jones Newswires.
Michael is a careful and shrewd editor, a terrific headline writer and an expert on Journal style. Since leaving the Markets desk last year, he’s steered the stock-market team at the wires through the rains of Sandy and the storm of a new all-time high in the DJIA, and helped break news on a number of fronts. His experience on the wires will be a tremendous asset to the desk as we continue to integrate the newsroom.
In his second tour with us, Michael will have a special focus on coordinating the desk’s handling of big ongoing news stories (think the Galleon case or stock-market milestones). He’ll work closely with our real-time tandem of Lora Western and Bradley Davis and the rest of our team to tie together online and print presentation of our section’s biggest projects.
Please join me in congratulating Michael and in welcoming him back to the sixth floor.
by Chris Roush
Yahoo Finance and CNBC are premiering the first two episodes of a new show called “Big Data Download” on Wednesday.
The show is hosted by CNBC’s Courtney Reagan and will regularly feature Yahoo Finance’s editor-in-chief Aaron Task, senior columnist Michael Santoli and co-host of “The Daily Ticker” Lauren Lyster.
“Big Data Download” is a daily digital program that taps into the big data revolution to deliver information to everyday investors and business decision makers. The show, which will air twice each day, will draw upon sources including Yahoo search data, social sentiment and investing algorithms created exclusively for this program from the Yahoo Labs team.
“Big Data Download” airs Monday through Friday, with original episodes at 11 a.m. and 2 p.m. ET.
The inaugural episode of “Big Data Download” examines whether the housing market is really in recovery by looking at both housing stocks and Yahoo! Search data. In the second episode, “Big Data Download” drills into gas prices. “Big Data Download” explores oil, gas, distillate inventory numbers to shed light on where prices should be and which companies will get a lift when the price goes up.
by Chris Roush
CNNMoney.com launched a portfolio option on Monday.
Powered by SigFig, Portfolio gives users a way to track their investments in one place with real-time market data.
CNNMoney Portfolio blends a sleek design and simple user interface with a wealth of financial data from hundreds of sources. The launch is part of CNNMoney’s ongoing effort to meet the demands of a growing audience for real-time utility paired with financial news.
In January, CNNMoney launched a cost of living comparison calculator and will continue to roll out new utility-based calculators in the coming months in areas such as retirement planning and investment rate of return.
The portfolio option allows users to sync and track your 401K, IRA and brokerage accounts in one place. The portfolio syncs with more than 60 brokerages.
by Chris Roush
Duncan Mavin, the Asia editor for the Heard on the Street section of the Wall Street Journal, sent out the following staff announcement:
I am delighted to announce two additions to the Heard on the Street team in Asia. Abheek Bhattacharya joins from The Wall Street Journal’s editorial page. Aaron Back is moving to the Heard team from his current post as deputy China bureau chief for Dow Jones Newswires in Beijing. Both Abheek and Aaron will be based in Hong Kong.
Abheek was previously a writer for The Journal’s editorial page in Hong Kong, playing a significant role in the section’s insightful coverage of Asian economics and politics. His smart and sometimes provocative work has covered a broad swath of topics including Indian telecoms, Indonesian banking and Chinese macroeconomics. Before joining The Journal, Abheek was based in Mumbai with Mint, where he excelled with editorials on economics and finance. A native of Mumbai, he holds a Bachelor’s degree from Yale University, where he studied intellectual history.
Aaron Back joined Dow Jones Newswires in Singapore, writing on the city state’s banks, property developers and financial markets. He transferred to the Beijing bureau, where he initially turned his keen eye for a great story to China’s burgeoning technology sector, before moving on to lead coverage of the country’s macro-economy and monetary policy. As deputy China bureau chief since 2011, his contribution has been invaluable to The Wall Street Journal/Dow Jones Newswires in China. A native of Denver, Colorado, Aaron studied Economics and East Asian Studies at Johns Hopkins University. He has also studied mandarin Chinese at universities in Taipei and Nanjing.
Please join me in wishing Abheek and Aaron success in their new roles.
Less than a year after the infamous JPMorgan Chase & Co.’s “London Whale” trading scandal that led to a $6.2 billion loss, IR Magazine gave an award to Jamie Dimon, the company’s chief executive officer, for having the best investor relations by a CEO or chairman in the large market capitalization category.
Though perhaps IR Magazine is giving Dimon the award for the way he handled investor relations following the scandal, in April 2012 Dimon described the would-be sweeping trading scandal as a small event that had been exaggerated out of proportion on JPMorgan’s first-quarter earnings conference call.
In response to a question regarding London Whale Bruno Iksil’s large position in credit-default swaps in corporate bonds, Dimon said on the call:
“It’s a complete tempest in a teapot. Every bank has a major portfolio. In those portfolios you make investments that you that you think are wise, the offset your exposures. Obviously it’s a big portfolio, we’re a large company, and we try to run it – it’s sophisticated, obviously complex things, but at the end of the day, that’s our job is to invest that portfolio wisely and intelligently over a long period of time to earn income and to offset other exposures we have.”
This misleading statement along with the lack of transparency provided to investors about trading practices raises eyebrows about IR Magazine’s decision to award Dimon the honor of having the best investor relations as a CEO.
IR Magazine’s Methodology
On its website, IR Magazine says that it conducts in-depth research to identify the best corporate investor relations teams. The magazine canvassed opinions through electronic surveys and telephone interviews of more than 800 sell-side analysts, buy-side analysts and portfolio managers across the U.S. to determine the winners.
Other nominees in Dimon’s category “Best IR by a CEO or chairman” included Covidien’s José Almeida, Danaher’s Lawrence Culp and Coca-Cola Co.’s Muhtar Kent.
“But fundamentally good IR is still a matter of building trust with the investment community – which is what all our award winners and nominees – as well as the IR Magazine US Top 100 – have achieved,” said IR Magazine’s CEO and founding editor Janet Dignan on its website.
Lack of Transparency
In a New York Times Dealbook article last week about the hearing by the Senate’s Permanent Subcommittee on Investigations that summoned Dimon and other current and former JPMorgan officials as it continues to formulate reports, John C. Liu, the New York City comptroller, raised concern on the way Dimon misinformed investors.
“It’s clear from the Senate report and Friday’s hearing that senior executives not only misinformed investors and regulators about the excessive risks the bank was taking, but also withheld this information from their own board. Mr. Dimon’s failure on this score come from the hubris of having too much power placed in his hands.”
Liu has invested in $500 million worth of JPMorgan shares on behalf of public pension funds. Liu is hoping to bolster support for a shareholder proposal that would split JPMorgan’s CEO and chairman roles, The New York Times reported.
Yet on the other side, Joe Evangelisti, a bank spokesman, said:
“Our management always said what they believed to be true at the time. In hindsight, we discovered some of the information they had was wrong…Jamie apologized and took responsibility on live television, multiple analyst calls, and in testimony before Congress and the Senate.”
Additionally, JPMorgan’s board have remained largely in support of its CEO and the bank has had its most profitable year ever and its stock rose more than 20 percent in the last four months.
“And above all the din and arguments concerning risky banking practices is the voice of money — if you’re making it, then you’re fine with how it’s being made,” wrote the International Business Times on Monday.
Yet some in the business media have been critical of Dimon and JPMorgan’s actions. Bloomberg News’ Jonathan Weil wrote an article in January about the omissions in JPMorgan’s report about the London Whale trading losses.
“The report also included this bizarre disclaimer: “This report sets out the facts that the task force believes are most relevant to understanding the causes of the losses. It reflects the task force’s view of the facts. Others (including regulators conducting their own investigations) may have a different view of the facts, or may focus on facts not described in this report, and may also draw different conclusions regarding the facts and issues.” In other words, we haven’t been told the whole story.”
What do you think? Did Dimon deserve to receive IR Magazine’s award as ”Best IR by a CEO or chairman” for the way he handled investor relations during and after the London Whale crisis, or does this seem like a suspicious action of the business media cozying up to the CEO of the most powerful banks in the world?