RB's "Market Movers" - Earnings Season, Citigroup Beats, Retail Disapppoints, Visa, Breaking Bad & More

By: Rob Black - Mon, 16 Jul 2012 12:28:15 -0800

Winner: Earnings Season Looks Worrisome
Winner:  Citigroup Beats Analysts’ Estimates
Loser: Retail Purchases in U.S. Unexpectedly Decrease 0.5%
Loser:  I.M.F. Clips Global Growth Forecast for 2013 to 3.9%
Loser: Visa Settlement Frees Consumers To Pay More
Winner: AMC Networks Stock “Breaking Bad”
Loser: Apple’s Siri Slammed in N.Y. Times
Loser: Microsoft Splits From MSNBC
Winner:  Zuckerberg’s Has 30 Year Mortgage

Quick Note . . . I despise anyone who refers to themselves as an Investment Coach.


Winner: Earnings Season Looks Worrisome

Last week’s reports overall were disappointing.

Earnings reports the next few weeks are  more likely to cause downdrafts for individual stocks, and the market overall, than to spark significant rallies.

The S&P 500 surged on Friday following the Wells Fargo and JP Morgan Chase earnings reports.
 
Expecting a Goldman Sachs beat tomorrow morning, but by how much?

Utilities sector P/E ratio now almost a full point above Technology sector -- 14.95 vs. 14.05. $$

Pay attention to earnings this week as there are multiple insights into various themes (U.S. economy, European Economy, Asia, China, Growth vs Value, etc . . .   These are the companies that I will be watching
 
Tuesday 

Coca-Cola
Goldman Sachs
Johnson and Johnson
Intel

Wednesday

Bank of America
American Express
eBay
IBM

Thursday

Johnson Controls
Morgan Stanley
Google
Microsoft

Friday

General Electric
Ingersoll-Rand

 

Winner:  Citigroup Beats Analysts’ Estimates

Citigroup, the third-biggest U.S. Bank, reported profit that beat analysts’estimates on revenue from advising on mergers and underwriting stocks and bonds.

Income declined 12 percent to $2.95 billion.

The bank has moved toward a more customer-driven model and run down its legacy problem assets, which should ultimately reduce its risk and free up capital.

Citigroup has a large South American exposure which is viewed as a good thing.

Loser: Retail Purchases in U.S. Unexpectedly Decrease 0.5%

Retail sales in the U.S. unexpectedly declined for a third straight month in June, a sign limited employment gains are taking a toll on the biggest part of the economy.

The 0.5 percent drop followed a 0.2 percent decrease in May.

Purchases last fell for three or more months in July through December 2008.

A weakening job market is sapping households of the confidence and income gains needed to boost expenditures, which account for about 70 percent of the economy.

Nine of 13 major retail sales categories showed a decline last month, led by a 1.8 percent slump at gas stations that reflected declining fuel costs.

Loser:  I.M.F. Clips Global Growth Forecast for 2013 to 3.9%
 

 The International Monetary Fund, unimpressed with the policy actions taken to stem the European sovereign debt crisis, on Monday cut its forecast of growth in 2013.

The IMF  warned that the measures taken in Europe have not done enough to quiet markets and restore growth

. The I.M.F. maintained its forecast of 2012 economic growth at 3.5 percent, but it cut its forecast of growth in 2013 to 3.9 percent, down from the estimate of 4.1 percent it made in April.

 In 2010, the world economy expanded 5.3 percent.

The I.M.F. cautioned that even those tepid forecasts might be too optimistic, if Europe does not do enough to ameliorate its debt crisis and if policies to improve growth in emerging markets fail to gain traction.

Countries experiencing the biggest reductions in expected growth include Brazil and India, whose economies have cooled this year; newly industrialized Asian economies, like Korea and Singapore, hit by a broader global slowdown; and Britain, struck by austerity budgeting.

The IMF reduced its China growth outlook for 2012 by 0.2 percentage point to 8 percent and for 2013 by 0.3 point to 8.5 percent. That is far stronger than the United States and Europe, but China's slowdown has dampened hopes it might make up for weak Western demand and drive global growth.

Loser: $6 Billion Visa Settlement Frees Consumers To Pay More

The $6 billion Visa settlement.

Merchants alleged the companies violated antitrust law by fixing the swipe fees, which average about 2 percent of the purchase price. Proceeds generate more than $40 billion a year for U.S. banks
Visa and  Mastercard and will reduce their so-called “interchange fees” by 10 basis points.

Retailers will be able to “surcharge”  when you purchase with plastic.

First take is that the settlement terms are better than expected for the networks -- most importantly, credit interchange is only being cut 10 basis points for eight months. “his outcome should be positive for shares of Visa and MasterCard.
 
Winner: AMC Networks Stock “Breaking Bad”

AMC Networks is a leading cable television broadcaster with a portfolio of popular TV networks anchored by American Movie Classics (AMC).

The cable network airing such critical hits as Mad Men, Walking Dead and Breaking Bad that reaches more than 95 million households.

It also owns The Independent Film Channel, the Sundance Channel, and WE: Women's Entertainment, one of the top networks aimed at women viewers.

Loser: Apple’s Siri Slammed in N.Y. Times

The next generation of iPhone is going into production.

Fresh reports from Chinese sources claim Apple's next-generation handset has entered the production phase complete with design changes including the addition of glass to the unit's "uni-body" backplate.
 
Unlike the iPhone 4 and 4S which boast a "glass sandwich" design with tough Gorilla Glass front and back coverings, the upcoming handset will reportedly have a backplate only "partially covered" by the tough material.

But until we can get out hands on the iPhone5 consider reading the NY Times today as there is a great article highlighting the not so useful Siri.  The article is written as if the author was dating Siri and decided to break up.
 


Loser: Microsoft Splits From MSNBC

Comcast’s NBCUniversal rebranded the MSNBC.com website as NBCNews.com after acquiring full ownership of the news site from Microsoft, ending a 16-year partnership.

The deal gives NBC News complete control over the MSNBC Digital Network, which includes MSNBC.com, Today.com, NightlyNews.com, BreakingNews.com and other sites.

Microsoft and NBC started MSNBC in 1996, teaming up to create a 24-hour news channel and companion website.

NBC agreed to acquire the news channel in 2005.

By acquiring full ownership of the website, NBC can link it more closely with MCSNBC TV.

The channel will introduce a new news website in 2013.


Winner:  Zuckerberg’s Loan Gives New Meaning to the 1%
 

Billionaire Mark Zuckerberg is giving new meaning to the term “the one percent.”

Zuckerberg refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent.

While almost all lending rates have reached historical lows this year, the borrowing costs available to high-net-worth individuals are even lower if the person is willing to bear the risk of monthly interest rate adjustments.

When you can borrow at a rate below inflation, you’re borrowing for free. This is the concept of using other people’s money and it preserves financial flexibility for the borrower.


Monthly principal and interest mortgage payments on the $5.95 million loan would start at $19,275.

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