Morning Market Update
How Warren Buffett Uses Discount Rates To Value Stocks
Warren Buffett has never detailed the process he uses to value the businesses he acquires for Berkshire Hathaway. However, over the years, he has provided some limited insight into his methods. Q3 2020 hedge fund letters, conferences and more Based on these comments, it is widely assumed that Buffett uses a discount cash flow model Read More
- US: Dow Futures: 13164.00 (-0.41%), S&P 500 Futures: 1394.00 (-0.46%), NASDAQ Futures: 2703.00 (-0.47%)
- Europe: CAC: 3218.98 (0.19%), DAX: 6717.95 (-0.64%), FTSE: 5756.82 (-0.96%).
- Asia-Pacific: Australia: 4435.90 (0.14%), China: 2438.44 (1.73%), Hong Kong: 21309.08 (1.01%), India: 5239.15 (-0.17%), Japan: 9380.25 (0.31%).
- Metals: Gold: 1657.40 (-0.30%), Silver: 30.72 (-0.70%), Copper: 3.78 (-1.77%)
- Energy: Crude Oil: 105.71 (-0.42%), Natural Gas: 2.35 (-0.93%)
- Commodities: Corn: 6.28 (-1.22%), Soya Bean: 13.84 (0.87%), Wheat: 6.39 (-1.98%)
- Currency: EUR/USD: 1.3134 (-0.76%), GBP/USD: 1.6165 (-0.35%), USD/JPY: 80.1600 (0.09%)
- 10 year US Treasury: 1.908% (-0.035)
Financial and Economic News Update
U.S. stock-index futures trading lower: U.S. stock index futures are pointing to a lower open on Wednesday, following a much weaker than expected ADP employment report. According to the ADP report, private sector employers added just 119,000 jobs in April, below the 170,000 that economists were expecting. The Dow Jones industrial average, the S&P 500 and the NASDAQ futures were all trading around half a percent lower.
European markets reverse gains: European markets turned weaker ahead of a crucial ECB meeting tomorrow. The German DAX (INDEXDB:DAX) was 0.6 percent lower at 6717.95, the FTSE 100 (INDEXFTSE:UKX) was down 1 percent at 5756.82, and the CAC 40 (INDEXEURO:PX1) was up 0.2 percent to 3218.98. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) was trading 0.8 percent lower.
Euro Zone manufacturing contracted for the ninth month; unemployment at 15-year high: The euro zone’s manufacturing sector shrank for a ninth month in April, London-based Markit Economics said today. Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) slipped to 45.9 last month from 47.7 in March. Data from a separate report showed that euro-region unemployment increased to 10.9 percent in March, the highest since April 1997.
Asian markets end higher: Asian markets closed higher on Wednesday as data showed the pace of growth in both U.S. and Chinese manufacturing picked up in April. The HANG SENG INDEX (INDEXHANGSENG:HSI) ended up 1.02 percent at 21,309.08, the highest close since March 16, while the SSE Composite Index (SHA:000001) (Shanghai Composite Index), which was closed on Monday and Tuesday, rose 1.8 percent to 2438.44. The NIKKEI 225 (INDEXNIKKEI:NI225) closed 0.3 percent higher, buoyed by a weaker yen, while the S&P/ASX 200 (INDEXASX:XJO) index gained 0.14 percent. The benchmark Indian 30-share BSE SENSITIVE (INDEXBOM:SENSEX) index fell 0.27 percent to 17,271.45 points.
China PMI rises in April: China’s official purchasing managers’ index rose to a 13-month high in April, while the HSBC China Purchasing Managers’ Index improved to 49.3 in April from 48.3 in March, both signalling that the world’s second-largest economy may be recovering from a first-quarter trough.
Company News Update
- MasterCard Inc (NYSE:MA) posted a 21 percent increase in first-quarter profit to $682 million, or $5.36 a share, as consumers spent more with their cards. Revenue increased 17 percent to $1.76 billion, topping analysts’ expectations.
- Time Warner Inc. (NYSE:TWX), one of the world’s largest media conglomerates, reported first-quarter earnings that beat analysts’ estimates on gains in television advertising and movie studio businesses.
- Comcast Corporation (NASDAQ:CMCSA), the largest U.S. cable company, reported a 30 percent increase in first quarter profit, beating expectations street estimates, due to increase in broadband customers.
- CVS Caremark Corporation (NYSE:CVS), the second largest drug retailer in the United States, reported first- quarter profit that exceeded analysts’ estimates, as it grabbed customers from Walgreen Company (NYSE:WAG).
- Barrick Gold Corporation (USA) (NYSE:ABX), the world’s largest producer of the metal, said first quarter profit excluding one-time items was $1.09 a share, in line with analysts’ estimates. The Toronto-based company also raised its quarterly dividend by 33 percent.
- Tripadvisor Inc (NASDAQ:TRIP), which was spun off from online travel company Expedia, Inc (NASDAQ:EXPE), reported first-quarter profit and sales that topped some analysts’ estimates.
- Peet’s Coffee & Tea, Inc. (NASDAQ:PEET), the California-based maker of whole bean coffee posted first quarter earnings and revenue that missed analysts’ estimates.
- The board of True Religion Apparel, Inc. (NASDAQ:TRLG), the seller of jeans, has authorized a $30 million share repurchase plan. The company yesterday reported first-quarter results that beat analysts’ expectations.
- North Palm Beach, Florida-based Bankrate Inc (NYSE:RATE), the online publisher of personal finance information posted first-quarter earnings and revenue that trailed the average analyst estimate.
- U.K.’s biggest pay-TV operator British Sky Broadcasting Group plc (LON:BSY) said net profit in the nine months to the end of March soared 19 percent to 689 million pounds ($1.118 billion) as the London-based company sold more broadband connections.
- Daimler AG (FRA:DAI)’s Mercedes-Benz overtook Bayerische Motoren Werke AG (FRA:BMW)’s BMW brand for luxury car sales in the U.S. Sales of Mercedes vehicles rose to 22,336 last month, while BMW recorded sales of 21,062 units.
- A federal judge in New Jersey has ruled that Swiss drug maker Novartis AG (ADR) (NYSE:NVS)’s Sandoz unit has infringed a U.S. patent licensed by Hospira, Inc. (NYSE:HSP) for the sedative Precedex.
- Standard Chartered PLC (LON:STAN), U.K.’s second-largest bank by market value, said first quarter operating profit saw a low double-digit growth, driven by consumer and wholesale-banking operations.
- Swisscom AG, Switzerland’s biggest phone company, said first quarter net profit fell 3.8 percent to 456 million francs ($499.7 million), in line with analysts’ expectations.
- Swiss bank UBS AG (USA) (NYSE:UBS) said first quarter net income fell 54 percent to 827 million Swiss francs ($910 million) from 1.81 billion francs in the year-earlier period, which managed to beat the average estimate of 810.9 million francs.
- Vestas Wind Systems, the world’s biggest wind turbine maker reported wider than expected first quarter operating losses due to cost overruns and faulty equipment.
- Australia and New Zealand Banking Group (ASX:ANZ), Australia’s third-largest bank by market value, said first-half profit climbed 10 percent to 2.92 billion Australian dollars ($3.02 billion), but said margins in its Australian business are declining.
- Bharti Airtel Limited (NSE:BHARTIARTL), India’s biggest mobile phone carrier by subscribers, posted a sharper than expected drop in fiscal fourth quarter profit, due to high foreign exchange and tax costs.
- Japanese gaming giant Gree,Inc. (TYO:3632) has agreed to acquire San Francisco-based mobile game developer Funzio Inc. for $210 million in cash to expand its lineup of games.
- Japan’s third-biggest oil refiner Idemitsu Kosan Co., Ltd. (TYO:5019) reported stronger than expected operating profits for the year ended March 2012, and announced a dividend hike for the full year.
- Japanese newspaper Sankei reported the government may not restart Kansai Electric Power Co Inc (TYO:9503)’s nuclear reactors in Ohi this summer unless it gets approval from local residents.
- SK Telecom Co., Ltd. (ADR) (NYSE:SKM), South Korea’s largest mobile carrier by subscribers, reported first-quarter profit that missed analyst estimates amid rising costs.
Economic Calendar for Wednesday, May 2, 2012:
07:00 A.M. ET: MBA Purchase Applications (Week ending Friday, April 27, 2012)
07:30 A.M. ET: Challenger Job-Cut Report (April)
08:00 A.M. ET: Federal Reserve Gov. Daniel Tarullo speaks
08:15 A.M. ET: ADP Employment Change (April)
09:00 A.M. ET: Treasury Refunding Announcement
10:00 A.M. ET: Factory Orders (MoM) (March)
10:30 A.M. ET: EIA Petroleum Status Report (Week ending Friday, April 27, 2012)
12:30 P.M. ET: Richmond Federal Reserve Bank President Jeffrey Lacker speaks.