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Seth Klarman: Investing Is Art First, Craft Second And Science Third
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- US: Dow: 12908.70 (0.81%), S&P 500: 1372.78 (0.67%), NASDAQ: 2942.60 (1.12%)
- Europe: CAC: 3235.40 (1.81%), DAX: 6684.42 (1.60%), FTSE: 5685.77 (1.00%).
- Asia-Pacific: Australia: 4123.60 (-0.42%), China: 2169.10 (0.36%), Hong Kong: 19239.88 (-1.12%), India: 5216.30 (0.45%), Japan: 8726.74 (-0.32%).
- Metals: Gold: 1570.80 (-1.18%), Silver: 27.10 (-0.81%), Copper: 3.47 (0.54%)
- Energy: Crude Oil: 89.87 (0.73%), Natural Gas: 2.97 (6.33%)
- Commodities: Corn: 7.84 (1.69%), Soya Bean: 16.20 (1.85%), Wheat: 9.12 (1.70%)
- Currency: Euro (€) / US Dollar ($) (EURUSD): 1.2281 (0.03%), British Pound Sterling (UK£) / US Dollar ($) (GBPUSD): 1.5654 (-0.05%), US Dollar ($) / Japanese Yen (¥) (USDJPY): 78.7950 (-0.35%)
- 10 year US Treasury: 1.494% (-0.014)
Market and Economy News Update
U.S. markets end higher: U.S. markets closed higher, led by a rally in technology stocks, amid statements by Federal Reserve Chairman Ben S. Bernanke that the central bank was ready to adopt more stimulus measures. The Dow Jones Industrial Average (INDEXDJX:.DJI) rallied for the second consecutive session, jumping 103.16 points, or 0.81 percent, to close at 12,908.70. The S&P 500 (INDEXSP:.INX) added 9.11 points, or 0.67 percent, to end at 1,372.78, while the NASDAQ Composite (INDEXNASDAQ:.IXIC) climbed 32.56 points, or 1.12 percent, to finish at 2,942.60. All three major averages are back in positive territory for the month.
Oil prices rise: Oil prices gained for the sixth consecutive day after U.S. crude oil inventories fell by 809,000 barrels last week, and tensions with Iran increased. Crude oil for August delivery increased 0.7 percent, to settle at $89.87 a barrel on the New York Mercantile Exchange. Brent oil for September settlement climbed 1.1 percent to $105.16 a barrel on the London-based ICE Futures Europe exchange.
Stocks in Focus
- · American Express Company (NYSE:AXP) posted second quarter earnings per share of $1.15 that topped Street expectations of earnings of $1.10 a share. Revenue for the quarter came in at $7.97 billion that missed expectations of $8.08 billion.
- International Business Machines Corp. (NYSE:IBM) reported second-quarter earnings excluding items of $3.51 per share that beat the average analysts’ estimate of $3.42 a share. Revenue declined 3 percent to $25.8 billion that trailed estimates of $26.28 billion.
- · eBay Inc (NASDAQ:EBAY) posted second-quarter earnings excluding items of 56 cents per share, on revenue of $3.4 billion that beat the analysts’ expectations of earnings of 55 cents a share on $3.36 billion in revenue.
- · Qualcomm, Inc. (NASDAQ:QCOM) posted third quarter adjusted earnings of 86 cents per share on revenue of $4.63 billion. Analysts were expecting adjusted earnings of 86 cents a share on revenues of $4.68 billion. The communications chip designer forecast fiscal fourth quarter profit that also missed analysts’ estimates.
- Yum! Brands, Inc. (NYSE:YUM) posted second quarter earnings of 67 cents a share, missing Street expectations for 70 cents a share. Sales stood at $3.17 billion that managed to beat expectations for $3.11 billion.
- Medical equipment maker Stryker Corporation (NYSE:SYK) posted second quarter earnings of 98 cents a share on revenue of $2.1 billion that fell marginally short of estimate of 99 cents a share on revenue of $2.13 billion.
- The Procter & Gamble Company (NYSE:PG)’s board said it unanimously supports Chief Executive Bob McDonald and his plans to turnaround the company.
- AT&T Inc. (NYSE:T) unveiled a new type of family plan that will allow customers to share data among multiple mobile devices, but will come with a sharp increase in fees for services such mobile Internet.
- Chevron Corporation (NYSE:CVX) has agreed to buy two oil blocks in Iraq’s Kurdistan, from India’s Reliance Industries Limited (NSE:RELIANCE).
- Goldman Sachs Group, Inc. (NYSE:GS) has agreed to settle a $698 million class action suit by investors who claimed losses from mortgage loan-backed securities issued by defunct subprime lender New Century Financial Corp.
- Capital One Financial Corp. (NYSE:COF) said second quarter profit plunged 90 percent to $92 million, or 16 cents a share, from $911 million, or $1.97 in the same period last year. Separately, the company also agreed to pay $210 million to settle federal charges that it tricked credit card customers to buy extra credit card products.
- Maintenance and repair product maker W.W. Grainger, Inc. (NYSE:GWW) closed 11 percent higher after it reported better than expected second quarter earnings and increased its fiscal year earnings guidance.
- Air medical transportation company Air Methods Corporation (NASDAQ:AIRM) projected second quarter earnings per share of $2.30 to $2.40, much higher than analysts’ expectations of earnings of $1.59 a share.
- Anadarko Petroleum Corporation (NYSE:APC) said drilling partner Tullow Oil plc (LON:TLW) has struck oil in the Deepwater Tano Block offshore the Republic of Ghana
- Electronics-equipment maker Amphenol Corporation (NYSE:APH) reported a better than expected second quarter profit and raised its full-year profit and revenue forecasts.
- Medical device company St. Jude Medical, Inc. (NYSE:STJ) reported a 1.2 percent rise in second quarter profit but trimmed its current quarter and full-year outlook
- Montreal-based cable-television company Cogeco Cable Inc. (TSE:CCA) agreed to buy US cable operator Atlantic Broadband for $1.36 billion.
- Networking appliances company F5 Networks, Inc. (NASDAQ:FFIV) reported third quarter earnings of $1.14 a share, in line with expectations, but revenue easily topped expectations.
Hedge Fund News Update
- Bill Ackman’s New York-based hedge fund Pershing Square Capital Management has reportedly sold its stake in Citigroup Inc. (NYSE:C) this week, the money from which was used to >buy sharesThe Procter & Gamble Company (NYSE:PG).
- Total assets managed by UCITS hedge funds have increased 7.5 percent in the second quarter, to 129 billion euros, according to data published by Geneva-based Alix Capital.
- Monaco-based hedge fund Tyrus Capital has agreed to pay about $5 million to settle allegations of market fraud in Brazil.
- Ralph DellaCamera’s DellaCamera Capital Management will close his six-year-old NAD hedge fund.
Earnings Calendar for Thursday, July 19, 2012
The following companies will report earnings before market open:
AutoNation, Inc. (NYSE:AN), Baxter International Inc. (NYSE:BAX), BB&T Corporation (NYSE:BBT), Quest Diagnostics Inc (NYSE:DGX), Diamond Offshore Drilling, Inc. (NYSE:DO), Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), Fifth Third Bancorp (NASDAQ:FITB), Genuine Parts Company (NYSE:GPC), Huntington Bancshares Incorporated (NASDAQ:HBAN), KeyCorp (NYSE:KEY), Laboratory Corp. of America Holdings (NYSE:LH), Southwest Airlines Co. (NYSE:LUV), Morgan Stanley (NYSE:MS), Nucor Corporation (NYSE:NUE), Philip Morris International Inc. (NYSE:PM), PPG Industries, Inc. (NYSE:PPG), Sherwin-Williams Company (NYSE:SHW), Snap-on Incorporated (NYSE:SNA), Safeway Inc. (NYSE:SWY), The Travelers Companies, Inc. (NYSE:TRV), Textron Inc. (NYSE:TXT), UnitedHealth Group Inc. (NYSE:UNH), Union Pacific Corporation (NYSE:UNP), V.F. Corporation (NYSE:VFC), Verizon Communications Inc (NYSE:VZ).
The Following Companies will report earnings after market close:
Advanced Micro Devices, Inc. (NYSE:AMD), Chipotle Mexican Grill, Inc. (NYSE:CMG), E Trade Financial Corporation (NASDAQ:ETFC), Google Inc (NASDAQ:GOOG), Intuitive Surgical, Inc. (NASDAQ:ISRG0, Microsoft Corporation (NASDAQ:MSFT), People’s United Financial, Inc. (NASDAQ:PBCT), SanDisk Corporation (NASDAQ:SNDK).
Brokerage Upgrades and Downgrades on Wednesday, July 18, 2012
- Enerplus Corp (USA) (NYSE:ERF) was raised to “equal weight” from “underweight” by analysts at Barclays Capital.
- Hillshire Brands Co (NYSE:HSH) was lifted to “outperform” from “neutral” by analysts at Credit Suisse.
- LINDE AG S/SDR (NASDAQ:LNEGY) was raised to “buy” from “neutral” by analysts at Goldman Sachs.
- NCR Corporation (NYSE:NCR) was upgraded to “buy” from “neutral” by analysts at Compass Point with a target price of $30.
- Orient-Express Hotels Ltd. (NYSE:OEH) was lifted to “buy” from “neutral” at MKM Partners.
- Oshkosh Corporation (NYSE:OSK) was raised to “buy” from “hold” by analysts at Jefferies Group.
- Repsol SA (PINK:REPYY) was upgraded to “top pick” from “sector perform” by analysts at RBC Capital with a target price of $16.
- Renasant Corp. (NASDAQ:RNST) was lifted to “neutral” from “underperform” at Sterne Agee.
- VMware, Inc. (NYSE:VMW) was raised to “buy” by analysts at Drexel Hamilton.
- American Tower Corp (NYSE:AMT) was downgraded to “neutral” from “buy” by analysts at Citigroup.
- Caterpillar Inc. (NYSE:CAT) was cut to “neutral” from “buy” by analysts at Longbow Research. Caterpillar Inc. (NYSE:CAT) was also lowered to “hold” from “buy” at Jefferies Group.
- Cinemark Holdings, Inc. (NYSE:CNK) was downgraded to “hold” from “buy” at Stifel Nicolaus.
- Dolby Laboratories, Inc. (NYSE:DLB) was lowered to “underweight” from “neutral” by analysts at JPMorgan Chase.
- Eaton Corporation (NYSE:ETN) was cut to “hold” from “buy” by analysts at Jefferies Group.
- Penn West Petroleum Ltd (USA) (NYSE:PWE) was downgraded to “sector perform” from “outperform” by analysts at RBC Capital with a target price of $17. Penn West Petroleum Ltd (USA) (NYSE:PWE) was also cut to “underweight” from “equal weight” by analysts at Barclays Capital.
- Rovi Corporation (NASDAQ:ROVI) was downgraded by analysts at Barrington Research and BMO Capital Markets from “outperform” to “market perform.”
- Saks Inc (NYSE:SKS) was cut by analysts at Goldman Sachs from “neutral” to “sell.”
- Tower International Inc (NYSE:TOWR) was lowered to “neutral” from “outperform” by analysts at Robert W. Baird with a target price of $11.
- VistaPrint Limited (NASDAQ:VPRT) was cut to “underperform” by analysts at Bank of America.
- Whole Foods Market, Inc. (NASDAQ:WFM) was downgraded by analysts at Williams Capital from “buy” to “hold.”