Morning Market Update
Michael Mauboussin: Here’s what active managers can do
The debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More
• US: Dow: 13083.00 (0.23%), S&P 500: 1416.80 (0.34%), NASDAQ: 2671.75 (0.36%)
• Europe: CAC: 3461.58 (0.38%), DAX: 7366.89 (0.55%), FTSE: 5876.85 (0.65%).
• Asia-Pacific: Australia: 4484.80 (0.24%), China: 2106.00 (-0.38%), Hong Kong: 21944.43 (-0.28%), India: 5724.40 (0.35%), Japan: 8975.15 (-0.36%).
• Metals: Gold: 1691.20 (0.48%), Silver: 31.34 (0.70%), Copper: 3.48 (0.26%)
• Energy: Crude Oil: 86.08 (0.50%), Natural Gas: 3.54 (-0.45%)
• Commodities: Corn: 7.39 (-0.57%), Soya Bean: 15.15 (-1.52%), Wheat: 8.73 (-0.03%)
• Currency: EUR/USD: 1.2804 (0.07%), GBP/USD: 1.5981 (0.01%), USD/JPY: 80.2100 (-0.10%)
• 10 year US Treasury: 1.703% (0.019)
Financial and Economic News Update
U.S. stock-index futures edge higher: U.S. stock-index futures are pointing to a higher open on Tuesday ahead of the U.S. presidential and congressional elections. Stocks are expected to trade in a narrow range during the session. Surveys show that Mitt Romney is the overwhelming favorite of Wall Street.
European markets trading higher: European markets are up in trade today, with the German DAX (INDEXDB:DAX) adding 0.6 percent to 7366.89, the FTSE 100 (INDEXFTSE:UKX) rising 0.7 percent to 5876.85 and the CAC 40 (INDEXEURO:PX1) up 0.4 percent to 3461.58. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) was trading 0.4 percent higher.
Asian markets end mostly lower: Asian markets closed lower on Tuesday with the HANG SENG INDEX (INDEXHANGSENG:HIS) down 0.3 percent at 21,944.4, while the SSE Composite Index (SHA:000001) (Shanghai Composite Index) shed 0.4 percent. Japan’s NIKKEI 225 (INDEXNIKKEI:NI225) closed down 0.4 percent at 8,975.15. The S&P/ASX 200 (INDEXASX:XJO) index added 10.6 points to 4,484.8. The benchmark Indian 30-share BSE SENSITIVE (INDEXBOM:SENSEX) index rose 0.3 percent.
Company News Update
• AOL, Inc. (NYSE:AOL) reported third quarter earnings excluding certain items of 34 cents a share, 5 cents above the average analysts’ estimate. Total revenue was flat at $531.7 million, ahead of expectations for $521.6 million.
• CVS Caremark Corporation (NYSE:CVS) reported third quarter adjusted earnings of 85 cents a share, on revenue of $30.23 billion. Analysts were expecting the drugstore operator to earn 83 cents a share on revenue of $30.09 billion.
• Office Depot Inc (NYSE:ODP) reported a third-quarter loss of $69.6 million, or 25 cents a share, from a profit of $91.7 million, or 28 cents a share, in the same period last year. Excluding items, earnings stood at 6 cents a share. Sales declined 5 percent to $2.69 billion from $2.84 billion a year earlier. Analysts had expected the retailer to earn a penny a share on sales of $2.73 billion.
• Marsh & McLennan Companies, Inc. (NYSE:MMC) reported third quarter earnings excluding certain items of 39 cents per share, one cent above estimates. Revenue for the period came in at $2.85 billion, trailing Street expectations for $2.92 billion.
• DIRECTV (NASDAQ:DTV) reported third quarter profit of $565 million, or 90 cents a share, up from $516 million, or 70 cents, in the year ago period. Revenue edged 8.3 percent higher to $7.42 billion. Analysts were expecting the satellite-television provider to earn 93 cents on revenue of $7.41 billion.
• Marathon Oil Corporation (NYSE:MRO) posted third quarter earnings excluding items of 64 cents a share, on revenue of $4.16 billion. Analysts had projected earnings of 64 cents a share on revenue of $3.5 billion.
• Goldman Sachs Group, Inc. (NYSE:GS) expanded its board size to 12 directors and named AIA Group Ltd (HKG:1299) chief executive Mark Edward Tucker to the board.
• Exchange operator NYSE Euronext (NYSE:NYX) said third-quarter net income fell 42 percent to $108 million from $186 million in the year-ago period. Revenue declined 21 percent to $559 million, hit by lackluster trading volumes.
• Emerson Electric Co. (NYSE:EMR) said fourth quarter earnings excluding items rose to $1.11 a share from $1.04 a share. Revenue gained 2.4 percent to $6.7 billion. Analysts had projected adjusted earnings of $1.05 a share on revenue of $6.69 billion. The company also raised its quarterly dividend to 41 cents a share from 40 cents a share.
• Cable-network operator Discovery Communications Inc. (NASDAQ:DISCA) reported third quarter profit of $205 million, or 57 cents a share, down from $237 million, or 60 cents a share, in the same period last year. Revenue was flat at $1.08 billion. Analysts were looking for earnings of 63 cents on revenue of $1.09 billion. The company also lowered its full-year outlook.
• Cimarex Energy Co. (NYSE:XEC) agreed to sell some oil and gas properties in Texas for $294 million.
• Fertilizers distributor CF Industries Holdings, Inc. (NYSE:CF) posted third quarter earnings of $5.96 a share on revenue of $1.36 billion, topping estimates for $5.70 a share on sales of $1.35 billion.
• Nike, Inc. (NYSE:NKE) is close to selling its Cole Haan unit to private equity firm Apax Partners in a deal worth nearly $500 million, according to a Reuters report.
• Weight-loss and packaged foods company Weight Watchers International, Inc. (NYSE:WTW) reported third quarter earnings of $1.20 a share on revenue of $431 million, topping estimates for $1.09 a share on sales of $419 million.
• Pharmacy benefits manager Express Scripts Holding Company (NASDAQ:ESRX) posted third quarter earnings excluding one-time items of $1.02 a share, topping estimates by 3 cents. Revenue, however, came in slightly below estimates. The company provided full-year earnings guidance that was mostly in line with forecasts.
• Educational entertainment company LeapFrog Enterprises, Inc. (NYSE:LF) reported third quarter earnings of 60 cents a share on revenue of $193 million that easily beat the average analysts’ estimate of 42 cents a share on sales of $174 million.
• Jive Software Inc (NASDQA:JIVE) reported third quarter adjusted loss of 9 cents a share, on revenue of $28.9 million. Analysts were expecting the business social networking software provider to report an adjusted loss of 11 cents a share, on revenue of $28.75 million.
• Chipotle Mexican Grill, Inc. (NYSE:CMG) is up 1.6 percent in early morning trade after Bank of America upgraded the stock to “buy” from “neutral.”
• Luxury carmaker Bayerische Motoren Werke AG (ETR:BMW) (FRA:BMW) is up 0.5 percent in Frankfurt after third quarter profit rose 14 percent. Earnings before interest and taxes rose to 2 billion euros ($2.56 billion) from 1.76 billion euros in the year-ago period. Sales climbed 14 percent to 18.8 billion euros, helped by strong demand for the new 3-Series sedan and wagon.
• British retailer Marks and Spencer Group Plc (LON:MKS) gained 1.3 percent after reporting first-half earnings that beat analysts’ estimates. First-half underlying pretax profit stood at 296.8 million pounds ($474 million), topping the average analysts’ estimate of 280 million pounds. Second-quarter same-store sales at the general-merchandise division also came in better than expected.
• UniCredit SpA (BIT:UCG), Italy’s biggest bank denied reports that it was planning a tie up with rival Intesa Sanpaolo SpA (BIT:ISP), according to a Reuters report.
• French oil major Total S.A. (ADR) (NYSE:TOT) (EPA:FP) will sell stakes in Nigerian onshore oil blocks to China Petroleum & Chemical Corp (ADR) (NYSE:SNP) (HKG:0386) (SHA:60028) for about $2.4 billion, according to a Bloomberg report.
• Volkswagen AG (ETR:VOW) (FRA:VOW) dropped 3.3 percent as Europe’s biggest carmaker sold 2.5 billion euros ($3.2 billion) of bonds that convert into shares at maturity.
• Hannover Rueckversicherung AG (ETR:HNR1) (FRA:HNR1), the world’s fourth-biggest re-insurer, said third-quarter profit rose 63 percent to 265.5 million euros from 163.2 million euros in the year-ago period. Analysts had projected a profit of 216 million euros.
• Swiss multinational human resource consulting company Adecco SA (ADEN) climbed 3 percent after reporting third-quarter profit of 118 million euros that exceeded the median analyst estimate of 103.2 million euros.
• Associated British Foods plc (LON:ABF) gained 0.5 percent in London after reporting a 17 percent increase in its full-year profit.
• UBS AG (USA) (NYSE:UBS) was raised to “overweight” from “underweight” by analysts at Barclays Plc.
• Andritz AG (ETR:AZ2) (FRA:AZ2), the world’s second-biggest hydropower turbine maker said third quarter net income dropped 5.6 percent to 58.5 million euros, while sales increased 7.9 percent to 1.27 billion euros. Analysts were looking for earnings of 60.4 million euros on revenue of 1.27 billion euros
• Nissan Motor Co., Ltd. (TYO:7201) said quarterly profit rose 7.7 percent to 106 billion yen ($1.3 billion), but the Japanese automaker cut its full-year net profit forecast by a fifth to 320 billion yen ($3.99 billion), amid slumping sales in China and the strength of the Japanese currency.
• Swiss bank Credit Suisse Group AG (ADR) (NYSE:CS) and Qatar’s sovereign wealth fund have agreed to set up an asset management joint venture to boost investments in emerging markets, according to a Reuters report.
• Australian oil and gas producer Transerv Energy Ltd (ASX:TSV) soared 22 percent after it said that partner Alcoa Inc. (NYSE:AA) had confirmed its commitment to the Warro gas project in the Perth Basin in Western Australia.
• Japan’s Sharp Corporation (TYO:6753) slumped in early trade after Standard & Poor’s downgraded the troubled TV maker’s credit rating, and analysts at J.P. Morgan and Nomura Securities lowered their price targets.
• Hong Kong-listed luggage giant Samsonite International S.A. (HKG:1910) plunged 8 percent after reporting lower than expected third-quarter sales.
• Chinese consumer electronics and home appliances company, Haier Electronics Group Co., Ltd. (HKG:1169) was poised to take complete control of New Zealand’s Fisher and Paykel Appliances after it acquired more than 90 percent of its shares, the companies said today.
• Chip-equipment maker Dainippon Screen Mfg. Co., Ltd. (TYO:7735) hit a three week low in Tokyo trading after unexpectedly slashing its annual forecast to an operating loss of 7 billion yen from a previous forecast of a 3.5 billion yen profit.
• China Merchants Holdings (Int’l) Co. Ltd (HKG:0144) tanked 5.2 percent to close at its lowest level since October 16 after an undisclosed institutional investor raised $84 million by selling 27 million shares at a discount of about 6.6 percent to yesterday’s closing price.
• Japanese bearing maker NTN Corporation (TYO:6472) slid 7.3 percent after cutting its full-year operating profit forecast by 72 percent to 7.5 billion yen ($94 million).
Economic Calendar for Tuesday, November 06, 2012:
07:45 A.M. ET: ICSC-Goldman Store Sales (Week ending Saturday, November 03)
08:55 A.M. ET: Redbook Index (YoY) (October 28)
08:55 A.M. ET: Redbook Index (MoM) (October 28)
09:45 A.M. ET: ISM New York Index (October)
11:30 A.M. ET: 4-Week Bill Auction
11:30 A.M. ET: 3-Year Note Auction
03:00 P.M. ET: Treasury STRIPS