Thursday, November 03, 2011

Morning Journal Volatility's impact on economic growth


News on Stocks in Our Portfolios—courtesy of Seeking Alpha

05:14 PM CME Group says MF Global's (MF) transfer of funds from segregated customer accounts appears to have been designed to avoid detection by taking place right after a CME audit last week. Separately, CME estimates the shortfall in customer funds as of the close of business on Nov. 1 was $633M. Comment!

04:30 PM CME Group (CME) issues a statement on missing funds at MF Global, saying after it completed its initial review the firm was in compliance - before it goes on to drop the hammer. "It now appears that the firm made subsequent transfers of customer segregated funds in a manner that may have been designed to avoid detection..." Comment!


04:28 PM More on Qualcomm's FQ4: 127M baseband chips shipped in FQ4,+14% Y/Y. $142M in shares repurchased. Free cash flow was $1.69B (above net income of $1.37B). ASP for royalty-bearing devices was $204-$210, down slightly Q/Q; ASP expected to be $197-$209 in FY12. Shipments of royalty-bearing devices expected to grow 16% in 2012, to ~900M units. QCOM +8.1% AH. (PR) Comment!

04:08 PM Qualcomm (QCOM): FQ4 EPS of $0.80 beats by $0.02. Revenue of $4.12B (+39% Y/Y) beats by $120M. Company expects FY12 revenue of $18B-$19B vs. $17.3B consensus. Expects FY12 EPS of $3.42-$3.62 vs. $3.48 consensus. Shares +6.2% AH. (PR) Comment!

02:03 PM MasterCard (MA +5.8%) crushed Q3 estimates, as gross dollar volume of transactions made with its cards increased 18.1% and total transactions rose 20.5%. The concern for the U.S. economy is that the surge in credit card use will lead to a similar uptick in delinquencies and defaults. Credit card use is far outstripping debit card use, possibly indicating that consumers didn’t have the cash. Comment!

12:34 PM Pepsico (PEP +0.2%) wins a bidding war for Brazilian Mabel with an offer estimated to be between 800M-900M reals ($460M-$518M). It looks like Pepsico aims to dominate the biscuit industry, as the deal adds 1.5M biscuits to the firm's production capabilities and follows the acquisition of an Argentinean biscuit company in Sept. Comment!

12:31 PM Shares of Chevron (CVX +2%) are trading higher as the company begins drilling its first shale gas exploration well in Poland. The drilling is the first of four projects the company has licensed to develop in the southeastern portion of the country. Comment!

11:52 AM Marathon Oil (MRO +2.9%) reportedly is exploring a sale of ~30% of a venture that comprises the bulk of its Gulf of Mexico assets, and is gauging the interest of several potential buyers in Asia. The stake sale may raise up to $1B; the company says it wants to sell $1.5B-$3B in assets over the next two to three years to reinvest in core operations. Comment!

11:45 AM Emerson Electric (EMR +3%) moves higher after Credit Suisse raises its estimates on the company, saying the stock has the propensity to grow its top-line and warrants a premium multiple. Comment!

09:00 AM Nike (NKE +2.3%) jumps premarket after Goldman upgrades to "Buy" and puts the stock on its "Conviction Buy" list. With shares at an all-time high, Goldman identifies Nike as a category leader and an outperformer in the S&P, also seeing the 2012 Olympics as a catalyst for even better performance. Comment!

More earnings reports:
Reported Expected
MUR $.73 $.18
QCOM .80 .78
MA 5.63 4.81

Economics

This Week’s Data


Weekly jobless claims fell 7,000 versus expectations of a drop of 2,000.
http://www.calculatedriskblog.com/2011/11/weekly-initial-unemployment-claims.html

Third quarter productivity came in up 3.1% versus estimates of up 2.9%; unit labor costs fell 2.4% versus forecasts of down 1.0%.

Other

This is a great article on how volatility in the Markets impacts future economic growth; as such, it supports the ECRI forecast for recession in 2012 (today’s must read):
http://www.zerohedge.com/news/will-spiking-vol-drag-global-growth-down

Politics

Domestic


The SEC’s role in the financial mess that we have been and are in (medium):
http://alephblog.com/2011/11/02/the-foul-deed-of-the-sec-in-2004/

International

Tony Blankley warns about China (medium):
http://townhall.com/columnists/tonyblankley/2011/11/02/a_time_for_statesmen

More on the Chinese manipulation of its currency (medium):
http://mjperry.blogspot.com/2011/11/china-manipulates-its-currency-to.html