Chillin' out till it needs to be funded
Q4 Earnings : Caterpillar, Apple(Q1), Boeing, Legg Mason, Mastercard, Visa
Great beat from Caterpillar, Legg Mason reports Friday, Master and Visa in people’s pockets report Thursday and Friday. Need the rest but the Dow will be a rush today after the southside strangler bit into Friday cheer. So come back tomorrow for the same report fully revised. Dollar markets as expected take the Dollar north and yields to 2.75% at its bottom last week before better sense prevails this week on both sides and full year targets for US 10 Y Trsy are reset to no more than 3.5% (soon after Wells Fargo’s John Stumpf stated the range to 2.75% – 3.25% last week)
The US Economy gains strength, Bank Balance sheets cheer up Fed Reserve Balances with credit growth
FOMC begins tomorrow, Davos has ended. New Home sales will remain in the 5 million range up a good 20% for the year. Durable Orders will stay above 1% excluding transportation(Boeing) Chicago PMI coasting on highs in the midwest will report around 56 and above again when we mint the mid week update (On Friday). Pending Home Sales hit South Beach again ( or at least Hartfield and Dulles Airports on the south map) for the seventh month in a row and the Fed Balance sheet reporting under a new Chair would hopefully undergo a revamp this year (again, just hooping!) The new Z1 reports on a separate date with household wealth trivia.
Meanwhile last week’s H.8 and H.3 reports how December keeping the momentum from November in both Credit and Deposits ( $8.8T till Jan 15, 2014), $1.08 Tln in Foreign Banks. Interbank loans ticked higher in November and December but were still 10% lower in annual rate and annual credit growth closed 5.9% higher in December. As Thursday reports will show again the Fed owns the entire MBS business in the US at $1.325 T in agency MBS securities with Commercial Banks holding just $139 Bln. Consumer Loans grew 6.4% and despite the continuing contraction in HELOCs, real estate debt held its own in 2013 equally split between CRES and Consumer real estate exposure. Outstanding derivatives jotted up $350 Bln in Fed reporting, more than $75 Bln of which was outstanding at Foreign banks, after starting the year at $512 Bln outstanding fairvalue. Reserve Balances were $2.4 T higher than required balances at the Fed.
A busy earnings calendar even for bankers (without being forced to enjoy weekends) Boeing to beat big
Seattle’s Boeing reports on Wednesday and Topline Sales will be lower than $23 Bln . Good for Boeing: Dubai Airshow, Bad for Boeing : Defence starts from the veritable bottom this year with Lockheed Martin also bullish for the same reasons while Dreamliner quibbles could still surface anytime. Boeing raised forecasts last quarter to $6.65 for the year in October and the 777X Wash. saga may just about end well for the company. Boeing will report 33% higher in 2013 at close to $6.80
The missing Caterpillar in the Dow wall is back
Caterpillar is basically upbeat on the fog lifting from its China operations for all counts and helped by a $10 Bln buyback program as the bond guys finally bit big into equity pockets on Friday running the sell off on mostly stymied rallies post earnings. Caterpillar had cut forecasts in Q3 but seems to have shrugged off the pain as expected in Q4, beating the smaller hurdle as Revenues remained under at $14.4 Bln but earnings already jumped 50% on year for Q4 ahead of the new buybacks and the sunny forecast from the management after playing safe in Q3 forecasts. Full year sales were just under $56 Bln and profits made $5.75 from $8.50 despite extraordinary items in 2012. Q4 cost improvements saw 2013 gross savings exceeding $1.2 Bln across manufacturing SGA and R&D costs. The company also keeps most of its $7.5 Bln older kitty for buybacks after just $2 Bln was spent in 2013. Mining equipment will die another 10% in 2014, the global scenario improvement not affecting the new acquisition for China and US .
Apple on a Spruce Goose Run
Apple’s $58 Bln revenues impressed but apparently margins shrank and despite the hyped China mobile deal, it languishes in #5 and will report no revenue growth in Q2 at less than $44 Bln it got in the door last March , a margin of around 37.9% and Angela Ahrendts sitting by the side with iTunes Apps at 8% of the $58 Bln holiday revenue and the iWatch revues coming when (in the works though). As Techcrunch and macrumors reported / live streamed, it was a disappointing 51 (47.8) mln iPhones, a creditable 26 mln iPads and slowly losing steam on iMacs as well. Holiday season totals were much the same in 2012 iPhones sold as well as revenues ( $37 Bln with $636 average per unit ) iPad growth by 48% means better scores as the company keeps looking for a cheap alternative to the expensive iPhones. A lower average unit price would have resulted if either the 4s or 5c would have sold. The company generated over $30 B in cash in the year and sent only $7.7 Bln in buybacks ina good year for the stock since it started the year from $394 levels. Cash pile is stat at $158 Bln after returning over $43 Bln to investors since it borrowed in the US. International sales are 63%. Japan grew 40% in the year with Facebook a DoCoMo signing. China already grew 20% before the China Mobile operationalised but that again is not projecting any better leading the index down some sordid depths before the indices swam back up to close in the green on Monday.
Big Pharma is in the hunt
Pfizer and Abbvie report this week too, so there is definitely a Mid week update on Friday open as well. Sanofi reported the same day in October but European annual statements will make it an average two weeks later than others
Apple, Schnapple Cook and the Burberry kit without China (#5 at 5%)
Apple reported after the close and did perform close to $60 B for the quarter though China Mobile was operationalized only in Jan ( 10 days back from Monday)
Friday includes, Baidu, Booz Allen, Chevron (you investors bit into MLs and Oil had a rally , but after the revisions at the pump this week/month we will be back to falling oil rices all year
Evercore reports with Facebook and Fortune Brands on Thursday. On a serious note, no one has been watching McCormick, Phillips 66 or Jetblue which also drive by on Thursday without inflight meals as usual. Marathon and Wellpoint, maybe!
Wednesday is the real estate bite you day with DR Horton reporting against the slump and American Airlines’ first since they flew together with US Airways. CIT & AT&T remain tough to try and tougher to lie with
Piper Jaffray and the State of the Union
Piper Jaffray on W’day and the other Pacific Railroad (Canadian Pacific, fly the market flags this week and US Steel if you still watch for it on Monday before the Apple cascade. The State of the Union will be busy with comebacks from the President at the edge of his wits in a gridlocked Congress, going it alone and strong
JNJ reported well last week but caught in the Friday pincer, gave up too fast. However Banks and Pharma remain the sectors likely to deliver consistent returns to equity and Fixed income investors. SEC’s new Commish has been branded loud and is alive to problems of the shadow banking markets ( and runs on money market accounts) No one asks Mark Carney anymore for a start.
The Banks were back, but Davos did not do much for them
Clearing Markets have been reporting good volumes under the new Volcker Rule provisions and there is still so much to do so little time as Admissions desks are in business and you as audience were as good for a shutdown as the i-95 hurt by Julia this month. But then if you are back from Davos, you might prefer alligators..(When you are up to your ass(Arse) in alligators it’s difficult to remember that your initial objective was to drain the swamp also quoted on Davos commentary on B’berg)
The Global Currency trade impact ( 7th week of EM withdrawals only fuelling frustated shnits in China)
Global economies shutting down include Ukraine, with Argentina and Turkey surviving a double digit panic week ending Friday. Banks may definitely find new markets for dealmaking within the banking sector this week as Davos showed mst bankers enjoying a comeback year and JP Morgan paying out $20 mln in Com for Jamie Dimon.
Till then, the sun continues to rise in the east and the east is blanched by snow, the sun probably never sets ina few month so keep those mites out of your shoes and keep biting the coffee ’cause the Seahawks’ going to lose this coming Sunday but till then Skittles and Starbucks might have made a big daybreak bonus.
Broncos (Anadarko, all Midwest Autos, Texas, Breads of the World and we hear local retailers on Main street)
Omaha! Omaha! Omaha! and it may still be Monday for you after the bell but it’s not the same for me.
Also in Denver CO, Accenture, Enterprise and Sprint, Oppenheimer, DaVita and DIRECTV.(all in the Best laces to Work list)
No EM Meltdown, why were you in South Africa and Turkey again? Not to mention China
Those believing an EM meltdown will happen rooting for other misshapen currencies and Economies all week would also retire to Julia hit cave mouths this week. The last week may probably be traced to the Year of the Horse showing up with an equal amount of pessimism in big bad China where everyone has been standing still on investments stuck inside for a good three to four years and EM withdrawals bringing US Trsys into vogue at low yield locks ahead of the mad rush at 3.5% later. South Africa’s Rand gets a special mention at never before 11 to the US Dollar but it looks like they won’t join the club with Argentina and Turkey. We believe in India, most winners do in 2014 too. All the H D programs we have finally applied are in India.
Like to listen stay glued to Bloomberg’s Eric Schatzker and Stephanie, or be sure to catch David Bloom’s(HSBC) musings on the Insider (Reuters). And if you can get used to the Earnings Wall on Marketwatch, that’s something almost beautiful despite Murdoch’s personal troubles.
Social Media ban for GS fuels anti Bloomberg rallies in Goldman Sachs’ 200 West Cafes?
Elsewhere in trading rooms GS is on way to a complete chatting and social media ban for its employees and most other big banks have banned chatting from a snowball in Bloomberg Terminals in the previous quarter or two, Bloomberg recording such ‘informative’ chats between traders.
Dow Jones will be back above 16000 in the afternoon and @GSElevator is the next GS employee to print a book.