In corporate news, Monster Beverage (MSNT) lost 12%, the biggest drop in the S&P after reporting a smaller than expected increase in Q2 profit and a reported scandal involving their ingredients.
JC Penney (JCP) climbed 6% climbed after executives said that the company has plenty of cash to complete a turnaround and revitalize their stores, despite falling on EPS and revenue. Finally, Manchester United (MANU) premiered on the NYSE today to a stable buying as their stock hovered above the $14 level all day long.
Yesterday, the government weekly natural gas report released a smaller than expected growth in natural gas supplies. Supplies came in at 24 billion cubic feet, last week’s storage was 28 billion and analysts’ expected a number of 30 billion, causing a 19 cent increase in the front month futures contract. This price increase comes at the end of the seasonal peak summer demand, and historically prices tend to fade from about this point on.
This morning natural gas prices dropped almost 5% after weather forecasts looked cooler than expected and the demand for natural gas this summer may be fading sooner than expected. The front month natural gas futures were trading at $2.8100 this morning. I am looking to short futures after a pullback.
David Cornes holds a degree in economics from the University of Montana.
This morning’s monthly USDA report caused erratic price movement in grains after forecasting a 17% cut in the yield estimate and new 17 year lows. After the 7:30 AM CDT announcement, corn had a range of over 30 cents within 5 minutes of the announcement, reaching highs of $8.4360 and lows shortly after of $8.1000. Corn futures are currently trading down 4.60 cents from the open at $8.1360. Soybeans are up 19.80 cents to $16.7440.
Gold futures gained $3.90 to $1624.10 and WTI crude futures lost 51 cents to $92.85.
S&P 500 futures fell 3.75 points to 1396.75, Dow futures traded down 40 points to 13098.00 and NASDAQ futures were down 5.50 points to 2712.25.
Research In Motion Ltd. (RIMM) rose 5% after a patent suit issued by Mformation Technologies Inc. was dropped.
Monster Beverage Corp. gave back some of yesterday’s gains after receiving a filing from the SEC regarding marketing and ingredients used in their products. MNST was down 8.25%.
Yahoo Inc. (YHOO) was down 5.56% after warning investors that they may not reward shareholders the cash earned from selling its share in Alibaba.
David Cornes holds a degree in economics from the University of Montana.
The IPO valued Manchester United, known wolrdwide as Man U, at $2.3 billion but shaved off nearly $100 off the proceeds for the team and its owners. Man U is one of the best soccer teams in the world and have won the English Premier League, the world’s top league, a total of 19 times with even more championships in the Champions League and associated tournaments.
Despite the fanfare regarding the IPO, investors should stay away from the stock as a trading tool and see the investment as a collectible rather than a profitable trade. Investors will have little control over the team’s activities and control is likely to remain with the current owners. In additon, publicly traded sports teams rarley outperform the market and if they do, they do not issue a dividend and offer little control of company decisions. Finally, it should be noted that, historically, even on field performance has little effect on publicly traded sports teams. For example, the Cleveland Indians stock did not increase substantially even after five straight AL Central winning seasons.
In conclusion, if you love Manchester United, feel free to buy one share of their common stock and hang the certificate above your bed, but should you expect return on your investment over the next few years? No.
As a trader, I am looking to profit from the front-end yield curve inversions. I would buy the front duration, sell the bottom of the curve X 2 and then buy a further duration, creating a butterfly spread.
David Cornes holds a degree in economics from the University of Montana.
The Seattle-based upscale retailer announced an 11% drop in income, however the company stated that this was common, as their largest sale of the year took place during the reported quarter. To me, this is not bearish news. Sales increased 7.4% to $2.92 billion with same-store sales increasing 4.5%. They reported earnings of $156 million or 75 cents a share. Analysts were expecting earnings of 74 cents a share with revenue of $2.96 billion. Last year the company reported earnings of $175 million and 80 cents a share.
Nordstroms guidance rose, with same-store sales expected to rise around 6.5%, an increase from the previous expected rise of 4-6%. Full year earnings expectations also rose to between $3.4 and $3.5 per share from the previous estimate of $3.30 to $3.45 a share. Nordstrom Rack posted a 7.7% increase in sales.
I consider the demand for Nordstrom and Nordstrom Rack relatively inelastic as they are niche markets that fit both sides of the U.S. consumer demographic. I would consider JWN a decent buy and hold opportunity. Maybe buying a condor in this stock would be a way to generate income in the near term.
David Cornes holds a degree in economics from the University of Montana.
The Hang Seng dropped .7% today retreating from their 3 month high reached yesterday. Short selling accounted for 12.2% of total turnover today. Weak earnings hit Li & Fung, as their core operating profit for the first half fell 22%, sending them to their worse single day loss since 1992. Goldman Sachs downgraded them to neutral from buy and their target price was cut to $17 from $ 18.60. China Yurun Food group and China Datang Corp both dropped 6.1 & 4.7% respectively. China Overseas Land and Investment reversed gains to finish .1% down after announcing a first half profit gain of 9.3%, slightly lower than expected.
The FTSEurofirst is currently down .4% due to weak Chinese data showing Chinese exports rose by just 1% from a year earlier, much lower than expected. Alternative fuel maker Novozymes was among the worst performers losing 2.9%. Indices are down around Europe with the DAX down .82%, the CAC down 1% and the Madrid General down .87%.
Bank of Ireland posted a 907B Euro loss in H1 compared to 722M a year ago, stock is down 6.1%
Goldman continues to retreat from Japan selling contractor Fujita Corp for 636M.
Commodities appear to be finishing weak with crude, natural gas and silver down over 1% and gold down just under .5%.
Contributer Chris Rygh is currently pursuing his MBA in Wisconsin and has a passion for the Market. Comments can be directed to ryghcw19@uww.edu
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