Michael Fowlkes
Chapel Hill, NC - http://www.investorsobserver.com
Michael Fowlkes is an options analyst and writer at Investors Observer.
New low for mortgage applications
As the housing market continues to struggle, there is further evidence today that things have yet to turn around as mortgage applications last week fell to lows not seen in nearly eight years. Today's data came from the Mortgage Bankers Association, which showed that its application index dropped down to 419.3 last week, its lowest level since all the way back to December 2000. Just since this past February the index is down by 61%.
For those of us who are anxiously awaiting any positive signs for the housing market, this week has proven to be anything but hopeful. Today's news comes on the heels of data yesterday that showed new home construction during July was at its lowest levels in over the past 17 years.
Continue reading New low for mortgage applications
Exxon Mobil (XOM) still fighting payments on oil spill damages
While the horrific oil spill by the Exxon Valdez happened all the way back in 1989 (yes that was 19 years ago!), Exxon Mobil (NYSE: XOM) is still in litigation over how much it should be forced to pay in damages. Last month, Exxon Mobil won a big victory when the Supreme Court (in a 5-3 decision) lowered the company's punitive damages from $2.5 billion all the way down to $507.5 million. While this was good news for Exxon Mobil, there was one little detail left to work out -- interest on all that money. Of course, Exxon Mobil does not want to pay that interest, and today the Supreme Court decided that a lower court needs to make this decision.
So just how much interest are we talking about here? Roughly $500 million and counting, as Exxon announced earlier that the victims of the oil spill have requested $488 million in interest. This works out to about $15,000 per victim.
What does this amount mean to Exxon? Ten hours of sales. That's right, ten hours. You would think the company would just pay the money and be done with the whole mess, but Exxon will continue to fight and will have its day in the lower court of appeals.
Continue reading Exxon Mobil (XOM) still fighting payments on oil spill damages
Rising dollar pushes oil prices lower
Oil prices have moved sharply lower this morning, mostly as a result of strong upside in the U.S. dollar. Earlier in the session, oil fell as low as $115.75 a barrel, and is currently sitting at $116.15.Prices have been dropping since mid July, and today's move comes as the dollar is reacting very positively to the recent decisions of the European Central Bank and the Bank of England to leave their interest rates unchanged. While the dollar still has a long way to go, it is encouraging to see the current rally.
As of today, the euro fell to a five month low versus the dollar, and with the dollar rising against both the British pound, and the Japanese yen, many optimistic analysts are predicting that a long recovery for the dollar is under way.
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Toyota (TM) forced to lay off workers in response to U.S. market
Over the past year, automakers have struggled to deal with the tough economic conditions in North America, especially the United States. One of the companies that has been able to handle the slowdown better than its peers has been Toyota (NYSE: TM). But the effects are being felt even by the Japanese automaker, as made clear today in the news that the company is laying off 800 workers in one of its Japanese plants.The 800 workers that are being laid off represent about 10% of the workforce at the company's plant in southwestern Japan. So far, the company has been able to sidestep the steep losses that its American rivals have been forced to deal with, but this year is proving to be a bit tougher, as the company is now predicting a first annual drop in profit, which would be the first time in the past seven years that the company has seen profit fall.
Toyota has been more fortunate than many automakers, mostly due the fact that the company has a long history of building smaller, more fuel efficient cars. This fact alone has helped it weather the slowdown that record high gasoline prices in the U.S. have helped create. Last Friday, however, the company stated that sales dropped 18.7% in July from the same period last year.
Continue reading Toyota (TM) forced to lay off workers in response to U.S. market
Oil moves higher to start off the week as concerns grow over supply
Since the middle of July we have been able to breathe a little sigh of relief as oil prices have been heading lower from the recent record highs. However, this morning oil prices are getting a slight boost as traders try to digest additional supply concerns.Lately, it has been hard to discuss the state of oil prices without mentioning Iran and its controversial President, Mahmoud Ahmadinejad, and that holds true again this morning. Over the weekend, the leader of the Islamic Republic caused even more tension over his country's nuclear program.
Iran has been claiming for the past couple of years that it has only peaceful intentions regarding its nuclear program, but of course the rest of the world, in particular Israel and the United States have voiced openly their distrust, and have claimed Iran has a more sinister intention ... nuclear weapons.
Continue reading Oil moves higher to start off the week as concerns grow over supply
RadioShack (RSH) soars after reporting second quarter numbers
Shares of electronics retailer RadioShack (NYSE: RSH) are soaring this morning after the company shattered its estimates for its second quarter numbers.Going into this morning's earnings announcement, analysts had been expecting to see the company show earnings of 26 cents per share, but the company shocked everyone by coming in well above those estimates, with a reported 35 cents per share for the quarter. Wall Street is rewarding the stock nicely this morning, pushing shares up over 14% in early morning trading.(See more of today's earnings news).
While the company was able to show a nice increase in sales, it did caution investors that the current economic condition is challenging, and that it expects this to remain the case for the foreseeable future. It has been tough for RadioShack recently to compete with stronger rivals such as Best Buy (NYSE: BBY), but the company showed good signs of life during the quarter by posting a 6.4% increase in sales. This is a very good sign for the company, which has been struggling the past several quarters.
Continue reading RadioShack (RSH) soars after reporting second quarter numbers
Earnings preview for Ford
Before the market opens tomorrow morning, American auto maker Ford Motor (NYSE: F) will be reporting its second quarter numbers. Wall Street is not looking for a great quarter from the company.Analysts on average expect the struggling auto maker to post a loss for the quarter of 25 cents per share, and revenues totaling $34.6 billion. The last time that the company reported earnings was back on April 24 when it shocked Wall Street with a 5 cents a share profit versus consensus estimate for a loss of 16 cents for its first quarter.
This quarter has proven to be tough for the company, which recently posted pretty bad June sales figures. In fact, sales for June declined by a devastating 28% compared to the same period last year.
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Oil inventory report pushes prices lower
Oil prices have been falling today, helped by the release of the weekly inventory report which showed larger than expected reserves in the precious crude.Going into today's report, analysts were expecting to see the Department of Energy announce that oil inventories fell by 1.9 million barrels last week, but in fact we only saw a decline of 1.6 million barrels.
Gasoline is probably more on the minds of most consumers, and what we saw in gasoline demand was even more extreme. Analysts had expected to see a rise of about 500,000 barrels of gasoline supplies last week, but the actual increase came in at 2.9 million barrels, a clear sign that high gasoline prices have forced many of us to cut back on our usage.
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Amazon (AMZN) second quarter earnings preview
The week got off to a shaky start in the wake of several earnings disappointments, thus a lot of attention will be paid to Amazon (NASDQ: AMZN) when it reports its second quarter numbers this afternoon after the market closes.Analysts are looking to see Amazon show earnings of 26 cents per share, and revenue of $3.96 billion. The last time that the company reported earnings was April 23, when be itat analysts' estimates by 2 pennies, with a reported 34 cents per share for its first quarter.
It has definitely been a tough couple of months for retailers, but we could see some strength in Amazon as a result of changes it made during the quarter which allows users to shop the store from their cell phones via its new service TextBuyIt.
Continue reading Amazon (AMZN) second quarter earnings preview
Iranian concerns push oil higher
Oil got off to a strong start today, with prices at one point moving up as high as $130.69 a barrel as fears of supply disruptions in Iran have kept the market bullish for the time being.Prices cool off a bit and are now sitting at $129.40, but you can be sure that as long as the tension between the West and Iran persists, you are going to continue to see prices that just refuse to come back down towards any sort of comfortable level.
Last week, we saw a pretty sizable drop in oil prices (see chart at the end of this post), which could be the main reason why this morning's rally was not able to hold above the $130 mark. Investors are probably still a bit weary of betting that we have hit support yet. What really got the market moving early on was fresh threats from the U.S. that more sanctions would be imposed on oil-rich Iran should it not cease its current nuclear program.
Continue reading Iranian concerns push oil higher
Mattel (MAT) soars following its second quarter earnings release
Shares of toy maker Mattel (NYSE: MAT) are soaring in premarket trading today, after the company announced better-than-expected numbers for its second quarter.At first glance, the numbers don't look too hot for Mattel. The company announced that profit was off by a pretty hefty 48% in the quarter, down to 3 cents per share on $11.8 million. This is down from $22.8 million, or 6 cents per share, for the same period last year. The company blamed most of the decline in weak demand for its Barbie dolls, and higher costs that it had to endure in the quarter.
From the above paragraph, you may be expecting to see the company being punished in the premarket, but in fact, shares of the stock are trading up a blazing 13.5% as I write this, and were up over 18% as of about 5 minutes ago. Why? Simple, in Wall Street it is all about expectations, and the company was able to outperform analysts estimates for the quarter, which were looking to see only a 2 cent per share report.
Continue reading Mattel (MAT) soars following its second quarter earnings release
June retail sales indicate rebate boost is fading
There were high hopes that Americans would run out and spend their tax rebate checks in a hurry, and that this would be just what the economy needed to get back on track. Well, it does seem that the checks were spent, but as weaker than expected June retail figures come in, it seems that it was a weak fix to a much bigger problem.The program worked out pretty well in May, as retail sales grew 0.8% during the month, but we were sent back to reality today as June's figures showed that retails sales in the month grew at a measly 0.1%. This was lower than the 0.4% that Wall Street analysts were expecting. Since these figures typically get re-adjusted, it is not out of the question to assume that this figure could be even lower. May, for example, was originally reported to have had an increase of 1.0%, but that was lowered to 0.8%.
Once again, we have to assume that it is record high gasoline prices that are weighing on consumer's minds, as the biggest declines came in automobiles, furniture, electronics and building materials. Auto sales of course were the biggest drag on the retail numbers, and if you look at the figures while ignoring auto sales, then retail would have actually risen by 0.8%, but that is still under the 1.0% that analysts were predicting.
Continue reading June retail sales indicate rebate boost is fading
Foreclosures jump 53% in June -- how long will this last?
We were given some more bad news this morning on the housing market, as RealtyTrac Inc. released data that showed a 53% jump in foreclosures during June compared with the same period last year.The good news is that if you compare June foreclosures to the previous month, they actually declined 3% nationwide, but that gives little comfort to the 252,363 homes that received at least one foreclosure related notice in the mail last month. Perhaps you are thinking that does not really sound like too big a number considering how big America is? Well, on a per household basis, that number represents 1 out of every 501 homeowners getting a foreclosure notice.
Across the nation, banks seized more than 71,000 properties, and all but 11 states reported increases in their foreclosure rates. The usual suspects are still sitting at the top of the list, those being Nevada, California, Arizona, Florida and Michigan.
Continue reading Foreclosures jump 53% in June -- how long will this last?
Marriott (MAR) beats estimates, but lowers forecasts
As we discussed in our earnings preview yesterday, hotel manager Marriott International (NYSE: MAR) reported its second quarter numbers this morning, and as we expected, we were given some more troublesome news from the company.First the good news. While analysts had been expecting to see the company show earnings of 49 cents a share, the company was actually able to come in higher, with 51 cents per share. However, despite showing 2 cents better than expected, this still represents an 11% drop in earnings from continuing operations.
With so much uncertainty around the company going into this morning's earnings report, you may assume that beating its number by 2 cents would have the stock moving higher in premarket trading. Well, you would be wrong. The stock is actually trading down a little more than 6% following the news.
Continue reading Marriott (MAR) beats estimates, but lowers forecasts
Marriot (MAR) second quarter earnings preview
The earnings season was officially launched last night with Alcoa Inc. (NYSE: AA) reporting better than expected numbers, and tomorrow we are going to see another big name, Marriott International (NYSE: MAR) report its second quarter numbers.
The company is due to report its current earnings prior to the market open, and going into tomorrow's report analysts are looking to see the company show 49 cents per share on $3.15 billion in revenues. The housing slump over the past year has definitely been hurting hotel operators, so it will be interesting to see what kind of quarter Marriott is able to show to its investors.
The last time the hotel chain released its quarterly numbers was back on April 17, when it matched analyst estimates for its first quarter with 33 cents per share. The stock made a brief rally following the release, but over the past month has been in a solid downward trend.
Continue reading Marriot (MAR) second quarter earnings preview
Closing Bell: Dow ends higher; HPQ, NOVL, PAY climb, EBAY, NVTL decline
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