Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:40 AM EST
S&P 500: -0.40; 1,448.10
NASDAQ 100: -0.25; 1,819.00
Dow: -2.00; 12,593.00
NIKKEI 225: -0.30%; 17.491.42 (-52.67)
HANG SENG: 20,209.71 (4/4)
S&P/ASX 200: -0.33; 6,077.10 (-20.10)
BSE SENSEX 30: +0.54%; 12.856.08 (+69.31)
FTSE 100: +0.32%; 6,385.10 (+20.40)
CAC 40: +0.11%; 5,745.47 (+6.46)
XETRA-DAX: +0.32%; 7,096.34 (+22.43)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.56%; $64.02 (-$0.36)
Gold: +0.10%; $678.10 (+$0.70)
Natural Gas: -0.20%; $7.50 (-$0.02)
Silver: +0.37%; $13.67 (+$0.05)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Initial Claims Average Drops To Nine-Week Low
The U.S. Labor Department reported its weekly initial jobless claims numbers this morning, showing a rise of 11,000, to a total of 321,000. Economists surveyed by Bloomberg were expecting the number to rise to just 315,000. Despite the weekly gain, the four-week average fell by 1,500 to 315,750, the lowest in nine weeks. The four-week average is considered a more stable indicator of the health of the U.S. job market. The Labor Department also reported the number of people collecting unemployment fell by 25,000 to 2.49 million, the lowest its been in 10 weeks. According to Cary Leahey, senior economist at Decision Economics Inc., "The labor market remains tight. If people want a job they can find a job. As long as that remains the case, consumer spending ought to be pretty good."
Sources: MarketWatch, Bloomberg
Commentary: U.S. Job Growth According to ADP, Monster • Drop in Factory Orders May Be Telling Us Something • U.S. Services Growth Hits Four-Year Low
Stocks/ETFs to watch: S&P 500 Index (SPY), Diamonds Trust Series 1 ETF (DIA), iShares Lehman Aggregate Bond (AGG)
Constellation Brands Earnings In Line With Downgraded Forecast
Constellation Brands Inc., a leading international producer alcoholic beverages, reported this morning its FQ4 net income rose 17% and sales rose 8% on strong wine and beer sales in the U.S. and Canada. Net income went from $58.2 million ($0.24/share) to $70.2 million ($0.29/share) on a sales rise from $1.3 billion to $1.42 billion. EPS excluding restructuring expenses were $0.35, beating analyst estimates of $0.34/share, while sales revenues beat estimates of $1.1 billion. For fiscal 2008, Constellation forecasts earnings of $1.30-1.40/share on a comparable basis, low single-digit sales growth, low single-digit incremental growth from its acquisitions of Vincor and Svedka, and net sales growth of 13-15%. Analysts are calling for EPS of $1.36 on revenue of $4.32 billion. Of note, imported beer sales jumped 31%; Constellation gets about 70% of its sales from wine, 24% from beer, and 6% from spirits. CEO Richard Sands: "While we had a solid year of organic net sales growth, our earnings performance was somewhat challenged by competitive conditions in the U.K. market." On March 1, the company issued a warning saying earnings would be $1.30-1.40/share (at the times Street estimates were for $1.83) and that sales would drop 12-14%. Shares are down 28% this year, but closed up $0.03 to $20.82 in trading yesterday. Constellation is the year's second worst performer on the S&P 500 Index following AMD.
Sources: Press Release, MarketWatch, Bloomberg
Commentary: Constellation Brands Vs. Diageo: A Good Stock Picking Study • Word on the Grapevine: Wine Stocks • Constellation Issues F2008 Warning, Shares Plummet
Stocks/ETFs to watch: Constellation Brands Inc. (STZ). Competitors: Diageo plc (DEO), Brown-Forman Corp. (BF.b), Fortune Brands Inc. (FO), Coors Brewing Co. (TAP), Anheuser-Busch Companies Inc. (BUD). ETFs: Consumer Discretionary SPDR ETF (XLY), PowerShares Dynamic Consumer Discretionary (PEZ), Vanguard Consumer Discretionary VIPERs (VCR)
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Asian Headlines (via Bloomberg.com)
• Japanese Energy Stocks May Fall, Led by Inpex on Lower in Crude Oil Prices Japanese energy-related stocks such as Inpex Holdings Inc. may fall after Iran's President said he will release 15 seized Britons, pushing prices of crude oil lower.
• Australian Dollar Advances to Strongest in 10 Years Against U.S. Currency The Australian dollar rose to the strongest in more than 10 years and bought 81.88 U.S. cents at 7:27 a.m. in Sydney from 81.27 cents late in Asia yesterday.
• China Regulator to Reject Carlyle Bid for Chongqing Bank Stake, People Say Carlyle Group's bid to buy part of Chongqing City Commercial Bank will be rejected as China stiffens opposition to buyout firms on concern they're not adding enough value, three people familiar with the matter said.
• Cemex Gets U.S. Antitrust Clearance for $11.7 Billion Rinker Takeover Bid Cemex SA (CX), the world's third-largest cement producer, received clearance from U.S. antitrust regulators for its $11.7 billion hostile offer for Australia's Rinker Group Ltd. (RIN).
• Emerging-Market Stocks Climb to Record, Erasing Losses From February Rout Emerging-market stocks rose to a record, erasing losses from the global rout that began Feb. 27, on prospects for improved economic and profit growth.
European Headlines (via Bloomberg.com)
• European Stocks Rise, Led by Air France, Lufthansa, Ahold, Delhaize Shares European stocks rose for a third day after a drop in oil prices lifted airlines and takeover speculation boosted shares of retailers.
• Barclays Will Sell $769 Million of Subprime Loans to CompuCredit of U.S. Barclays Plc (BCS), the U.K. bank negotiating to buy ABN Amro Holding NV (ABN), agreed to sell most of its subprime credit-card unit, reducing higher-risk loans.