Asia was lower this morning and Europe was lower after being higher due to economic news out of Germany. The US futures are higher at this time, but the big news will come out today in the form of the first economic news out this week. Investors should be aware that we think the FOMC rate decision will be a non-news factor as it is weeks before the election and the Fed wants to remain to appear neutral in political matters. Today's big news will be the New Home Sales figure and that could drive the home builders and plays like Whirlpool higher today.
We have economic news out today, it is as follows:
- MBA Mortgage Index - N/A
- New Home Sales - 385K
- FHFA Housing Price Index - N/A
- Crude Inventories - N/A
- FOMC Rate Decision - N/A
Looking at Asian markets we see markets are lower:
- All Ordinaries - down 0.82%
- Shanghai Composite - up 0.07%
- Nikkei 225 - down 0.67%
- NZSE 50 - down 0.07%
- Seoul Composite - down 0.67%
In Europe markets are slightly higher:
- CAC 40 - up 0.34%
- DAX - down 0.04%
- FTSE 100 - down 0.02%
- OSE - up 0.45%
After the market close yesterday Sirius XM 's (SIRI) Chief Executive Officer Mel Karmazin announced that he would be leaving the company in February 2013. We would look for high volume today as investors and the computers alike trade the volatility this will create. The rumors have been swirling about this possibility for a while now and after he finished his stock sales it obviously seemed like a good time. It will be interesting to see the stories come out over the next few days about what played out behind the scenes and to see where this media genius ends up in his next job. Shares were lower in after hours trading after finishing the regular trading session at $2.87/share as shares fell $0.04 (1.37%).
We have been spending much of our time writing about big technology companies and others having revenue issues the last few days, but yesterday we saw ARM Holdings (ARMH), the U.K. intellectual property semiconductor play, rise sharply as they beat analysts' revenue estimates. Shares finished the day at $31.19/share after rising $3.07 (10.92%) on higher than normal volume of 9.3 million shares. The company met the bottom line expectations, even with the top line beat but the important thing is that they did end their run of disappointing results for investors. We were bullish of this one in the $20s when it had retreated and many were saying it was dead and after this report we remain optimistic moving forward.
Shares in Regions Financial (RF) were hit hard yesterday after their earnings report. The shares finished the day at $6.54 after falling $0.54 (7.63%) on volume of 78.8 million shares. The stock was the second most active on the New York Stock Exchange as shares fell below their 200-day moving average. Earnings were three times higher than last year as the bank set aside less money for bad loans, but investors worried about the fact that their yield earned off of those loans fell. The company had previously done a good job protecting the margins but this quarter they were unable to, although they were still able to exceed analysts' expectations. The company also announced that they may sell preferred shares. This recommendation is lower than it has been in many months and at this time we are going to move it to a hold from a buy until we see improvement in the overall market.
Whirlpool (WHR) saw shares rise sharply yesterday as shares finished up $7.50 (8.69%) to close at $93.81/share on volume of 5.7 million shares. The company is great play on the housing recovery and their earnings display a recovery of sorts for the industry. Volumes for the company were down, but they did have enough demand to create pricing power which is what pushed their numbers above analysts' expectations. We personally are not invested in this one, but have a few friends whose retirement accounts hold this one as a long-term play on a housing recovery based on our research (full disclosure). There are still questions out there concerning the company however the bigger story is the housing recovery and what that means for the sales of the company's wares. The shares hit a new 52-week high yesterday and we think that long-term the shares can get in the neighborhood of $110-120/share.
One of the biggest disappointments yesterday had to have been Dupont (DD) as the shares fell $4.51 (9.06%) to close at $45.25/share on volume of 31.5 million shares. The company reported poor results in regards to revenue and announced that they would be restructuring the company while eliminating roughly 2400 jobs and closing about 20 plants. This is equivalent to about 5% of the company's workforce and the plan is expected to save the company about half a billion per year. We, like most of the rest of the investment community, were caught off guard by just how bad the story was here. Remember it was not too long ago the company was discussing big expansion plans for the United States based off of the cheap natural gas prices and strong demand in the chemicals business, now we are getting a story of how tough of an environment it is to operate in. For long-term investors this is a good entry level as the yield is about 4% and the shares are trading near a 52-week low.