GDX – Market Vectors Gold Miners ETF – Shares of the gold ETF that invests in shares of precious metals mining companies are up 0.5% to $49.53 with one hour remaining in the trading session. Option implied volatility has come down from 54% to 46% recently as gold’s price has surged. Nearer-term investors sought downside protection on the fund, whereas long-term traders initiated bullish plays. Investors hoping to lock in gains experienced during the recent run-up in the price of gold purchased 4,000 puts at the January 2010 47 strike for 3.05 apiece. Further along, at the March 2010 44 strike, another 6,000 puts were picked up for an average premium of 3.10 per contract. Finally, long-term bullishness took the form of a call spread in the January 2011 contract. It appears one investor purchased about 5,000 calls at the January 50 strike for an average of 9.52 each, marked against the sale of the same number of calls at the higher January 55 strike for 7.55 each. The net cost of the optimistic play amounts to 1.97 per contract. The trader stands to accrue maximum potential profits of 3.03 each if shares of GDX rally 11% over the current price to $55.00 by expiration in January 2011.

Much has been written about the planned release by General Motors of the Chevy Volt, a plug-in hybrid electric vehicle. When GM launches the vehicle, now slated for late 2010, it expects to sell tens of thousands of them.

Q3 2009 Earnings Call

October 27, 2009 1:00 pm ET

By Jeff St. John

The Department of Energy on Tuesday named 100 smart grid projects as winners of $3.4 billion in stimulus grants – and it looks like the smart meter industry is going to be happy.

• Goldman defends dark pools, status quo. In a letter to the SEC (.pdf), Goldman Sachs (GS) dispelled five common myths about so-called 'dark pool' anonymous trading exchanges, saying the venues benefit both institutional and retail traders by reducing transaction costs and increasing competition. The rest of the 56-page document - which summarizes a Sept. 24 SEC/Goldman gettogether - sheds light on industry practices of short selling, high-frequency trading, flash trading and naked access, which have come under varying levels of criticism in recent months.
• India begins exit. With inflation pressures building, the Reserve Bank of India took the first step toward withdrawing its record fiscal stimulus by ordering lenders to keep more cash in government bonds. "It may be appropriate to sequence the 'exit' in a calibrated way," governor Duvvuri Subbarao said today after boosting the liquidity ratio to 25% from 24%. BofI kept its benchmark rates unchanged, and maintained its 6% GDP growth forecast. "We will start to see G-20 economies exiting now, starting with the emerging ones and then the advanced countries," economist Mridul Saggar said. India's BSE Sensex was down 2.3% amid a broad Asia pullback. (ETF: INP)
• New IRS group targets ultra-rich. A new IRS unit will target the ultra-wealthy by helping decode partnerships, offshore trusts and other complex techniques used to hide earnings. Speaking to an accountants' trade group Monday, IRS commissioner Doug Shulman said the new Global High Wealth Industry group will begin its first audits next month, honing in on individuals with assets or income in the tens of millions - for whom, he said, you cannot assess compliance "by looking only at their 1040s."
• Gross sees weaker U.S., pressure on Treasurys. Influential bond manager Bill Gross warned Monday that an end to the Fed's debt buyback schemes could add selling pressure to several credit markets, including U.S. Treasurys. Gross also said he believes emerging economies will grow faster than the U.S.: "The emerging world, whether it's in Asia, Australia or other associated countries, will do much better from the standpoint of growth, and that's where money should eventually move to. It moves there because of higher profits and it moves there actually because of higher real interest rates."
• China predicts more growth ahead. China reported a 190% jump in overseas investment (to $20.5B in Q3), and forecast industrial production would rise 16% in Q4 after a 13.9% gain in Q3. Analysts say Beijing may be encouraging Chinese companies to invest abroad to ease upward pressure on the yen. Last week, China reported an 8.9% gain in Q3 GDP, leading to speculation about an imminent exit from its super-loose monetary stance. This morning, Morgan Stanley's Stephen Roach said investors are wrong to bet on China reining things in: "The Chinese really are fixated on one thing and one thing alone which is social stability - they don’t want to take a risk of another negative growth surprise." (ETFs: FXI, PGJ)
• Japan's Fujii criticizes BOJ. Japan's finance minister lashed out at its central bank Tuesday, calling its view of the economy too rosy and narrowly informed. "The BOJ has repeatedly said the economy is getting better, but they are dealing with different people," Hirohisa Fujii said at a meeting. The BOJ has a developed a reputation of allowing its jawboning to push it to act in a contrary way just to demonstrate its independence. (ETF: EWJ)
• UBS hires McCann to rebuild Americas unit. UBS (UBS) named Robert McCann - former chief of Merrill Lynch's brokerage unit - to head its Americas wealth management businesses. UBS has been hurt by a tax dispute with the U.S. government, not to mention bad bets on auction-rate securities, writedowns, and capital outflows. McCann dispelled rumors the unit may be up for sale: "I had to go to court against two of my former employers to be able to work with UBS. I would have not done that if the whole goal was to sell the company." Analysts say the unit remains 'strategically challenged,' and are skeptical a new helmsman can combat the negative implications of UBS's loss of its status as banker to the ultra-secretive.
• Utex leads bidders for GE Security. Sources say United Technologies (UTX) has emerged as the frontrunner for GE's (GE) fire alarm and surveillance systems unit, which it put on the block earlier this year. A deal would bolster United's strategy of locking in revenue streams by offering multi-year service contracts for equipment and systems in commercial buildings. GE is thought to want about $2B for the unit.
• EU approves Pepsi bottlers merger. PepsiCo (PEP) received the European Commission's blessings for its $7.8B deal to buy Pepsi Bottling Group (PBG) Tuesday, despite some overlap in their businesses. "The proposed transaction would not significantly change the market structure. Consequently, the Commission concluded that the transaction would not raise competition concerns," it said.
• Europe lending dries up. Euro zone private-sector loans fell 0.3% from a year ago, the first contraction on record, but economists said a slight rise in month-over-month lending was a sign credit in the area was slowly beginning to flow again. "The year-on-year fall is going to catch everyone's imaginations, but that's a lagging indicator of what's been going on," Fortis's Nick Kounis said. Loans to households rose by €14B from August, the fifth sequential increase.
• Data point to bumpy recovery. Regional reports Monday suggested the economy is approaching levels associated with the end of recession, but isn't exactly surging to new highs. Chicago Fed's national activity index (.pdf) fell to -0.81 from -0.65 in August, with production/income making the only positive contribution. Still, the index's three-month moving average makes quite a strong case for a V-shaped recovery. Dallas Fed said Texas-area factory activity declined, and its production index moved into negative ground after leveling the month before. The Chicago Fed's manufacturing index (.pdf) rose 1% to 82.3, but remains 15.7% lower than a year ago.

Earnings: Tue. Before Open

• ACGO Corp. (AGCO): Q3 EPS of $0.13 beats by $0.09. Revenue of $1.4B (-32.7%) in-line. (PR)
• AK Steel (AKS): Q3 EPS of $0.06 beats by $0.05. Revenue of $1.04B (-51.7%) in-line. Shares +1.1% premarket. (PR)
• Avery Dennison (AVY): Q3 EPS of $0.82 beats by $0.25. Revenue of $1.55B (-10.2%) vs. $1.47B. "While the rate of volume decline in the third quarter improved compared with the first half of the year, this was largely due to a slowdown in inventory reductions. Our end-markets remain soft, and we continue to be cautious about the pace of their recovery." (PR)
• BE Aerospace (BEAV): Q3 EPS of $0.36 beats by $0.04. Revenue of $460M (-21.8%) in-line. Expects a substantial increase in earnings and revenue in 2011. (PR)
• Boyd Gaming (BYD): Q3 EPS of $0.09 misses by $0.01. Revenue of $398M (-6.6%) vs. $411M. "While visitation levels remained fairly constant, spend per visitor continues to be down significantly year-over-year, as consumers are still being cautious with their spending." (PR)
• BP (BP): Q3 earnings of $4.67B (-47%) vs. consensus of $3.25B. Sees 2009 costs down by $4B vs. a previous $3B. Total production +6.9%. Shares +5% premarket. (PR)
• Canadian Pacific Railway (CP): Q3 EPS of $0.85 beats by $0.07. Revenue of $1.09B (-14%) in-line. (PR)
• Celanese (CE): Q3 EPS of $0.58 beats by $0.15. Revenue of $1.3B (-28.5%) in-line. (PR)
• CommScope (CTV): Q3 EPS of $0.61 beats by $0.05. Revenue of $750M (-29.4%) vs. $784M. (PR)
• Convergys (CVG): Q3 EPS of $0.27 beats by $0.04. Revenue of $765M (+13.2%) vs. $653M. (PR)
• Corn Products International (CPO): Q3 EPS of $0.70 beats by $0.07. Revenue of $971M (-10.5%) vs. $983M. (PR)
• EarthLink (ELNK): Q3 EPS of $0.28 beats by $0.03. Revenue of $174M (-24.4%) in-line. Net subscriber losses of 146K, down from 149K in Q2 and 275K a year ago. Shares +3.8% premarket. (PR)
• Del Monte (FDP): Q3 EPS of $0.61 beats by $0.24. Revenue of $766M vs. $819M. (PR)
• FirstEnergy (FE): Q3 EPS of $1.11 beats by $0.06. Revenue of $3.4B (-12.8%) vs. $2.96B. (PR)
• FPL Group (FPL): Q3 EPS of $1.38 misses by $0.03. Revenue of $4.47B vs. $4.96B. Shares -3.1% premarket. (PR)
• Honda (HMC): FQ2 profit of ¥54B (-56%) beats consensus by ¥11B. U.S. vehicle sales -25% to 300K. Sees full-year net income of ¥155B, almost triple its previous forecast, and global sales of 3.4M, up 3.2%. (Bloomberg)
• Hospira (HSP): Q3 EPS of $0.90 beats by $0.21. Revenue of $1.01B (+8.9%) vs. $0.94B. Shares +3.7% premarket. (PR)
• IAC/InterActiveCorp (IACI): Q3 EPS of $0.34 beats by $0.21. Revenue of $337M (-8.9%) in-line. Shares +1.3% premarket. (PR)
• Iconix Brand Group (ICON): Q3 EPS of $0.31 beats by $0.03. Revenue of $59.4M (+7.7%) vs. $53.9M. Shares -1.3% premarket. (PR)
• Johnson Controls (JCI): FQ4 EPS of $0.52 beats by $0.01. Revenue of $7.87B (-15.5%) in-line. (PR)
• L-3 Communications (LLL): Q3 EPS of $2.12 beats by $0.27. Revenue of $3.84B (+4.9%) in-line. (PR)
• Life Technologies (LIFE): Q3 EPS of $0.73 beats by $0.11. Revenue of $805M (+2.7%) vs. $791M. Shares +4.1% premarket. (PR)
• Sonic Automotive (SAH): Q3 EPS of $0.21 misses by $0.03. Revenue of $1.52B (-5.9%) in-line. (PR)
• TD Ameritrade (AMTD): Q3 EPS of $0.26 beats by $0.04. Revenue of $658M (+1.3%) vs. $630M. Avg. client trades +35% to 411K/day. Used 70% of net income to buy back shares at average of $11.94/share. Shares +1.4% premarket. (PR)
• Textron (TXT): Q3 EPS of $0.12 vs. consensus of -$0.03. Revenue of $2.55B (-26.6%) in-line. Sees full-year EPS of $0.33-0.63 vs. consensus of -$0.06. (PR)
• Under Armour (UA): Q3 EPS of $0.52 beats by $0.08. Revenue of $270M (+16.2%) vs. $250M. Shares +1.6% premarket. (PR)
• United States Steel (X): Q3 EPS of -$2.11 beats by $0.76. Revenue of $2.82B (-61.5%) vs. $2.72B. Shipment volumes and operating rates increased significantly from the very low levels of Q2. Remains cautious in its outlook for end-user demand, as customer order rates have decreased from Q3. Shares +4.4% premarket. (PR)
• Valero (VLO): Q3 EPS of -$0.39 misses by $0.06. Revenue of $19.5B (-45.8%) vs. $18.8B. Refining margins continued to suffer from a combination of weak demand for refined products and high inventories. Shares +0.6% premarket. (PR)
• Wynn Resorts (WYNN): Q3 EPS of $0.33 beats by $0.18. Revenue of $773M vs. $743M. Shares +1.9% premarket. (PR)

Earnings: Mon. After Close

• Arris Group (ARRS): Q3 EPS of $0.25 beats by $0.01. Revenue of $276M (-7%) vs. $274M. Shares +0.7% AH. (PR)
• Baidu.com (BIDU): Q3 EPS of $2.16 beats by $0.35. Revenue of $187M (+39%) vs. $188M. Sees Q4 revenue of $174M-180M vs. $203M. Shares -13.1% AH. (PR)
• Cabot Oil & Gas (COG): Q3 EPS of $0.41 beats by $0.05. Revenue of $207M (-15%) vs. $205M. (PR)
• DryShips (DRYS): Q3 adjusted EPS of $0.27 beats by $0.07. Revenue of $228M (-30%) vs. $210M. Shares -0.3% AH. (PR)
• Flextronics International (FLEX): FQ2 EPS of $0.13 beats by $0.04. Revenue of $5.8B (+1%) in-line. Sees Q3 EPS of $0.14-0.16 vs. $0.13. Shares +2.7% AH. (PR)
• Health Management Associates (HMA): Q3 EPS of $0.10 beats by $0.01. Revenue of $1.1B (+6%) in-line. Shares -1.1% AH. (PR)
• Masco (MAS): Q3 EPS of $0.08 misses by $0.01. Revenue of $2.1B (-17%) vs. $2B. Sees full-year adjusted EPS of $0.12-0.22 vs. $0.07. Shares -0.1% AH. (PR)
• Plum Creek Timber (PCL): Q3 EPS of $0.12 beats by $0.04. Revenue of $294M (-29%) vs. $274M. Sees Q4 EPS of $0.12-0.17 vs. $0.12, and full-year EPS of $1.39-1.44 vs. $1.35. Shares +0.6% AH. (PR)
• SL Green Realty (SLG): Q3 EPS of $0.98 in-line. Revenue of $250M (-7%) vs. $224M. (PR)
• Vertex Pharmaceuticals (VRTX): Q3 EPS of -$0.71 beats by $0.10. Revenue of $25M (-21%) vs. $30M. (PR)
• VF Corp. (VFC): Q3 EPS of $1.94 misses by $0.01. Revenue of $2B (-5%) in-line. Shares -7% AH. (PR)

Today's Markets

Asia's markets dropped strongly on Tuesday, but Europe is above breakeven at midday, and futures are flat after a U.S. pullback Monday.

On October 5, First Energy (NYSE: FE) announced a planned energy efficiency program, involving the delivery of two compact fluorescent lightbulbs (CFLs) to each of its residential and small commercial customers in Ohio. This was to be a part of First Energy’s revived energy efficiency programs, stimulated in large part by the 2008 passage of Ohio SB 221, which stipulates that utilities must reduce their customers’ energy consumption by 22.5% by 2025.

Many investors thought that they could time the market to their advantage. But actually they just guessed about the psychology of other investors, trying to figure out when others might start selling. In fact this explains why so many investors were holding stocks while they also thought the market was overpriced, according to Robert Shiller from The Washington Post.

In today’s low interest rate environment, yield-hungry investors might want to invest in financially strong blue chip companies that offer the potential for stable and solid dividends. I filtered the 200 largest U.S. stocks (by market cap), and below are 20 highest dividend yield companies (sort by yield %).

Bullish Calls

First Energy (FE), Dominion (D), Exelon (EXC): "I've got to tell you...First energy is a well-run company with a good yield. It's not as good as Dominion, or if you want growth, EXC. Those are my favorites."

Bullish Events:

1. July-2009 ISM manufacturing data posted 48.9 vs. consensus estimates of 46.5;
2. June-2009 Construction Spending improved to 0.3% vs. consensus estimates of -0.5%;
3. July-2009 motor vehicle sales rose 15% to 8.3mm annualized units vs. previous month’s 7.1mm; and
4. economists in the private sector, e.g. Alan Greenspan and notorious Dr. Doom aka Nouriel Roubini, are also seeing plausible light at the end of an economic tunnel of darkness.

Bearish Events: N/A

Q2 2009 Earnings Call

August 3, 2009 2:00 pm ET

• New GM board to meet, discuss Opel. General Motors' new 13-member board convenes today for the first time, with an agenda that reportedly includes a discussion of asset sales, company goals and, most importantly, a review of the bids received for GM's Opel unit. Ahead of the meeting, Germany's Economy Minister Karl-Theodor zu Guttenberg said both bids for Opel must be improved in order to win government backing. GM's new chairman, Edward E. Whitacre Jr., will be firmly in the spotlight as he tries to simultaneously negotiate political pressure from Washington and help CEO Fritz Henderson turn the company around.
• UBS said to reach tax settlement. Swiss newspapers report UBS (UBS) has reached a tax probe settlement with the U.S. government. As part of the deal, UBS will not have to pay a fine but will release data on 5,000 of its American clients to U.S. authorities. Final details of the settlement are still being worked out, but discussions should be complete by the end of the week. Swiss officials declined to comment. Shares +5% premarket (7:00 ET).
• White House weighs taxes, more jobless aid. White House officials said jobless benefits may need to be extended as an economic recovery likely won't create new jobs until next year. As many as 1.5M Americans will exhaust their unemployment benefits in the coming months, contributing to more foreclosures and hurting already-weak consumer spending. Officials are also unwilling to rule out possible tax increases, including a middle-class tax hike, as a way to address massive budget deficits.
• Surprise profit at HSBC. HSBC (HBC) posted a surprise H1 profit as earnings from its securities unit more than doubled. Net income fell 57% to $3.35B, vs. an expected $600M loss. Though loan impairments and other credit risk provisions rose to $13.9B from $3.9B the year before, HSBC Chairman Stephen Green expressed optimism that "it may be that we have passed, or are about to pass the bottom of the cycle in the financial markets." Shares +7% premarket (7:00 ET).
• Car rebate program clunks along. After the government's 'Cash for Clunkers' ran through its entire $1B budget in just six days, the House of Representatives quickly approved another $2B for the car rebate program on Friday. The Senate is set to take up the funding appropriation today, with the White House expressing optimism that the program will be extended, despite some signs of resistance from concerned lawmakers and the possibility of a Republican attempt to block the funding extension outright. Government and industry officials said nearly 250,000 cars have already been sold on clunker trade-ins, but some economists aren't convinced the program is providing as many benefits as it claims.
• Nissan goes electric in leafs and bounds. Nissan (NSANY) gained 5.4% in Tokyo trading, reaching a 10-month high, after unveiling the Leaf, an electric car which gets 100 miles on a full charge. Nissan spent 17 years developing Leaf's lithium-ion battery, and hopes the technology will help it become the biggest supplier of electric cars. CEO Carlos Ghosn said aggressive estimates that electric cars will make up 10% of all sales by 2020 are very reasonable.
• Friday's failures. Regulators closed another round of banks on Friday, in Oklahoma, Florida, Ohio, Illinois and New Jersey, bringing this year's total to 69 failures and raising questions about the recovery of the banking sector. The closures are expected to cost the FDIC around $912M. (Read the FDIC's press releases: I, II, III, IV, V)

Earnings: Monday Before Open

• Clorox (CLX): FQ4 EPS of $1.20 beats by $0.01. Revenue of $1.5B (+0.3%) in-line. Shares +0.6% premarket (8:30 ET). (PR)
• FirstEnergy (FE): Q2 EPS of $0.87 beats by $0.03. Revenue of $3.3B (+0.8%) vs. $3.2B. (PR)
• Humana (HUM): Q2 EPS of $1.67 beats by $0.03. Revenue of $7.6B (+7.5%) vs. $7.8B. (PR)
• James River Coal Company (JRCC): Q2 EPS of $0.59 misses by $0.19. Revenue of $172M (+25%) vs. $189M. Issues downside FY '09 EPS guidance of $2.25-2.60 vs. prior $3.30-3.80. (PR)
• Loews (L): Q2 EPS of $0.78 misses by $0.20. Revenue of $3.5B (-10%) vs. $3.4B. (PR)
• MGM Mirage (MGM): Q2 EPS of -$0.15 misses by $0.06. Revenue of $1.5B (-21%) in-line. Shares -1.1% premarket (8:45 ET). (PR)
• Molson Coors Brewing Company (TAP): Q2 EPS of $1.11 beats by $0.14. Revenue of $799M (-54.5%) vs. $751M. (PR)
• National Retail Properties (NNN): Q2 FFO of $0.45 beats by $0.05. Revenue of $59M (+4%) vs. $55M. (PR)
• Reliant Energy (RRI): Q2 EPS of -$0.30 misses by $0.03. Revenue of $390M (-61.5%) vs. $360M. Shares +2.8% premarket (8:15 ET). (PR)
• Tyson Foods (TSN): FQ3 EPS of $0.33 beats by $0.11. Revenue of $6.7B (-3%) in-line. (PR)

Today's Markets

Asian markets closed mostly up. European markets and U.S. futures are off to a strong start.

TWST: As we look at that space, what's of prime import at this point? What's going on that investors are really focused on?

Sentiment

After a steady open, stocks faltered in morning trading and volatility picked up in the second half of trading on options-expiration Friday. The Dow Jones Industrial Average held modest gains early following better-than-expected data on industrial production, manufacturing, and consumer sentiment.

However, the rally ran out of steam early and General Motors (GM) led a morning slide in the Dow Jones Industrial Average. GM is down 5.85 percent at $1.10 per share due to ongoing worries about the automaker's financial well-being. BofA (BAC) is down 6.2 percent to $10.60 and falling to its lows of the day and the week.

Q1 2009 Earnings Call

May 5, 2009 1:00 pm ET

• More banks need capital. Speculation continues to grow ahead of Thursday's stress test results, with sources now saying as many as 10 out of 19 tested banks may need more capital. Regulators will likely cite commercial real-estate loans as a major reason why the banks need more capital, with projected losses of up to 12% on those loans over two years. Despite the rumors, financial shares rose by the most in more than a month yesterday, sending Wells Fargo (WFC) up 23.7%, Bank of America (BAC) up 19.3% and Citigroup (C) up 7.7%.
• S&P marches upwards. The S&P 500 turned positive for 2009, as a late burst of buying in the financial sector, basic-materials, energy and consumer stocks pushed the index to 907.24. The S&P is up 34% since hitting bear-market lows in early March, and is now up 0.4% for the year to date.
• UBS misses profit mark again. UBS (UBS) posted a Q1 net loss of 1.98B Swiss francs ($1.75B) amid more writedowns and continued client withdrawals, and said its bad loans may increase as the global economy worsens. Since taking office in February, CEO Oswald Gruebel has cut 7,500 jobs, replaced two executive board members and sold a Brazilian business unit, calling a return to profitability his 'most urgent' task. Shares -1.2% premarket (7:00 ET).
• Obama tax plan faces resistance. Obama unveiled plans to end tax breaks for U.S.-based multinational corporations but met with resistance from some Democrats in Congress worried about 'unintended consequences.' The proposal would ban three offshore tax-saving strategies commonly used by companies like Citigroup (C), General Electric (GE) and Procter & Gamble (PG), and re-opened a debate about whether U.S. firms can stay globally competitive if forced to pay hefty taxes on foreign profits.
• Bankruptcy fallout for Chrysler lenders, dealers. Chrysler's dealership network is on the verge of collapse as uncertainty about Chrysler's future drives already-scarce consumers away. Meanwhile, secured lenders who oppose Chrysler's bankruptcy plan have asked for their identities to be kept secret after some received death threats. Chrysler itself received court permission to use $4.5B in government loans for bankruptcy financing, and expects to be profitable again by 2012.
• Antitrust probe on Apple, Google. The Federal Trade Commission is investigating whether Apple (AAPL) and Google (GOOG) violated antitrust laws with the overlap of directors on their boards. Arthur Levinson and Google CEO Eric Schmidt sit on the boards of both companies, leaving room for antitrust regulators to intervene if their presence reduces competition.
• Alcatel-Lucent widens loss. Alcatel-Lucent (ALU) saw its Q1 loss more than double to €402M ($537.5M) from €181M the year before, as demand for telecommunications equipment slumped. This marked the company's tenth consecutive quarterly deficit. CEO Ben Verwaayen said the company has no plans to leave the business of making wireless-communications equipment but acknowledged this "will be a year of transition" and "taking appropriate actions." Shares -2.7% premarket (7:00 ET).
• Raising the bar on failed bank reviews. With so many U.S. banks failing (32 to date in 2009), government watchdogs want to change the law so that a review is required only if a bank's failure costs the FDIC $300M or more. Currently, a review must be done if a bank failure costs the FDIC $25M or more, which has created a heavy workload of 'material loss reviews' of failed banks.
• Kindle tackles textbooks. Amazon (AMZN) is reportedly planning to unveil a new version of Kindle tomorrow aimed at publishers of periodicals and academic textbooks. The new e-reader will, among other features, likely have a larger screen and a more fully functional web browser. Amazon has already worked out a deal with several publishers to make their textbooks available in e-format.
• ArcelorMittal shelves steel bid. ArcelorMittal (MT) has suspended a potential $8B investment in Indonesian steelmaking facilities, after over a year of stalled negotiations. The deal was meant to capture key supplies of iron ore and reduce ArcelorMittal's reliance on big suppliers like Rio Tinto (RTP) and BHP Billiton (BHP).
• TALF gets a boost. The Federal Reserve's TALF program is making some progress, with a $5B JPMorgan Chase (JPM) bond offering backed by credit-card loans that is eligible for the program. The JPMorgan deal is the largest to date of the TALF-eligible offerings, and is one of six deals due to be sold today.
• Loss but no aid expected for AIG. AIG (AIG) is expected to post a Q1 loss when it reports on Thursday, but reportedly won't need a new capital injection from the government. If this is true, it will be the first quarterly results announcement since AIG's September bailout that is not coupled with government aid.
• Aussies hold rate steady. Australia's central bank left its benchmark interest rate unchanged at 3%, as largely expected. The bank is waiting to see whether the lowest borrowing rates in nearly 50 years, coupled with government spending, will be enough to pull the economy out of its recession.
• Construction spending improves (.pdf). Construction spending rose 0.3% in March vs. an expected 1.6% fall and last month's 1% fall (revised). For the quarter, spending fell 10.9%.
• Home sales beat expectations. Pending Home Sales rose 3.2% in March, vs. consensus of 0% and previous sales of +2% (revised). NAR chief economist Lawrence Yun said the increase could be the "leading edge" of first-time buyers taking advantage of cheap prices and the $8,000 tax credit.

Earnings: Tuesday Before Open

• Archer-Daniels-Midland (ADM): FQ3 EPS of $0.37 misses by $0.12. Revenue of $14.8B (-20.7%) vs. $16.9B. (PR)
• Automatic Data Processing (ADP): FQ3 EPS of $0.80 in-line. Revenue of $2.4B (-2.2%) in-line. (PR)
• Avon Products (AVP): Q1 EPS of $0.27 misses by $0.06. Revenue of $2.2B (-12.9%) vs. $2.1B. (PR)
• Brookfield Asset Management (BAM): Q1 EPS of $0.15 misses by $0.01. Revenue of $2.65B (-17.4%) vs. $1.61B. (PR)
• Cincinnati Bell (CBB): Q1 EPS of $0.12 beats by $0.01. Revenue of $625.5M (-3.5%) vs. $345M. (PR)
• Cimarex Energy (XEC): Q1 EPS of $0.09 misses by $0.08. Revenue of $209M (-56.2%) vs. $232M. (PR)
• Cognizant Technology Solutions (CTSH): Q1 EPS of $0.38 beats by $0.01. Revenue of $746M (+16%) vs. $734M. (PR)
• Constellation Energy Group (CEG): Q1 EPS of $0.74 beats by $0.04. Revenue of $3.1B (-16.2%) vs. $4.4B. (PR)
• CVS (CVS): Q1 EPS of $0.55 beats by $0.01. Revenue of $23.4B (+9.7%) vs. $23.6B. (PR)
• Denbury Resources (DNR): Q1 EPS of $0.19 in-line. Revenue of $173.7M (-45.2%) vs. $241.4M. (PR)
• Diamondrock Hospitality Company (DRH): Q1 EPS of $0.16 beats by $0.03. Revenue of $118.5M (-10.8%) vs. $114M. (PR)
• Duke Energy (DUK): Q1 EPS of $0.28 misses by $0.04. Revenue of $3.3B (-0.7%) vs. $3.4B. (PR)
• Emerson Electric (EMR): FQ2 EPS of $0.49 misses by $0.04. Revenue of $5.1B (-15.5%) in-line. (PR)
• FirstEnergy (FE): Q1 EPS of $1.02 beats by $0.13. (PR)
• Foundation Coal (FCL): Q1 EPS of -$0.10 misses by $0.06. Revenue of $395M (-2.9%) vs. $401M. (PR)
• Health Net (HNT): Q1 EPS of $0.41 beats by $0.06. Revenue of $3.9B (+2.5%) in-line. Shares +2.6% premarket (8:40 ET). (PR)
• Hewitt Associates (HEW): FQ2 EPS of $0.60 beats by $0.05. Revenue of $762M (-3.5%) vs. $754.5M. (PR)
• IntercontinentalExchange (ICE): Q1 EPS of $1.09 beats by $0.14. Revenue of $232M (+12.1%) vs. $230M. (PR)
• Kraft Foods (KFT): Q1 EPS of $0.45 beats by $0.05. Revenue of $9.4B (-6.5%) vs. $9.7B. Shares +3.0% premarket (7:30 ET). (PR)
• Legg Mason (LM): FQ4 EPS of -$2.29 beats by $0.04. Revenue of $617M (-42.3%) vs. $611M. (PR)
• Louisiana-Pacific (LPX): Q1 EPS of -$0.29 beats by $0.13. Revenue of $205M (-41.4%) vs. $245M. (PR)
• Macerich Company (MAC): Q1 EPS of $1.16 beats by $0.10. Revenue of $211M (-3.1%) vs. $201M. (PR)
• Marvel Entertainment (MVL): Q1 EPS of $0.57 beats by $0.21. Revenue of $197M (+75%) vs. $136M. (PR)
• Molson (TAP): Q1 EPS of $0.53 beats by $0.20. Revenue of $559M (-58.8%) vs. $568M. Shares +6.5% premarket (8:45 ET).(PR)
• Penske Automotive Group (PAG): Q1 EPS of $0.11 beats by $0.08. Revenue of $2.2B (-32%) in-line. (PR)
• PetroQuest Energy (PQ): Q1 EPS of -$1.36 misses by $1.40. Revenue of $59M (-22.4%) in-line. (PR)
• Pinnacle West Capital (PNW): Q1 EPS of -$0.29 misses by $0.17. Revenue of $629M (-8.6%) vs. $699M. (PR)
• Precision Castparts (PCP): FQ4 EPS of $1.87 misses by $0.01. Revenue of $1.6B (-9.2%) vs. $1.8B. (PR)
• Progress Energy (PGN): Q1 EPS of $0.64 beats by $0.03. Revenue of $2.4B (+18.2%) vs. $2.2B. (PR)
• Radian Group (RDN): Q1 EPS of -$2.69 misses by $1.03. Net loss is "primarily attributable to unrealized mark to market losses on derivatives and the continued increase in mortgage insurance defaults." (PR)
• Spectra Energy (SE): Q1 EPS of $0.33 in-line. Revenue of $1.4B (-13.5%) in-line. (PR)
• St. Joe (JOE): Q1 EPS of -$0.12 misses by $0.10. Revenue of $21.6M (-81.5%) vs. $33.3M. (PR)
• Teva Pharmaceutical Industries (TEVA): Q1 EPS of $0.71 beats by $0.03. Revenue of $3.1B (+22.4%) vs. $3.4B. (PR)
• Valeant Pharmaceuticals (VRX): Q1 EPS of $0.46 beats by $0.23. Revenue of $178M (+17%) vs. $175M. Shares +5.6% premarket (8:15 ET). (PR)
• Wisconsin Energy (WEC): Q1 EPS of $1.20 beats by $0.18. Revenue of $1.40B (-2.2%) vs. $1.45B. (PR)
• W&T Offshore (WTI): Q1 EPS of -$0.54 misses by $0.01. Revenue of $117M (-67.1%) vs. $122M. (PR)

Earnings: Monday After Close

• American Financial Group (AFG): Q1 EPS of $1.11 beats by $0.15. Sees full-year EPS of $3.75-4.05 vs. $3.72. Shares +9.7% AH. (PR)
• Chesapeake Energy (CHK): Q1 EPS of $0.46 misses by $0.02. Revenue of $2B (+23.8%) vs. $2.2B. Shares -6% AH. (PR)
• D.R. Horton (DHI): FQ2 EPS of -$0.34 misses by $0.04. Revenue of $775M (-52.3%) vs. $817M. Shares -1.2% AH. (PR)
• EOG Resources (EOG): Q1 EPS of $0.53 misses by $0.06. Revenue of $1.16B (+2.1%) vs. $0.98B. Shares +0.9% AH. (PR)
• Extra Space Storage (EXR): Q1 FFO of $0.23 misses by $0.26. Revenue of $69.3M (+5.5%) vs. $67.1M. Sees full-year FFO of $0.99-1.03 vs. $1.21. Shares -3.7% AH. (PR)
• FMC Corp. (FMC): Q1 EPS of $1.22 in-line. Revenue of $690M (-8%) vs. $790M. Shares -6.2% AH. (PR)
• Forest Oil (FST): Q1 EPS of $0.29 beats by $0.13. Revenue of $195M (-48.3%) vs. $257M. Shares flat AH. (PR)
• Health Care REIT (HCN): Q1 FFO of $0.81 beats by $0.02. Revenue of $144M (+14%) in-line. (PR)
• Hill-Rom (HRC): FQ2 EPS of $0.27 beats by $0.12. Revenue of $337M (-10.1%) vs. $334M. Full-year guidance in-line. (PR)
• Hologic (HOLX): FQ2 EPS of $0.29 beats by $0.02. Revenue of $402M (-6.7%) vs. $405M. Sees FQ3 EPS in-line, and revenue of $390-400M vs. $409M consensus. Shares -10.3% AH. (PR)
• McKesson (MCK): FQ4 EPS of $1.23 beats by $0.08. Revenue of $26.22B vs. $27.3B. Shares -3.4% AH. (PR)
• MGM Mirage (MGM): Q1 EPS of -$0.06 beats by $0.01. Revenue of $1.5B (-20.4%) vs. $1.58B. Says cancellations have tapered off and business seems to be stabilizing. Shares +4.8% AH. (PR)
• Principal Financial Group (PFG): Q1 EPS of $0.63 misses by $0.03. Revenue of $2.18B vs. $2.51B. Assets under management down 22% from a year ago to $237B. Shares +0.4% AH. (PR)
• St. Mary Land (SM): Q1 EPS of -$0.01 misses by $0.15. Revenue of $199M (-45%) vs. $196M. Shares flat AH. (PR)
• Vulcan Materials (VMC): Q1 EPS of -$0.29 misses by $0.22. Revenue of $600M (-26.6%) vs. $690M. -2.4% AH. (PR)

Today's Markets

Overseas markets moved higher Tuesday. Futures are up moderately.

Below is a summary of 22 AFG Buy Recommendations from the S&P500 Index. The report highlights the 2 companies from each sector (ex. financials) that have the most attractive value score and are currently rated Buys by The Applied Finance Group, Ltd. (AFG). Factors used to derive a AFG’s recommendation include: Expected change in Economic Margins, Intrinsic Value, and Management Quality.

We also ran a VE analysis and provided the results. The VE analysis of each company is used to identify implied sales growth expectations versus what the company has delivered historically in sales growth over the past 5 years. Measuring the spread between a company’s VE sales growth expectations and what it has historically delivered should give you a good idea of which companies have the best chance of meeting or exceeding those expectations, and thus are more likely to outperform.

By using The Applied Finance Group’s (AFG's) Risk Analysis, we have identified the top and bottom two firms in each sector (excluding the Financial sector) according to an overall risk score based on 9 variables (see more detail below). In addition to the risk analysis variables we also added another layer of analysis by evaluating the companies’ Earnings Quality (based on the concept of Accruals) and Altman Z-Score (identifies firms that are at risk of going bankrupt in the next 2 years).

Applied Finance Group’s Risk Analysis is designed to systematically calculate a stock’s risk score based on fundamental relationships between the Quarterly Income Statements and Balance Sheets. The template measures 9 factors to determine Risk: Changes in A/R, Changes in Inventories, Cash Flow vs. Operating Cash Flow, Fixed Payments vs. Pre-Tax Cash Flow, Leverage, Intangibles, Write-offs, Management Quality, and Valuation. Companies with lower scores have less risk. Companies in the Financial Sector were excluded due to their differences in financial statement structure.

Here is a list of the variables that are taken into account within this risk analysis: