General News:
– News of the day: The 10-year Treasure Note yield is above 5%. The cross above this psychological number spells trouble for stocks.
– Jobless claims fell 1,000 to 309,000. However a fall to 312,000 was expected. Continuing claims rose to 2.535 million. Only 2.5 million was expected.
– Mortgage company, Freddie Mac, reported that the 30-year, fixed-rate mortgages averaged 6.53 percent this week, a 10-month high, which is up sharply from 6.42 percent last week.
– Philadelphia Media Holdings L.L.C. is interested in joining a bid for the Dow Jones & Co., publisher of The Wall Street Journal.
– Bloomberg’s, John Berry, said that Fed officials will not change rates this year and even if the economy moves as expected, there may not be a change in 2008 either.
– JP Morgan hired 40 additional analysts to their commodity unit, a day after Prudential gets out of equity trading and research.
Asia/Europe:
Asia:
– Asian equities were mixed. China remained strong after a report was issued that the Chinese government would not raise the capital gains tax.
– Breakdown of Asian stock indices: China’s CSI 300 +3.4%, South Korea down -0.6%, Australia down -0.4%, New Zealand down -1.4%, India down -0.5%, Vietnam up +1.4%
– The People’s Daily, a Chinese newspaper, reported that China should make the yuan fully convertible in order to slow the accumulation of foreign reserves. They add that it is becoming expensive to keep the level of reserve.
– Liberal Democratic Party member in Japan, Mr. Kaneko, said it would be premature for the Bank of Japan to raise rates in July and says that the GDP deflator is still falling.
– Japan’s foreign reserves fell about $4 billion.
– Australia’s unemployment rate fell to 4.2% when 4.4% was expected. The number of people employed rose to 39,400. Only 10,000 was expected.
– Australia’s May construction index fell, representing a weakness in home building activity. The fall is also cited from factors such as lower new starts and fewer customer inquiries.
Europe:
– The Bank of England left rates unchanged.
– European Central Bank member, Mr. Mersh, noted that capacity use was reading its limit and there are threats that the service sector could raise prices.
– ECB member, Mr. Weber, said that EU inflation is near the top of the pain threshold.
– There may be slower productivity growth and higher wages, according to Riksbank (Sweden), Oeberg.
Corporate News:
– Disappoints came in the form of only modest sales gains.
– Books-A-Million (BAMM) announced a $3 one time dividend.
– Ingersoll-Rand (IR) may sell bobcat to Terex.
– Monster Worldwide (MNST) reported a restructuring.
– Medco (MHS), the nation’s largest pharmacy manager, has won a contract from CVS/Caremark (CVS). The contract was for a lucrative mail-order pharmacy business for the Federal Employees Program. Medco expects a $2 billion boost in annual revenues from the newly acquired contract.
– Chain Store Sales reports:
– Costco Wholesale Corp. (COST) +7%, 5.9% was expected.
– BJ’s Wholesale Club (BJ) +4.1%, 1.8% was expected.
– Nordstrom (JWN) +6.3%, 3.5% was expected.
– Christopher & Banks (CBK) +4%.
– Kohl’s Corp. (KSS) +10.5%, 6.4% was expected.
– Stein Mart (SMRT) +2.5%, -0.5% was expected.
– Jos. A Bank Clothiers (JOSB) +13.5%, 3.6% was expected.
– Family Dollar Stores (FDO) +2.5%, 1.7% was expected.
– Sharper Image Corp. (SHRP) -8%, -14% was expected.
– Saks Inc. (SKS) +37.5%, 12.5% was expected.
– Chico’s FAS Inc. (CHS) -2.9%, -4.5% was expected.
– TJX Companies Inc. (TJX) +5%, 3.8% was expected.
– JC Penny (JCP) down -2.0%, -0.5% was expected.
– Macy’s (M) -3.3%, -1% was expected.
– Fred’s Inc. (FRED) +0.2%, 1.5% was expected.
– AnnTaylor (ANN) -4.6%, -2.8% was expected.
– Abercrombie & Fitch (ANF) -5.0%, -2.1% was expected.
– Gap Inc. (GPS) -7.0%, -3.9% was expected.
– Deb Shops Inc. (DEBS) +0.2%, 1.5% was expected.
– Aeropostale Inc. (ARO) +1.9%, 5.0% was expected.
– American Eagle Outfitters (AEO) +5%, 6.0% was expected. EPS was $0.35, estimates were $0.37. Bearish number.
– Target (TGT) +5.8%, 6.2% was expected.
Favorable Comments:
– Google (GOOG) received favorable comments from Jefferies.
– General Dynamics Corp. (GD) upgraded a Lehman Brothers.
Negative Comments:
– Chipotle Mexican Grill (CMG) downgraded at Ray James.
– Volvo AB (VOLV) downgraded at JP Morgan.