Tag - Fdx

As of press time, 3:05 P.M. Eastern Time, stocks had given up most gains from the morning session. The Dow was at 9,509, up 3 points; the Nasdaq was down less than 3 points, holding at 2,017; and the S&P 500 had given up less than one point to hold at 1,025.

Advances lead declines on the NYSE and Amex while declines were just edging out advances on the Nasdaq.

Crude oil futures were up nearly half a dollar to $74.37 and August gold was trading down at 943.60 per ounce.

Small-cap gainers trading over 1 million shares include Mercer International (Nasdaq:MERC), up 71%; Charlotte Russe Holding (Nasdaq:CHIC), up 26%; and Electro-Optical Sciences (Nasdaq:MELA), up 20%.

*****On Friday, I wrote about how difficult it can be for investors to discern if the information they are receiving is valuable, or even trustworthy. Over the weekend, I read an article from Bloomberg that made my stomach turn. 

Apparently, as institutional investors began to suspect there was trouble brewing for many finance companies back in 2007, they stopped buying these companies' bonds. And by "these companies" I mean companies like AIG, CIT Group, GMAC and even Lehman Brothers.

When finance companies can't sell their bonds to institutional investors, we hear in the news that "capital markets are getting tight" or "disrupted." Of course what that actually means is that institutional investors, the ones who are most "in the know", won't lend money because it's too risky.

So what do companies like AIG or CIT Group do when the institutional investors they've been doing business with for years suddenly decide it's no  longer worth the risk? Why they go too individual investors who won't ask too many questions… 

*****There's a company in Chicago called Incapital, LLC, that underwrites corporate bonds intended for sale to individual investors. Founded by Tom Ricketts, whose father founded TD Ameritrade, Incapital controls 75% of the retail bond underwriting market.
 
In February of 2008, an unnamed Fidelity broker recommended CIT bonds to a customer instead of Freeport McMoran (NYSE:FDX) bonds because at the time CIT bonds were rated higher. The Fidelity broker reportedly said that the CIT bonds were pre-screened.

Less than a month later, credit default swaps (which is basically insurance for bonds in case the company goes bankrupt and defaults) on CIT Group bonds were already at distressed levels. Bloomberg reports that credit default swaps sellers wanted "…$1.75 million upfront and $500,000 a year to protect $10 million of the company bonds from default for five years…"

In other words, the institutional crowd knew full well that CIT bonds were highly risky, as evidenced by the 42.5% insurance cost. And yet that Fidelity broker was selling them to a retired customer as a safe "pres-screened" investment at the exact same time.

In all, CIT Group sold $600 million worth of bonds to unsuspecting individual (retail) investors in the first quarter of 2008. They've traded as low as $0.42 since.

Unfortunately, the story gets worse…

*****Incapital was selling Lehman Brothers bonds to individual investors three months before it went bankrupt. It also helped AIG and Freddie Mac raise money from individual investors.

The Financial Industry Regulatory Authority is investigating whether the "risks to these securities (cutely named InterNotes) were adequately disclosed…"

Sounds like and open and shit case to me.

And as for Ricketts, the owner of Incapital, he and his family are the proud owner of a 95% stake in the Chicago Cubs, Wrigley Field and a 25% percent interest in Comcast SportsNet. The cost: $845 million.

*****On Friday, July 17, rumors of CIT Group's imminent bankruptcy swirled. CIT Internotes were the most heavily traded bonds that day. Hundreds of millions worth of these bonds changed hands. And as you might guess, it was the individual investor who lost the most money during the panic sale.

Individual investors were selling one particular CIT bond that matures in 2016 for $0.42 on the dollar. Institutional investors were selling the same bond for $0.52 on the dollar. And yes, once again, it gets worse.

Traders were taking a 6% commission on the CIT Internotes trades that day, while all other trades were generating a 1% commission.

So not only were individual investors getting worse prices, they were paying higher fees. It's appalling. And there's really only one lesson: be careful out there.

If you're looking for honest advice and want to invest alongside an investment expert, I encourage you to check out my Recovery Portfolio service. I'm putting $100,000 of my own money where my mouth is. So when I tell subscribers we're buying XYZ stock, I'm buying it, too. No hype, no fluff, just real investing with real month. And I'll get you started with the five funds that these jokers on Wall Street won't share with you. Click here to find out more.

Until tomorrow,

Ian Wyatt
Editor
Small Cap Investor Daily

P.P.S. My book The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks is coming out on September 14 - visit www.smallcapbook.com to learn more. You can also follow me on http://twitter.com/ianwyatt 

Ian Wyatt is the Chief Investment Strategist of SmallCapInvestor.com and author of The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks. You can learn more about his book and receive small-cap stock picks at www.smallcapbook.com.

Small-cap stocks were slightly lower early this morning, pulled down by a rash of weak profit reports and gloomy outlooks amid ongoing concerns about the economic environment. Energy stocks were a soft spot for the market as crude oil tumbled to fresh four-year lows. Some of today’s small-cap gainers are BioSpecifics Technologies Corp. (Nasdaq:BSTC), Apogee Enterprises Inc. (Nasdaq:APOG) and TTM Tech Inc. (Nasdaq:TTMI).

Other Market Watch highlights today included:

• The dollar rallied into positive territory against the euro after taking a hit overnight, which could weigh on various commodity markets.  
• Crude oil prices tumbled to four-year lows Wednesday and extended that slide today, off some $1.50 a barrel this morning.  
• The energy market was on the mend overnight, but started sinking fast into the stock market open.  
• This morning, analysts at UBS lowered their forecast for 2009 profit estimates for the S&P 500

Small Cap Gainers:

• BioSpecifics Technologies Corp. jumped 41% as the biopharma firm announced a licensing agreement with Pfizer Inc. See (Nasdaq:BSTC).  
• Apogee Enterprises Inc. rose 12% as the glass maker received an earnings-related lift. See (Nasdaq:APOG).  
• TTM Tech Inc. rose 8% as the circuit board manufacturer continues to climb off the November lows. See (Nasdaq:TTMI).  
• FedEx Corp. met the current forecast, but warned that 2009 looked quite weak and said they would cut costs to prepare. See (NYSE:FDX). 

Small Cap Losers:

• Tennant Co. slumped 19% as the safety solutions firm announced restructuring plans amid slower sales. See (NYSE:TNC).  
• Atheros Communications falls 9.3% in pre-market after being cut to "hold" by Deutsche Bank. See (Nasdaq:ATHR).  
• Actuant earnings slashed in first quarter, shares tumble 7%. See (NYSE:ATU). 
• JP Morgan cuts Bucyrus to "neutral;" shares down 4% in pre-market. See (Nasdaq:BUCY).  

Small-cap stocks were slightly lower early this morning, pulled down by a rash of weak profit reports and gloomy outlooks amid ongoing concerns about the economic environment. Energy stocks were a soft spot for the market as crude oil tumbled to fresh four-year lows. At 10:05 a.m. ET, the Russell 2000 (NYSE:IWM) was down 1.24, or 0.20%, at 485.35.

The Philly Fed report came in at 39.3, which was up from last month’s reading, but still slightly below the consensus forecast. The leading indicators report was down 0.4%, which was in line with projections.

Earlier this morning ahead of the opening, the weekly claims report came in at 554,000, which was in line with market projections, but still awful historically. The four-week moving average on claims rose to 543,750, which is the highest level since December 1982. Continuing claims edged down 4.384 million, down from 4.431, which is a mildly positive development – but again, these numbers are still among the highest in a generation and the overall employment picture in the United States is expected to get worse over the next couple of months.

Bullish traders will say that all the dreadful economic news is a known factor and is already priced into the market. What’s more, most of the profit news has been awful as well, but is also subject to the “been there, done that” market response. This morning, analysts at UBS lowered their forecast for 2009 profit estimates for the . . .

Small-cap stocks were expected to open flat to slightly higher Wednesday morning as the market digests Tuesday’s collapse, which registered as the largest one-day downdraft of the year. The Russell 2000 (NYSE:IWM) was up about 0.2% in after-hours trading, which would suggest an open near 708.60.

Stocks index futures price direction was choppy in after-hours trading with the Dow and S&P 500 slipping into negative territory, then bouncing back after trading higher much of the night. Nasdaq futures were up about 0.5%. Stock markets around the world were mixed to lower overnight, with Japan off 0.4%, Hong Kong down 2.4%, Australia down 1.5%, Singapore down 1.9%, India down 1.6%, China up 0.1%, South Korea up 0.8% and Taiwan up 0.5%.

A big part of the story during Tuesday’s collapse was an unraveling of Lehman Brothers Holdings Inc. (NYSE:LEH), as LEH shares tumbled some 44% and triggered a wave of selling throughout the financial landscape. This morning LEH released earnings, which were awful, but the market was already expecting awful news anyhow. LEH confirmed they were planning to sell off prized assets to raise capital, as the fourth-largest U.S. investment bank posted losses nearing $4 billion for the quarter. LEH shares were turning higher ahead of the open.

Crude oil prices tipped lower, slipping about $0.30 a barrel toward the $103 zone. The market spent much of the overnight session on a mild rally after OPEC surprised the market by voting to cut production 500,000 barrels a day in response to the recent slide in prices. The temporary bump in energy prices helped lift gold off 11-month lows that were set in Asian trading. The U.S. dollar was firm against the euro . . .

Forward Air Corp. (Nasdaq:FWRD) is one of the pack mules of the transportation industry, a hybrid that blends its niche air-freight service with surface movement of cargo. And despite the economic doldrums and sky-high fuel costs, Forward Air is moving forward as it hauls out a plan that includes organic growth and acquisitions.

Of the dozen analysts surveyed by Thomson Reuters, there’s an even split of six calling Forward Air a “strong buy” and six rating it the equivalent of “hold.” The median price target is $41 for Forward Air, which saw its 52-week high of $41.90 on Aug. 9, 2007, while hitting its 52-week low of $25.55 on Jan. 23. The stock closed Thursday at $36.02.

KeyBanc Capital Markets analyst Todd Fowler, who has the stock at “hold,” said in an interview that Forward Air is currently benefiting “from some things they’ve done internally, as well as external factors, the prime one being that (transportation competitor) Kitty Hawk filed for bankruptcy in October and went out of business. That helped stabilize pricing in the market.”

Fowler is on the sidelines with Forward Air not only because of its exposure to what is known as the deferred air-freight business, “since people tend to shy away” in a soft economy; but also because the company might need some time to absorb three recent acquisitions...

Small-cap stocks edged lower on the open, pulled down by overseas equities declines and an on-going rout in the financial arena. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was down 12.36, or 1.72%, at 707.45, sinking to the lowest level since April 24.

Into the U.S. stock market opening, prices for “black gold” were off from the overnight highs quite a bit, which helped trim opening losses for equities. In overnight action, crude oil prices climbed near $139 dollars a barrel amid rumors of an attack on Iran. The rumors were denied by Iranian officials and crude oil prices gradually pulled back off the highs. By the opening, crude oil prices actually slipped into the red a tad and were bouncing back and forth around steady levels.

The consumer confidence report came out at 50.4, which was well below the forecast of 56 and down from a revised 58.1 reading last month. The figure was a fresh 16-year low and equity markets and the U.S. dollar extended losses after the soft data on confidence.

The FOMC started a two-day policy meeting today, and some traders may go into hibernation waiting for the official rate news Wednesday afternoon. Fed funds futures have priced out any chance for a rate hike from this meeting, and the market is expecting interest rate policy to move into a hold mode.

The Case-Shiller U.S. home price index came out at minus 1.4% versus minus 2.2% in March. The year-over-year decline was a whopping minus 15.3%; although the numbers are numbingly bad on face value, they were actually a touch better than feared, sparking hope that housing market declines are nearing some kind of . . .

Small caps declined after the opening, made a brief resurgence during the second hour of regular trading but have continued their descent in the afternoon. Concerns about the financial sector and FedEx Corp.’s (NYSE:FDX) warning that low demand and high fuel costs will impact profits kept investors gloomy. At 1:39 p.m. ET, the Russell 2000 (NYSE:IWM) was off 9.03, or 1.23%, at 727.54.

Regional banks are taking a beating, with Marshall & Iisley Corp. (NYSE:MI) sinking 4% to a new 52-week low on analyst downgrades while Zions Bancorporation (Nasdaq:ZION) also set a fresh 52-week low, losing about 3%. Unfortunately, the news remains depressing for banks and other financial stocks, with Fifth Third Bancorp (Nasdaq:FITB) losing 14% during the afternoon session. Within the financial arena, large-cap futures and commodities broker MF Global (NYSE:MF) is plunging some 38% after the Bermuda-based firm said revenues were below the forecast and news that the company will sell convertible securities to raise capital and . . .

Small-cap stocks pressed lower on the opening as a fresh batch of earnings failed to impress investors in the aftermath of Monday’s rout on financial stocks and as crude oil drifted up to $135 dollars a barrel. At 10:00 a.m. ET, the Russell 2000 (NYSE:IWM) was off 5.56, or 0.76%, at 731.01.

Regional banks were hammered Monday, with Marshall & Iisley Corp. (NYSE:MI) sinking 5% to 52-week lows on analyst downgrades while Zions Bancorporation (Nasdaq:ZION) also set 52-week lows, losing about 10%. Unfortunately, the news remains gloomy for banks and other financial stocks, with Fifth Third Bancorp (Nasdaq:FITB) shedding 16% shortly after today’s opening. Within the financial arena, large-cap futures and commodities broker MF Global (NYSE:MF) tumbled 22% as the firm said revenues were below the forecast and news that the company will sell convertible securities to raise capital and pay down debt.

The “headline” financial stock coming into today’s action was Morgan Stanley (NYSE:MS), which reported quarterly results that were slightly above the forecast. However, the firm was still pulled into the red, down about 6% in early trading.

Outside of the financial world, FedEx (NYSE:FDX) earnings came in below the forecast, and their outlook for 2009 was dreadfully in line with surging energy costs that are hurting results for the package courier. When the FedEx news came out before the opening, it sparked about a three handle additional decline in large-cap S&P 500 futures.

Speaking of surging energy, crude oil prices climbed back to the $135 dollar a barrel level ahead of the stock market opening on concerns about a potential strike in Nigeria that could crimp output. Crude oil pulled back toward $134 dollars, but should gather direction for the day from the latest stocks data, which will come out . . .

Small-cap stocks are expected to push lower on the opening, pulled down by residual selling after Tuesday’s rout in the financial sector and by another batch of soft earnings leading into this morning’s open. The Russell 2000 (NYSE:IWM) was off about 0.7% in overnight trading, which would translate to an opening near 731.75.

Earnings news from large-cap firms ahead of the open ramped up overnight selling interest. Morgan Stanley’s (NYSE:MS) results were actually slightly better than the forecast, and although the stock was little changed immediately after the news in after-hours trading, the shares later turned into the red. Stock index futures were tugged lower by earnings news from FedEx (NYSE:FDX), which came in slightly below the forecast. The firm had a dreadful outlook for 2009, which sparked a 5% decline in the stock in after-hours trading and which tacked on about three more handles to the downside in S&P 500 futures.

Within the financial sector theme, shares in large-cap futures firm MF Global (NYSE:MF) tumbled some 15% overnight as revenue was below the forecast and the company said it would raise capital by selling convertible securities to pay down debt.

Crude oil futures were higher overnight, climbing to the $134.50-a-barrel range and will take direction from the 10:30 a.m. ET weekly inventory data, meaning the stock market could also take a turn for the better or worse at that time as well.

The MBA mortgage applications report came in at minus 8.8% and continues to be soft in line with the difficult housing situation and an uptick in rates. The market should be able to skate through the rest of today’s session without interruption from . . .

Small-cap stocks extended the recent slide Wednesday, as rising crude oil prices, ongoing credit crunch worries and a soft “Beige Book” report on economic activity took a toll. The Russell 2000 (NYSE:IWM) shed 14.74, or 2.01%, to 717.88, the lowest daily close since May 7 and the fourth consecutive close below opening levels, which shows that the bears are winning all the intraday skirmishes lately.

The Russell also closed below the 20-day moving average for the third consecutive session on lower closes, something that has not happened since March. The 20-day moving average is often watched as a short-term trend proxy and the last two times we saw the market below that line three consecutive periods, it presaged a nasty move lower. In addition, late in the day the Russell popped through key chart support at 720.50. Decisive action below that support would suggest a technical breakdown of the recent recovery move, and carries a downside target to 690, which makes action Thursday even more important to gauge the power of this pullback.

Crude oil prices shot $7 dollars a barrel higher Wednesday as the weekly stocks report reflected a drop in U.S. inventories for the fourth consecutive week. Crude oil prices jumped to more than $138 dollars, closing in on last week’s record high that approached $140. Elsewhere in the commodities arena, corn, soybeans and wheat soared up their daily trading limits today amid flooding in the heartland. Corn prices have been making record highs, which means that consumers’ wallets are taking a hit at the gas pump and then again at the grocery store. The iPath GSCI Total Return structured note fund reversed two days of losses to notch new record highs today, reflecting the broad advance in the price of physical goods. The Commodity Research Bureau Index of 19 markets also made new record highs today. A slide in the U.S. dollar also contributed to the rise in crude oil and other commodities, with the greenback down 0.4% against the yen, and off about 0.6% versus the . . .

Small-cap stocks are expected to start out the week in the green, lifted by gains in overseas equity indices, a firm tone in the U.S. dollar, and a pullback in crude oil prices. In after-hours trading, the Russell 2000 (NYSE:IWM) was up 0.7%, which would translate to an opening near 725. However, S&P 500 futures were only up about 0.1% moving toward the open, which would be a much more tame advance for small caps.

In overseas markets, Japan’s Nikkei was up 0.6%, while European shares were up about 0.5%, underpinned by profit news from the largest European bank, HSBC, which gained about 2%. The HSBC news could provide a lift early this week . . .

The Russell 2000 (NYSE: IWM) and the Dow halted two days of strong gains on concerns about the far-ranging impact of the subprime meltdown and news of mixed earnings. The small-cap index fell 7.64 points, or 0.93%, to 809.76. The Dow Jones Industrial Average (INDU) lost 48.86 points, or 0.35%, to 13,766.70.

Futures were pointing south and small-cap stocks opened with a drop following news that financial services giant Bear Stearns Companies Inc. (NYSE: BSC) suffered a 61% drop in the third quarter due to its investment in securities backed by subprime mortgages.

Of the major financial institutions, the New York-based brokerage house is the most exposed to the subprime mortgage market and has suffered the most since the meltdown began earlier this year.

On the other hand, Goldman Sachs Group, Inc. (NYSE: GS) announced that its quarterly earnings soared 79%, breezing past Wall Street’s projections.

Transport giant FedEx Corp. (NYSE: FDX) added to the negative tone when it announced that it is reducing its fiscal year 2008 expectations due to a weaker U.S. economy.

Meanwhile, U.S. Federal Reserve Chairman Ben Bernanke appeared in front of Congress and told lawmakers that the recent financial turbulence stems from the troubled subprime mortgage sector, “but the resulting global financial losses have far exceeded even the most pessimistic estimates of the credit losses on these loans.”

Consequently, “recent developments in financial markets have increased the uncertainty surrounding the economic outlook,” Bernanke said to members of the House of Representatives Financial Services Committee.

That was enough to set the stage for the bears to dominate the session. The Russell 2000 went down and never neared positive territory, while the Dow bounced around close to the flat line before settling on a downward trajectory early in the afternoon.

Otherwise, the economic news that came out today was generally positive.

The U.S. Labor Department reported that the number of American workers filing for unemployment benefits fell 9,000 to 311,000 for the week ended Sept. 15, the lowest level in seven weeks.

Economists had forecasted claims to stay at their upwardly revised previous level of 320,000.

The numbers indicate a surprising improvement in the labor market, which has become the focus of attention during the past few weeks as fears of an economic slowdown have multiplied.

Elsewhere, the Federal Reserve Bank of Philadelphia reported that its monthly index of regional manufacturing activity showed an unexpectedly strong rise in September. The index covers Pennsylvania, New Jersey and Delaware.

The Russell 2000 (NYSE: IWM) is falling with the Dow (INDU) trailing, while the price of oil rises yet again and the U.S. dollar slides. At 2:50 p.m. ET, the small-cap index had shed 11.42 points, or 1.4%, to 805.98. The Dow Jones Industrial Average was down 60.32 points, or 0.44%, to 13,755.24.

The bears are running the show this afternoon as stocks interrupt two days of strong gains.

Transport giant FedEx Corp. (NYSE: FDX) set the negative tone when it announced before the start of trading that it is reducing its fiscal year 2008 expectations due to a weaker U.S. economy.

Similarly, financial services giant Bear Stearns Companies Inc. (NYSE: BSC) reported that its profit fell a breathtaking 61% in the third quarter due to its investment in securities backed by subprime mortgages.

In economic news, the Federal Reserve Bank of Philadelphia reported after the opening that its monthly index of regional manufacturing activity showed an unexpectedly strong rise in September.

The Business Outlook Survey showed that the indices for general activity, new orders, employment and shipments increased, reflecting continued underlying growth. According to the survey, 30% of manufacturing companies report an increase in activity, while 19% report a decline.

The index covers Pennsylvania, New Jersey and Delaware.

Elsewhere, the price of oil has added about $1.39 to nearly $83.32 a barrel, which is yet another record level. The increase follows news that production from the Gulf of Mexico has been decreased due to forecasts that a tropical depression affecting the region could intensify. Oil has been above $80 during the past week.