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from Counterparties:

MORNING BID – Microsoft, up from the ashes

Microsoft heads into tonight’s earnings report coming in on a high, having recently breached the $40 threshold for the first time in forever (it’s all Frozen references this week, folks). The company pushed past $40 a share in early April for the first time in nearly 14 years, and spent most of that time ensconced in a tight range between about $22 and $35 a share, depending on what the overall market was doing. It tanked in 2008 with everything else, and then spent the 2010-2012 period putting together a cumulative 13 percent price loss in the midst of a raging bull market, if evidence of its sad-sack status couldn’t be more apparent.

This year, though, the company’s been the beneficiary (along with the other “horsemen,” Cisco, Intel and Oracle) of a shift away from overvalued momentum-driven stocks towards cyclical technology stories. These are the types of companies that produce steady revenues even if they’re not doing anything but collecting on consistent upgrades of stuff that everybody needs and doesn’t really like. And really, the company had a stranglehold over PC operating systems that it defended aggressively, let’s not kid ourselves.

For what seems like the better part of a decade, the company has also been talking about how it plans on getting ahead for the next technological leap happening around it. Personal computer sales are bound to be slack, because people aren’t buying those and they’re now buying tablets. But hope springs: CEO Satya Nadella plans on taking analyst questions on the conference call, which isn’t the usual thing for Microsoft.

Sometimes changes in strategic direction mean something for real, and even though analysts at times are overly obsequious and eager to please their corporate overlords ("Congrats on the quarter, guys"), they’re still the voice of someone outside the company and therefore aren’t as likely to be blowing smoke. The company’s planning on focusing more on mobile apps and cloud computing in coming years – probably the right choice, given the trend in computer technology at the moment – but the question is whether they can truly capitalize or not.

from Counterparties:

MORNING BID – Volatility, or lack thereof

It was another disappointing night for those looking for heavy volatility out of those reporting earnings - the trio of biotech stocks many were looking at, Gilead, Illumina and Amgen, had varying results, but they didn't show the kind of bounce that some people were expecting.

In after-hours action Illumina was moving around 7 percent, short of the 11 to 12 percent move the options market was looking for, and Gilead was up around 3 to 4 percent, less than the six percent gain that the options market had factored in. Following the disappointment among those betting on volatility post Netflix-earnings -- and the stock still moved a lot, just nowhere near as much as expected -- it raises questions about whether some investors might start to temper expectations when it comes to overall volatility, because putting down money on a big swing has been a bit of a loser so far.

from Counterparties:

MORNING BID – Biotech swings into earnings

Earnings get a bit less boring with a slew of biotechnology and medical device names out Tuesday, most of them after the closing bell.

Among those that will be most watched are Gilead Sciences, sort of the linchpin of this whole selloff the market's been dealing with in the last several weeks, Illumina, one of the market's biggest high-flyers in the last couple of years, and Amgen, which compared with these biotechnology names might as well be a telephone company in terms of volatility and overall sex appeal.

from Counterparties:

MORNING BID – A week overflowing with earnings

Markets head into a busy week of earnings with a bit of uncertainty around whether the major companies out there will help continue the momentum in the stock market that was regained last week after some weeks of lackluster trading.

As put in Reuters' Wall Street Weekahead, there's something for everyone this week, from the old-line tech companies like Microsoft that have been the recent beneficiary of the switch away from the high-flying names like Netflix and Facebook (which also report this week) to some big industrial names like General Motors - which has plenty of its own issues with the recall - to Dow components like AT&T and McDonald's.

from Counterparties:

MORNING BID – Google, IBM cloud market rebound

The markets have remained interesting this week as earnings season has ramped up, but the most interesting index remains the Nasdaq Composite.

The Nazz continues its upward swing following Tuesday’s volatile, deep plunge; it has now gained more than three percent in the brief period between the lows it hit Tuesday and the Wednesday close. That's a pretty short period of time to see such a dramatic move in the index but doesn’t necessarily point to better tidings ahead. Bespoke Investment Group pointed out that when swings like this are usually seen – there have been 18 such occurrences since 2000 – it doesn’t bode well for the tech-heavy index.

from Counterparties:

MORNING BID – The same-store situation

Same-store sales figures may be enough to inspire some investors to resume paring portfolios of some consumer discretionary stocks that have underperformed in the last five or six weeks.

Equities rebounded on Tuesday, but the overall feeling is that the market hasn’t yet finished with the bout of selling infecting the high-volatility, high-beta names that dominate conversations.
Most consumer names aren’t in this rarefied air (they don’t trade at price-to-sales ratios of a gajillion) but they’ve still been a target for some time on bad news.

from Counterparties:

MORNING BID – Momentum stocks: A primer

Lots of stocks have been getting killed in the last several weeks and the declines don’t seem really like they’re set to abate headed into a week where news is again at a premium (sure, earnings, but it’s just a few names, and they’re mostly decidedly not in this category of the momentum names that fueled the rally in 2013). So the likes of Facebook, Tesla Motors, Netflix, Alexion Pharmaceuticals, and a bunch of others have seen their fortunes turn in the market. But at this time we thought it would be a good way to get into this topic again by trying to lay out just what the hell a momentum stock is in the first place, because they exhibit a number of characteristics beyond just “a stock that’s going up very high.” So here goes:

Growing Industries: Internet retail, internet security, solar, cloud computing, companies that use the cloud for providing services (think Salesforce.com), biotechnology, and anything else where the prospects for growth are big and related to a growing sector of the economy. Utilities don’t really qualify here, naturally. The reasons are two-fold: for one, in order to jump onto a rising growth story, you’d want to be in a place where the expected future returns outpace the returns you’re getting now, something you won’t get from the telephone company, someone who sells toothpaste, or the guys hooking up the electricity.

from Global Investing:

Braving emerging stocks again

It's a brave investor who will venture into emerging markets these days, let alone start a new fund. Data from Thomson Reuters company Lipper shows declining appetite for new emerging market funds - while almost 200 emerging debt and equity funds were launched in Europe back in 2011, the tally so far  this year is just 10.

But Shaw Wagener, a portfolio manager at U.S. investor American Funds has gone against the trend, launching an emerging growth and income fund earlier this month.

from Counterparties:

MORNING BID – Seeing the Oracle

The markets are still a few weeks away from the earnings season (didn't the last one just end?) but there's an early - or late, if you will - precursor to all of that with Oracle's results due out after the closing bell on Tuesday.

Whether it's a harbinger of what to expect for technology companies remains to be seen. But as a company with substantial revenue coming from the Asia-Pacific, it's going to be closely watched to see what kind of toll slowing growth in China has taken on demand for technology goods for companies operating in the region in general.

from Counterparties:

MORNING BID – Long in the tooth

The common refrain, five years after the end of the market's worst performance in decades (excluding the technology arena, yet to recover its highs from the tech bubble), is that this bull market is getting long in the tooth: It's gone too far, too fast, and therefore, is due to end. We examined this in a story by Caroline Valetkevitch, just setting aside the hand-wringing about things ending or not, and throwing out a few things that really get at people. (Full Story)

One of those is the idea that the market hasn't seen a correction in more than two years or so, though there's some semantics here per Dan Greenhaus of BTIG. He notes that the 19.4-percent drop (peak to trough) in 2011 only doesn't qualify as an ever-so-brief bear market by the slimmest of margins, and if you accept the idea that this was a bear, "the current rally isn’t five years old, it's just two and a quarter."

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