Big Earnings Day Keeps Stocks Rallying

“Make it rain, US corporations — Make. It. Rain.”

Dow: 15,105, +49 (+0.32%)        S&P 500: 1,633, +7 (+0.41%)

Just like mom used to say, when it rains…it f*&king pours.  A major day ofearnings reports powered the Dow up 49 points and the S&P 500 to an all-time high for the 5th straight trading session.  Cha-ching.

#1. Whole Foods Hammers Expectations 

The mystical powers… of eating organically are becoming even more popular in America.  Whole Foods Market (WFM) released down-right impressive earnings and the stock jumped 10% on the news.  Somebody give ‘em an all-natural cookie.

It’s not vudu… it’s tofu.  Actually, it’s tofu-vudu.  With a wave of their (handmade) wand, WFM announced a 2 for 1 stock split.  Coming later this month, instead of 185 million outstanding shares, there will be 370 million worth half the price.  Cheaper shares means easier access, and usually higher trading volume.

America’s healthiest grocery store… continues to lead the high-end grocery experience.  John Mackey, the famous CEO, believes the demand for overly-priced health food will continue to increase.  As a result, expectations for earnings across 2013 increased.  Nice Mackey.  Now you can charge us even more for our Annie’s macaroni.

#2. Green Mountain Coffee Roaster Soars

It’s called commitment… Starbucks (SBUX) announced today it was partnering with smaller Green Mountain Coffee Roasters (GMCR) by making K-Cup single portion coffee pods for another five years.  SBUX will increase the number of brands and flavors of Green Mountain’s patented Keurig coffee machine pods.  GMCR shareholders just let out a sigh of relief and toasted pints of their favorite maple syrup brew.  GMCR is up 16% since the announcement.  

Take that, David Einhorn… GMCR shares were once above $100, but in 2011 celerity investor David Einhorn said all of GMCR’s profits rely on the golden Keurig machine and the immaculate K-cups that bring steamy aromatic coffee to cubicles and waiting rooms everywhere–the problem was the patents expired in 2012 and without that protection, Einhorn predicted that profits would collapse when other firms could infringe into their precious single-serving coffee turf.  The stock plummeted.

Don’t call it a comeback… Green Mountain Coffee is up 16% now that investors see that SBUX can be a partner, instead of a threat.  SBUX did create its own competitor to GMCR’s machine, but this announcement is a show of support to the Green wonder of coffee.

#3. Int’l Econ News Helps US Markets

A little helping hand… never hurts.  While earnings news came in strong, international econ reports added a 5-Hour Energy-style kick to investor enthusiasm.  In Europe, industrial production in the Eurozone‘s strongest economy (take a bow, Germany) rose 1.2% in March (BBC) — the most notable positive sign in the region over the last month (thanks, Hans and Franz).

The other big news… came from across the other pond, courtesy of solid Chinese trade data (made in China).  Chinese exports rose nearly 15% in April from a year earlier (CNBC) — another confidence boost to investors who worried the world’s 2nd largest economy was losing some momentum over 2012.

Thursday:

• Your Thursday morning serving of Weekly Jobless Claims
• Even more 1st Quarter Earnings Reports: DISH Network, Orbitz, Cooper Tire, Starz…

MarketSnacks Fact of the Day:  Since 1992, Vermont-based Green Mountain Coffee Roasters has sent 18% of its employees to Hacienda La Minita in Costa Rica so that they can check out “the source” of their beans.

“Dow Down, S&P Up As Spanish Bailout Delays Keep Markets At Bay”

When hedge fund manager David Einhorn speaks, all the animals of the kingdom must listen

Dow: 13,482 (-0.24%)        S&P 500: 1,446 (+0.21%)

Bieber-fever? Maybe not.  The country-wide pandemonium and man-tears-of-joy Michael Jackson caused with his one-man performances…maybe.  Like their Hollywood counterparts, celebrity investors are super-stars on Wall Street with enormous followings, and today the famous David Einhorn strutted his stuff at his annual value investing conference in NYC, by choosing what stocks were in, and which are out this season – Markets were enthralled by his words.  Before the legendary hedge fund manager spoke, though, markets continued to toss & turn in discomfort while Spain delays a bailout request from the new European Central Bank bond-buying bailout system.  Markets started down big but regained most of their losses as headliner stocks made gains and the Dow finished down 33 points.

Spanish Prime Minister refuses to formally request ECB bailout for Spain

After already arranging a 60 billion euro bailout to go directly to their banks, most European governments believe it’s inevitable that the Spanish government must also request a bailout.  Their debt pile is huge and to pay it off, they must spend an arm and a leg in high interest rates because investors are scared of they won’t be paid back. Last week’s riots rendered Spain even riskier in the eyes of investors…the Spanish government is now in the hotseat.  They need a bailout, but can’t get it without agreeing to the austerity conditions that come with it, which will inject even more venom into the rioting public.  Today, though, the Prime Minister said that a bailout request is not “imminent,” leaving one massive dump of uncertainty in the psyche of global investors.  Markets started down this morning as they just want to see some closure in the Spanish bailout question.

Einhorn concerned about Chipotle, Microsoft now 3rd largest US company

If we had a bone to pick with the high quality burrito institution Chipotle (CMG) it would be over their avocados ($2.95 for guacamole?  Seriously?).  But aforementioned hedge fund manager David Einhorn has a more technical perspective and noted today that rising food & healthcare costs and competition (Taco Bell, owned by Yum Brands, is introducing similar menu items) will hurt their earnings – Chipotle shares fell over 4%.  On the other end of the spectrum, Microsoft (MSFT) regained its position as the 3rd largest US company by market capitalization (Apple may be grabbing headlines with its iPhone 5, but there’s life in that there Microsoft yet).  The tech giant gained 0.6% today to pass Google (GOOG) and Wal-Mart (WMT) to get back its (bronze) crown.

Einhorn praises GM, Ford dips on mediocre vehicle sales

The Detroit auto company General Motors (GM) benefited from Einhorn’s flattering words despite coming up short on analyst expectations for September car sales.  GM drove 2.6% higher as Einhorn raved that the stock was very cheap right now, and their future earnings justify a much higher value than their $23.60 stock would suggest.  He thinks the firm should save up cash and finally buy off the rest of the legacy US government ownership from the auto crisis.  Einhorn didn’t have anything to say about Ford (F), but it’s worth noting that America’s other big car maker slipped over 1% after vehicle sales dipped last month – small car sales though did reach a 10-year high, as auto sales overall this year for both companies have been steadily improving so far.

Tomorrow:

• Some big ol’ September data: The ADP Jobs Survey is a preview for Friday’s major employment report & the ISM Non-Manufacturing Index covers data for the services sector
• The 1st Presidential Debate (tailgate it if you’re in Denver)

© 2012 MarketSnacks

“Markets Fall as Investors Brace Themselves for Friday’s Government Labor Report”

“Hermione, if I don’t get that wizardry promotion tomorrow, promise you’ll stay with me”

Dow 13,207 (-.47%)        S&P 1,392 (-.77%)

Sitting through the 45th minute of trailers at a movie theater, the MarketSnacks team can get pretty irritated as our brains think only about the epic that we actually came (and paid $25 each) to see in the first place.  That type of repressed, anticipatory frustration embodied investors’ mindsets today on the eve of tomorrow’s blockbuster government employment report.  Weekly jobless claims (the amount of Americans filing for unemployment) fell by 27,000 to reach 365,000 after rising last week, while the non-profit statistics organization ISM reported that non-manufacturing (i.e. service industry) expanded slower than expected in April.  Yet all eyes remain focused on tomorrow morning’s monthly jobs announcement from the Labor Department, and low expectations following Wednesday’s preliminary reading pulled the Dow down 62 points.

Facebook sets IPO price range of $28 – $35, IPO just two weeks away

“It will be pandemonium,” said one seasoned Wall Street historian of the stock floor frenzy expected for Facebook’s (FB) first day of trading, set to be in about two weeks.  Facebook, with the advice of lead investment banks Morgan Stanley, JPMorgan and Goldman Sachs, announced it expects its shares to price between $28 and $35, which means this initial public offering (IPO) could raise up to $13.6 billion for the work distraction/social network.  An IPO is the process by which a private company becomes publicly held, offering its shares to investors in an effort to raise capital (money).  Since not all shares will be sold in this offering, this would value the entire company at up to $96 billion, with CEO Mark Zuckerberg owning a $18.7 billion stake.  This expected company value would whallop Google’s record-setting internet IPO value by nearly 4 times and arguably entitle Mr. Zuckerberg to gold-plated, unicorn horn-engraved business cards.

Green Mountain Coffee Roasters disappoints with earnings and reduces growth expectations

Green Mountain Coffee Roaster (GMCR) shares tanked a whopping 48% today after announcing a big slowdown in sales growth and citing unpredictability in sales forecasts.  GMCR shares peaked at $115 in September after a caffeine and maple syrup-crazed 3-year rise from just $8 in 2008.  Doubts in the company rose when respected stock-picker David Einhorn said the company’s accounting methods were questionable.  And investors further reassessed GMCR’s prospects in March when Starbucks challenged the Vermont-based firm’s bread-and-butter market of single cup coffee and espresso brewing.  Green Mountain’s CEO cautioned that growth in their K-cup coffee pods is slowing (5-hour energy shots have entranced the recent college grad demographic) and some of their key patents expire this year.  Investors sold the stock en masse this morning after these announcements to correct the stock price down to a bitter $26.

Tomorrow:

• Tomorrow’s eagerly-anticipated government employment report for April is huge headline news and will detail how many jobs were added last month along with the official unemployment rate – investors have been waiting for this data for four weeks and expectations are currently low…
• Corporate Earnings season continues with Quarter 1 results – Estee Lauder (EL), Duke Energy (DUK), Madison Square Garden (MSG)….

© 2012 MarketSnacks