Racer
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DuPont sees 1Q, FY06 earns below Wall St. consensus (DD) By Michael Baron
NEW YORK (MarketWatch) -- DuPont (DD) Tuesday reported fourth-quarter earnings of $153 million, or 16 cents a share, down from a year-ago profit of $278 million, or 28 cents a share. The latest results include a gain of 3 cents a share related to lower than expected tax costs from its repatriation of foreign earnings. The year-ago performance includes a charge of $93 million, or 9 cents a share. Sales fell 3% in the latest three months to $5.83 billion from $6 billion in the same period a year earlier. The average estimate of analysts polled by Thomson First Call was for a profit of 10 cents a share in the December period on revenue of $5.92 billion. Looking ahead, DuPont forecast earnings of 70 cents a share for the first quarter. Wall Street's current consensus estimate is for a profit of 99 cents a share in the March period. The company expects first-quarter results to be hurt by a year-over-year decline in its agriculture and nutrition business due to lower volumes from crop protection chemicals, competitive pressures, and a shift in seasonal revenue. DuPont also expects its performance materials and coatings and color technologies businesses to continue to be adversely affected by Hurricanes Katrina and Rita. For 2006, the company sees earnings of about $2.60 a share. The current average estimate of analysts polled by Thomson First Call is for a profit of $2.83 a share in the period. The stock closed Monday at $39.55, up 3 cents.
NEW YORK (MarketWatch) -- DuPont (DD) Tuesday reported fourth-quarter earnings of $153 million, or 16 cents a share, down from a year-ago profit of $278 million, or 28 cents a share. The latest results include a gain of 3 cents a share related to lower than expected tax costs from its repatriation of foreign earnings. The year-ago performance includes a charge of $93 million, or 9 cents a share. Sales fell 3% in the latest three months to $5.83 billion from $6 billion in the same period a year earlier. The average estimate of analysts polled by Thomson First Call was for a profit of 10 cents a share in the December period on revenue of $5.92 billion. Looking ahead, DuPont forecast earnings of 70 cents a share for the first quarter. Wall Street's current consensus estimate is for a profit of 99 cents a share in the March period. The company expects first-quarter results to be hurt by a year-over-year decline in its agriculture and nutrition business due to lower volumes from crop protection chemicals, competitive pressures, and a shift in seasonal revenue. DuPont also expects its performance materials and coatings and color technologies businesses to continue to be adversely affected by Hurricanes Katrina and Rita. For 2006, the company sees earnings of about $2.60 a share. The current average estimate of analysts polled by Thomson First Call is for a profit of $2.83 a share in the period. The stock closed Monday at $39.55, up 3 cents.
macbonzo
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Just looking at the US markets at the moment, I get the feeling that we are running out of steam.
Last Wednesday, after looking at INTC's results and guidance and then the stubbornly high price of oil, I felt that things had changed. We got the big pullback on friday. It now appears (still pretty early to reach firm conclusions) that Q4 earnings are going to be mediocre at best. It's all very well to say that 80% of S&P companies have met or exceeded their estimates, but when you look at the companies who are falling short or being cautious looking forward you get some big names: INTC, C, AA.
This bull market is getting pretty long in the tooth and to sustain it, we need to look for these big names to comfortably exceed their estimates on eps and revenue plus raise their forward guidance to keep the momentum going. If we lump in the persistently high price of crude on to this we can see why the bulls are making little progress in pushing this market up.
It is also worth noting that the structure of markets change - or to be more accurate the composition of its participants. Whilst the slow moving, long-term holders of shares i.e. pension funds, insurance companies and the retail sector will all say that they are buying at the moment, the short - term operators i.e. hedge and arb funds who are highly leveraged have an entirely different agenda. These guys are hardly ever in a "market neutral" position. Given the lack of volatility in many markets, these huge highly levered players will chase any meaningful price action, drawing capital into to market and exaggerating any move. We saw this last friday where any buyers were easily crowded out by a stampeding mass.
The last thing, I think, that is worth mentioning, is the US housing market. I, personally believe that it is peoples' perceived "wealth effect" that largely determines consumer behaviour. In most cases, this is directly related to the value of their property. Even if housing market only becomes flat this year, we will notice a substantial drop in consumption. Last year house price inflation was running at 12.9% and this year the National Association of Realtors forecasts that figure will drop to 5.1% The Housing figures are out tomorrow.
To summarise, I would see increase volatility but a downward movement.
Last Wednesday, after looking at INTC's results and guidance and then the stubbornly high price of oil, I felt that things had changed. We got the big pullback on friday. It now appears (still pretty early to reach firm conclusions) that Q4 earnings are going to be mediocre at best. It's all very well to say that 80% of S&P companies have met or exceeded their estimates, but when you look at the companies who are falling short or being cautious looking forward you get some big names: INTC, C, AA.
This bull market is getting pretty long in the tooth and to sustain it, we need to look for these big names to comfortably exceed their estimates on eps and revenue plus raise their forward guidance to keep the momentum going. If we lump in the persistently high price of crude on to this we can see why the bulls are making little progress in pushing this market up.
It is also worth noting that the structure of markets change - or to be more accurate the composition of its participants. Whilst the slow moving, long-term holders of shares i.e. pension funds, insurance companies and the retail sector will all say that they are buying at the moment, the short - term operators i.e. hedge and arb funds who are highly leveraged have an entirely different agenda. These guys are hardly ever in a "market neutral" position. Given the lack of volatility in many markets, these huge highly levered players will chase any meaningful price action, drawing capital into to market and exaggerating any move. We saw this last friday where any buyers were easily crowded out by a stampeding mass.
The last thing, I think, that is worth mentioning, is the US housing market. I, personally believe that it is peoples' perceived "wealth effect" that largely determines consumer behaviour. In most cases, this is directly related to the value of their property. Even if housing market only becomes flat this year, we will notice a substantial drop in consumption. Last year house price inflation was running at 12.9% and this year the National Association of Realtors forecasts that figure will drop to 5.1% The Housing figures are out tomorrow.
To summarise, I would see increase volatility but a downward movement.
BRAD SULLIVANS VIEWmacbonzo said:
The index markets suffered through an aggressive downdraft on Friday as the SP500 had its largest 1-day trading decline since May 2003 (in % terms). The main culprits for the selling seemed to be a combination of higher Crude Oil prices, poor earnings and something very few people seem to be discussing - the expiration of options and large scale premium sale programs that have been used by hedge funds to get "alpha" as competition on returns increases. For those funds, Friday was a bloodbath as volatilities shot higher and prices moved rapidly lower. This type of action, on expiration day, creates "need" based trading on the part of these funds in order to hedge their premium before it turns into a net loss. I am discussing what most agree was the hottest single style trade throughout hedge fund land the past year - naked premium selling. These are un hedged positions by the funds and when a day of volatility and rapid price movement hits the market - their need based trading exaggerates the movement.
Technically speaking, Friday's action was a disaster as the large cap indices broke through key short term support levels. In the large cap arena, the DJI, SP500 and NDX all settled below their respective 20 day MA's, but remain well above their 200 day MA's. Clearly the market is beginning to show some signs of weakness as earnings season progresses. Even more troubling seems to be that the "FED is almost done, let's buy 'em rally" was removed with the selling on Friday. I think the overall market will be hard pressed to find any significant traction on the upside from any further FED statements about the rate hike cycle being complete. If that conjecture is correct, it leaves the indices in a overbought state without the news to support the strength. Couple this with the earnings, oil and geopolitical worries and it is no wonder volatility is moving higher. The trouble is...at least for the bulls - that the overall index market suffered its first dent on these factors for 2006. While we may bounce higher and challenge the highs of this move, I think the table is set for a severe springtime correction.
macbonzo said:
A couple of other points in support....
Minimum monthly credit card payments are doubling in January
For many mortgage holders in the US, the first of the ARM interest rate increases will take effect this month.
Expiration of the corporate profits repatriation act (aka American Jobs Creation Act 2004) will stop billions from returning to US shores
solentsurfer
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It's cetainly squeezing itself right into the triangle, whichever way it's going to go it's probably going to move pretty sharpish when it does. Wouldn't like to call it but my gut feeling is down, 10550 ish, further if it gathers enough momentum and peeps still having last Friday in the back of their minds. 
solentsurfer
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Hook Shot said:
Don't rely on me, I'm all gut feel - some of the TA's on here put me to shame. Sentiment seems to favour a rise at the moment with a fall later, I'm just not so sure - would have liked to see a more confident bounce after Friday either yesterday or today. One things for sure, 10,700 is proving to a significant point, it provided resistance last summer/autumn and now support.
solentsurfer
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Opportunity to grab 30 pts as it comes back to 10700 - possibly :?:aspex said:
just grabbed 31 points on the way up, dont usually bother intraday but looked to good to miss might go short at the close tonight ahead of tomorrows home sales and mortgage applications.the figures shouldnt be all that clever according to the number crunchers.
might go short at the close tonight ahead of tomorrows home sales and mortgage applications.the figures shouldnt be all that clever according to the number crunchers.
macbonzo
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Racer said:
Absolutely.
Racer,
Slightly O/T, but did you ever use Global Futures (Strategy Runner)? It's just that they have been chasing me for about 6 months now and are offering an extremely good deal on commissions. I'm not massively fond of US brokerages, but they seem very professional.