The Week Ahead: Tiffany, Avago Technologies and The Fresh Market Report Earnings; Key Economic Data on Tap
The final week of May will be critical for the markets as volatility hit a number of regional stock indices this week, although the United States was largely spared. For the week, the S&P 500 lost a little better than 1 percent, but this paled in comparison to losses in Japan, where the Nikkei fell more than 7 percent on Thursday. Traders will be watching earnings announcements from the likes of Tiffany (NYSE: TIF), Michael Kors (NASDAQ: KORS), Dollar General (NYSE: DG), The Fresh Market (NASDAQ: TFM), Avago Technologies (NASDAQ: AVGO), Costco (NASDAQ: COST), and Guess? (NYSE: GES), among others. On the economic front, consumer confidence numbers for the month of May will be out on Tuesday. Other domestic reports that will be of interest to the market include jobless claims and the second GDP estimate, both of which are due out on Thursday. Pending home sales data will also be due out on Thursday. On Friday, key economic reports include Chicago PMI and the final reading of the University of Michigan Consumer Sentiment index. EarningsOn Tuesday, May 28, luxury retailer Tiffany is expected to release its quarterly earnings results prior to the opening bell. Heading into the report, Wall Street analysts have consensus EPS estimates of $0.52, representing a year over year decline of almost 19 percent compared to the $0.64 the company reported in last year's corresponding period. Sales are expected to be up 4.40 percent to $855.14 million. Shares closed Friday's trading session essentially flat at $76.21. Year-to-date, Tiffany has risen nearly 33 percent on the back of a strong market. In a client note from Thursday, analysts at Deutsche Bank noted that the company previously guided for net earnings from operations to fall around 15 to 20 percent due to gross margin pressure and higher marketing-related costs. The company said that it sees earnings growth in all subsequent quarters. The stock is currently trading above Deutsche Bank's price target of $68.50. On Wednesday, May 29, The Fresh Market is scheduled to release its quarterly results before the opening bell. Analysts expect the company to report a 10 percent rise in earnings per share to $0.44 from $0.40 last year. Sales are expected to rise 13.80 percent to $369.69 million. The stock climbed a little less than 1 percent on Friday to close at $46.10. Year-to-date, TFM has lost more than 4 percent, significantly underperforming the broader market. In a client note from Thursday, Deutsche Bank analysts wrote that "recent strength at WFM gives us some confidence that trends at TFM may be improving, at least modestly." The firm is looking for EPS above current Street consensus, but noted that the company has missed estimates in its last two quarters. Deutsche Bank reiterated its Hold rating on the stock and $40.00 price target. Avago Technologies is expected to release its quarterly results after the market close on Wednesday. Heading into the report, analysts are modeling a decline of almost 15 percent in EPS to $0.52 from $0.61 in the year ago period. Sales are expected to be down 3.30 percent to $558.24 million. The stock closed up 0.38 percent on Friday to $34.10. In 2013, AVGO has risen a little less than 8 percent, underperforming the broader market. Analysts at Deutsche Bank wrote that "AVGO shares have underperformed peers in recent weeks as we believe investors fear the co's upcoming F2Q results/guide will yield estimate cuts." They added that while Deutsche Bank estimates are slightly below current consensus, the firm's detailed end-market analysis "leaves us comfortable with our ests, which we believe are better than buy-side fears." The firm reiterated its Buy rating and $40.00 price target on the stock ahead of Wednesday's report. EconomicsOn Tuesday, the Conference Board's Consumer Confidence Index is expected to rise to 72.5 for May versus 68.1 in April. Wednesday's initial jobless claims data is forecast to stay flat at 340,000 for the week ending May 25. Continuing claims are expected to rise to 3 million for the week ending May 18, a rise from the 2.912 million continuing jobless claims reported in the prior week. The GDP second estimate is expected to show GDP was up 1.2 percent in the first-quarter. International economic reports that the market will be watching next week include Canada's interest rate decision on Wednesday and Chinese Manufacturing PMI data on Friday. Canada's central bank is expected to hold interest rates steady at 1 percent while there is no forecast for Chinese PMI. In the prior period, the index came in at 50.60, showing very modest expansion. Weekly calendarMondayMarket HolidayTuesdayEarnings from: Canadian Solar (NASDAQ: CSIQ), Seadrill (NASDAQ: SDRL), Tiffany (NYSE: TIF), and Wet Seal (NASDAQ: WTSL), among othersSwiss Employment level, U.S. consumer confidence, Japanese retail salesWednesdayEarnings from: Dollar General (NYSE: DG), Michael Kors (NASDAQ: KORS), The Fresh Market (NYSE: TFM) and Avago Technologies (NASDAQ: AVGO), among others.German Unemployment, Brazilian GDP, German CPI, Canadian interest rate decision, U.S. RedbookThursdayEarnings from: Big Lots (NYSE: BIG), Costco (NASDAQ: COST), Express (NASDAQ: EXPR), Joy Global (NYSE: JOY), Sanderson Farms (NASDAQ: SAFM), Guess? (NYSE: GES), and Lions Gate Entertainment (NYSE: LGF), among others.Swiss GDP, U.S. GDP, U.S. jobless claims, U.S. pending home salesFridayEarnings From:Frontline (NYSE: FRO), Genesco (NYSE: GCO), and Graham (NYSE: GHM)Indian GDP, French consumer spending, EU unemployment rate, Canadian GDP, U.S. personal income and spending, U.S. Core PCE Price Index, Chicago PMI, Michigan Consumer Sentiment and Chinese Manufacturing PMI
Seven Arts Entertainment Responds to Defamatory And Fraudulent Statements Regarding Activities at Cannes Film Festival
Seven Arts Entertainment Inc. (OTC: SAPX) ("Seven Arts" or the "Company") became aware that the public relations agency of an entity known to the Company only as "IFSG" has issued defamatory and fraudulent statements regarding the activities of the Company at the recent Cannes Film Festival. IFSG is unknown to the Company, and the Company has not been able to locate any office or registered address. IFSG may be an assignee of another entity that may have invested a limited amount of money in a motion picture project of Seven Arts Pictures plc ("PLC"), the Company's listing predecessor, which is in a creditor's liquidation proceeding in England. The Company believes that any claims of that entity would be only as an investor in the project, and any claims would need to be presented in respect of PLC in the United Kingdom, including any claims with respect to affiliates of PLC.No actions have been filed against the Company or any of its affiliates by any party in connection with the above-referenced motion picture, and no claims have been threatened despite the defamatory and fraudulent statements made by IFSG. In contradiction ofSee full press release
BlackBerry to Announce Q1 2014 Results on Friday, June 28th, 2013
BlackBerry(R) (NASDAQ: BBRY)(TSX:BB) will be reporting results for the first quarter of fiscal 2014 on June 28, 2013. A conference call and live webcast will be held beginning at 8 am ET, which can be accessed by dialing 1-800-814-4859 or through your BlackBerry(R) 10 smartphone, personal computer or BlackBerry(R) PlayBook(TM) tablet at http://ca.blackberry.com/company/investors/events.html. A replay of the conference call will also be available at approximately 10 am by dialing (+1)416-640-1917 and entering pass code 4612565# or by clicking the link above on your BlackBerry(R) 10 smartphone, personal computer or BlackBerry(R) PlayBook(TM) tablet. This replay will be available until midnight ET July 12, 2013. Scheduled Quarterly Results Conference calls for FY 2014 Q1: Friday, June 28, 2013, before markets open Q2: Friday, September 27, 2013, before markets open See full press release
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Fed Tapering Could Hurt This ETF...And It's Not One You'd Expect
One of this week's most prominent themes has been speculation that the Federal Reserve is either going to wind down or soon end its $85 billion per month asset-buying activities. Not surprisingly, that has not been particularly good news for U.S. stocks and other riskier assets. Beyond the usual ETF suspects such as mortgage-backed securities, mortgage REIT funds and high beta sector plays that could be harmed by the end of quantitative easing, a surprising candidate for end-of-QE vulnerability has entered the conversation. That ETF is the iShares MSCI Turkey Investable Market Index Fund (NYSE: TUR), one of 2013's emerging markets ETF stars. Barclays published a list of investments that could be hit if QE ends and Turkish stocks made that dubious cut."Investors who are concerned about the reversal of Fed easing should consider short positions in assets with high elasticities to the Fed and expensive valuations versus history. Turkish equities and US defensives appear vulnerable,"according to part of the note posted in Barron's. That prediction comes just a few weeks after TUR touched a new 52-week high after the Borsa Istanbul National 100 surged to its highest levels in at least 25 years. Last week, Moody's Investors Service raised Turkey's credit rating by one notch to Baa3 from Ba1. The new rating is investment grade. Then the Japan Credit Rating Agency boosted Turkey to investment grade followed by Canada's international credit rating agency Dominion Bond Rating Service doing the same on Monday. As for the Barclays prediction, there might be something to it as TUR has fallen since Wednesday when the tapering talk really gained steam, but the ETF is not frothy on a valuation, at least not relative to the broader emerging markets universe. TUR currently has a P/E ratio of 15 and a price-to-book ratio of three. The iShares MSCI Emerging Markets Index Fund (NYSE: EEM) had a P/E of 18 and a price-to-book of three, according to issuer data. One issue that could through a wrench in the Barclays prediction about Turkey is correlations. As in TUR's correlations to U.S. stocks and EEM is not that intimate. Over the past three years, TUR has a correlation of just 0.54 to the iShares Core S&P 500 ETF (NYSE: IVV) and a 0.66 correlation to EEM. TUR's one-year correlations fall to 0.46 against EEM and just 0.29 against IVV, according to iShares data. With TUR up about 20 percent in the past 90, the best prescription might be take some profits in the ETF soon, keep a small position and play with the house's money while waiting to see if tapering, if it happens, weight on Turkish stocks. For more on ETFs, click here.
Standpoint Research Downgrades Procter & Gamble Company (The) to Sell
Standpoint Research downgrades Procter & Gamble Company (The) (NYSE: PG) from Hold to Sell.
Barrick Notifies Silver Wheaton It is Reviewing Resolution on Pascua-Lama Project in Chile
Silver Wheaton Corp. (NYSE: SLW) has today been notified by Barrick Gold Corporation (NYSE: ABX) that Barrick is currently reviewing a resolution that it has received on the Pascua-Lama project by Chile's Superintendent of the Environment (Superintendencia del Medio Ambiente or "SMA").The SMA requires Barrick to complete Pascua-Lama's water management system in accordance with the project's environmental permit before resuming construction activities in Chile and has levied a $16 million fine against Barrick."We remain confident in Barrick's ability to develop Pascua Lama into one of the world's great gold / silver mines," said Randy Smallwood, President and Chief Executive Officer of Silver Wheaton. "Barrick has continued to show a strong commitment to exceeding regulatory compliance and protecting the environment, and it is worth highlighting that there have been no negative environmental impacts at Pascua Lama to date. We remain confident in Barrick's commitment to this project, and look forward to seeing this issue resolved. Silver Wheaton looks forward to a long term partnership with Barrick on Pascua-Lama."
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Barrick to Assess Implications of SMA Resolution
Barrick Gold Corporation (NYSE: ABX)(TSX:ABX) (Barrick or the "company") today received a resolution from Chile's Superintendence of the Environment (Superintendencia del Medio Ambiente or "SMA") that requires the company to complete Pascua-Lama's water management system in accordance with the project's environmental permit before resuming construction activities in Chile.The SMA also announced that the company will be subject to an administrative fine of approximately $16 million for deviations from certain requirements of the project's Chilean environmental approval, including a series of reporting requirements and instances of non-compliance related to the project's water management system.The company is in the process of reviewing the SMA resolution in detail. Barrick is fully committed to complying with all aspects of the resolution and to operating at the highest environmental standards.FOR FURTHER INFORMATION PLEASE CONTACT: INVESTOR CONTACT: Greg PanagosSenior Vice PresidentInvestor Relations and Communications(416) 309-2943gpanagos@barrick.comMEDIA CONTACT: Andy LloydDirector, Media Relations(416) 307-7414alloyd@barrick.comSee full press release
Japanese Yen Strength to Be Limited by BoJ Policy -David Song, Currency Analyst at DailyFX
"The Japanese Yen continued to gain ground against its U.S. counterpart, with the USDJPY slipping to a fresh weekly low of 100.65, and the near-term correction may gather pace in the week days ahead should we see a growing number of Bank of Japan officials strike a more neutral tone for monetary policy. Indeed, it seems as though the BoJ will carry its wait-and-see approach into the second-half of the year as the central bank raises its fundamental forecast for the fifth consecutive month, and Governor Haruhiko Kuroda may scale back his aggressive approach in achieving the 2% target for inflation as the board anticipates price growth to ‘gradually turn positive' over the policy horizon. However, the BoJ may have little choice but to further embark on its easing cycle as there remains a ‘high degree of uncertainty' surrounding the fundamental outlook, and the central bank may include a broader range of asset classes in its quantitative easing program in an effort to encourage a stronger recovery."
Implications of SAP and Jive Ending Acquisition Talks
As stated by Bloomberg, SAP (NYSE: SAP) has been in acquisition talks with Jive Software (NASDAQ: JIVE) recently. Bloomberg’s sources stated an acquisition will not go through because Jive’s products are too similar to those of SAP. While none of these rumors have been confirmed and spokespersons have specifically refused to comment, shares of Jive surged on this news and are maintaining an elevated level with average volume. This suggests that Jive’s software has the potential to seriously compete with SAP for market share. SAP recorded 2012 sales of $24 billion as compared to Jive’s $114 million. This statistic has especially positive implications as Jive’s sales are steadily rising, up 48 percent from 2011 to 2012 as compared to 16 percent increase for SAP. If Jive can fix its profitability issues, shares will rally. One can also speculate talks ended because Jive is very confident with its product. Rather than working with SAP, Jive officials may rather compete with the tech giant. A famous rejection of this nature is Colman Mockler fighting off three hostile takeovers during his tenure as CEO of Gillette. Because he believed in the potential of his company, Mockler fought to maintain control of it, resulting in a huge increase of share price. Another possible interpretation is that Jive thinks its shares are significantly more valuable than the market and SAP think they are. Valuation disagreements are of the most likely to cause deals to fall through. Regardless of what this news really means, shares of Jive are trading up 4.56 percent to $16.50 and SAP is down 2.95 percent to $75.89.
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It's Time to Think About Obscure Middle East ETFs
Geopolitical concerns and perceived liquidity risk are among the issues that have kept investors from embracing Middle East stocks and ETFs in recent years. A prime example of a market hampered by those issues is Egypt.The Market Vectors Egypt ETF (NYSE: EGPT), the lone ETF devoted exclusively to North Africa's largest economy, has had its share of struggles at the hands of negative news flow. However, that does not mean the entire Middle East investment thesis is damaged. Actually, the opposite is true."The Middle East markets may be associated with higher levels of risk as a result of the seemingly constant conflict-oriented headlines coming out of the region (i.e., from Israel, Syria, Iran, Iraq, Egypt, to name just a few of the dicey spots)," said WisdomTree Research Director in a new research note. "Yet at least the market moves this year illustrate that not all news is bad. Many of the Middle East economies are growing as they develop significant infrastructure spending with their oil wealth in an effort to diversify their economies." Indeed, some Middle East markets, many of which are classified by index providers as frontier markets, are found among the world's high fliers in 2013. Through Thursday, the Dubai Financial Market General Index (DFMGI) was up 48 percent this year while the Abu Dhabi Securities General Market Index (ADSMI) was higher by nearly 39 percent. Predictably, gains like that often prompt questions about whether Middle East ETFs have any value left to offer."With the strong gains already experienced in 2013, it is natural to ask if there is any value left in this region,"said Schwartz in the note. "The Middle East has not participated as much as other emerging market countries in the gains off the lows of early 2009." However, select Middle East ETFs have been under-the-radar leaders this year. For example, the WisdomTree Middle East Dividend Fund (NASDAQ: GULF), which features a decent 30-day SEC yield of 3.1 percent, has surged 19.3 percent year-to-date. The Market Vectors Gulf States ETF (NYSE: MES) is up nearly 16 percent. Still, there are differences between investing in Qatar and the United Arab Emirates compared to investing in Brazil and China."Exposure to these Middle East countries thus represents a different type of emerging market allocation. Whereas China has the potential to catch up with the developed world on a per capita income basis, the largest Middle East countries already have larger income levels. The investment case is really about how these countries diversify their oil wealth into their economies and create opportunities throughout the broader region for countries such as Egypt, which are not as endowed with oil wealth and high GDP numbers," said Schwartz. There is at least one potential near-term catalyst that jolt GULF, MES and rival ETFs. On June 11, index provider MSCI (NYSE: MSCI) releases its annual market reclassification and and Qatar and United Arab Emirates could be promoted to emerging markets status. Should that move occur, it could possibly alter risk perceptions because frontier markets are often regarded as riskier and more volatile than their emerging peers. In turn, that would benefit GULF, which allocates almost 65 percent of its combined weight to UAE and Qatar. MES is no slouch on the Qatar/UAE front, either, with a combined 56 percent weight to those countries. UAE and Qatar combine for over 47 percent of the PowerShares MENA Frontier Countries Portfolio's (NASDAQ: PMNA). For more on ETFs, click here.
Consider Fundamentals Before Bailing on Japan ETFs
Perhaps Japanese stocks and the corresponding ETFs had things too good and too easy to start 2013. The abridged version of the story goes like this: Prime Minister Shinzo Abe garnered more confidence among average Japanese citizens than his recent predecessors, the yen tumbled against the U.S. dollar to levels not seen in several years and Japanese stocks responded by becoming Asia's best performers this year. Then came Thursday, a day that saw Japanese stocks suffer their worst one day performance in more than two years. Friday's Asian session was no day at the beach, either. The Nikkei 225 started the day in fine fashion only to careen down to 14,000, before rebounding by more than 600 points. Days like Thursday and Friday are enough to make participants question the veracity of Japan's rally and some analysts have done just that. This may be a "blood on the streets" scenario where cooler heads eventually prevail, particularly if USD/JPY continues to rise."With the equity market rising in conjunction with earnings expectations, I believe the case for Japan's equity markets is intact," said WisdomTree Research Director Jeremy Schwartz in a note. "A key variable to watch, of course, is the exchange rate, as much of the moves higher in equities are tied to weakness in the yen. From a historical perspective, I believe there is more room for weakness." The yen is the worst-performing developed market currency in the world this year, a plunge that has bolstered the fortunes of ETFs such as the WisdomTree Japan Hedged Equity Fund (NYSE: DXJ), the iShares MSCI Japan Index Fund (NYSE: EWJ) and a swath of unheralded small-cap funds. However, that does not mean there is not more downside in store for the yen. Currently trading in the 100-101 after recently touching 103, it is worth remembering the pair flirted with the level exactly six years ago."Although the yen has weakened substantially against the U.S. dollar and the TOPIX has surged, both are below their pre-crisis levels. The yen would need to depreciate another 22%, and the TOPIX would have to appreciate over 52% for them to return to the highs set in 2007," said Schwartz. "To put this in perspective, the S&P 500 is currently around 4% above its 2007 high." Investors looking for exposure to the TOPIX can consider the iShares S&P/TOPIX 150 Index Fund (NYSE: ITF), which has tumbled 6.6 percent in the past week. The often overlooked Japan ETF is still up 13.6 percent this year. Underscoring the still solid fundamental case for Japan ETFs is rising corporate earning due to the weaker yen. DXJ in particular is designed to benefit from that trend. While investors are infatuated with the ETF's short yen mechanism, they overlook DXJ's explicit focus on Japanese exporters."The products that Japanese companies sell worldwide become cheaper to foreign buyers as the yen weakens against their domestic currencies," said Schwartz. As these products become relatively cheaper across the globe, the demand increases, allowing Japanese companies to sell more. The companies eventually must bring the money back to Japan, and when they do, they are able to exchange the foreign currencies against more yen. This process has allowed many Japanese companies to report increases in sales and profits." For more on ETFs, click here.
Mid-Day Market Update: Infoblox Jumps On Upbeat Results, Sears Declines
Midway through trading Friday, the Dow traded down 0.20 percent to 15,264.01, while the NASDAQ fell 0.29 percent to 3,449.33. The S&P was also down, declining 0.31 percent to 1,645.38.Top Headline Yesterday, Pandora Media (NYSE: P) reported upbeat revenue for the first quarter. Pandora posted a quarterly net loss of $28.6 million, or $0.16 per share, versus a year-ago loss of $20.2 million, or $0.12 per share. Excluding one-time items, Pandora lost $0.10 per share. Its revenue surged 55% to $126 million. However, analysts were expecting a loss of $0.10 per share on revenue of $124 million.Equities Trading UPInfoblox (NYSE: BLOX) shot up, gaining 12.34 percent to $24.72, after the company reported upbeat Q3 results. Dean Foods Company (NYSE: DF) was also up 4.03 percent to $10.07, after the company announced completion of spin-off of WhiteWave Foods. Procter & Gamble Co (NYSE: PG) got a boost, shooting up 3.88 percent to $81.75 after the company appointed Alan George Lafley as its President and CEO.Equities Trading DOWNSears Holdings (NASDAQ: SHLD) was down, falling 14.84 percent to $49.54, after the company reported wider-than-expected Q1 loss. Abercrombie & Fitch Co (NYSE: ANF) shares tumbled 10.16 percent to $48.84 on weak Q1 results. Aeropostale (NYSE: ARO) was down 9.71 percent to $14.88 after the company reported a loss in the first quarter.Commodities In commodity news, oil traded down 0.46 percent to $93.82, while gold dropped 0.34 percent to $1,387.00. Silver traded down 0.04 percent Friday to $22.50, while copper fell 0.09 percent to $3.30.Euro zone European shares were lower on Friday. The Spanish Ibex Index fell 0.95 percent and the Italian FTSE MIB Index dropped 0.66 percent. Meanwhile, the German DAX tumbled 0.56 percent and the French CAC 40 fell 0.26 percent while U.K. shares declined 0.63 percent.Economics Orders for durable goods rose 3.3 percent to $222.6 billion in April, versus a revised 5.9 percent fall in March. However, economists were expecting a 1.4 percent rise
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Ascendiant Capital Downgrades Buckle, Inc. (The) to Sell
Ascendiant Capital downgrades Buckle, Inc. (The) (NYSE: BKE) from Neutral to Sell.
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