Tuesday, February 24, 2015

Higher markets after Janet Yellen says the Fed will be flexible

Dow shot up 92, advancers ahead of decliners 3-2 & NAZ rose 7.  The MLP index lost pennies in the 448s & the REIT index fell a very big 7 to the 335s.  Junk bond funds edged higher & Treasuries rallied, taking the yield on the 10 year Treasury below 2%.  Oil lost ground in the 49s & gold did little.

AMJ (Alerian MLP Index tracking fund)

stock chart

CLJ15.NYM....Crude Oil Apr 15....49.38 Down ...0.07  (0.1%)

Live 24 hours gold chart [Kitco Inc.]

Home Depot, a Dow stock, posted a better-than-expected rise in quarterly same-store sales on but the company warned that a strong dollar will likely hurt 2015 earnings.  CEO Craig Menear said if the US dollar stays at current levels the company expects a negative impact of $1B to 2015 sales growth & a hit to EPS of 6¢ for the year.  Profit beat expectations as an improving job market encouraged Americans to spend more on renovations.  The company also said it would buy back $18B of its shares, replacing a $17B buyback authorized in 2013.  HD expects full-year 2015 EPS of $5.11-$5.17, after accounting for share buybacks & sales growth of 3.5-4.7%.  But fiscal 2015 EPS guidance does not include an accrual for losses related to last year's data breach, which may include liabilities to payment card networks for reimbursements of card fraud costs.  Same-store sales rose 7.9% in the fiscal Q4 (ended Feb 1), beating the estimate of 5.5%.  Comparable sales increased 8.9% in the US, where HD has more than 85% of its 2269 stores.  EPS rose to $1.05.  Excluding items, EPS was $1.00 & net sales rose 8.3% to $19.2B.  Analysts had expected EPS of 89¢ on revenue of $18.7B.  HD also raised its quarterly div to 59¢ from 47¢.  The stock went up 4.47.  If you would like to learn more about HD, click on this link:

Home Depot Sets $18B Buyback, Posts Beat

Home Depot (HD)

Macy's (M) reported a weaker-than-expected rise in sales in the holiday qtr & forecast full-year profit & revenue that missed expectations as the owner of Bloomingdale's invests in new lower-priced & intl stores.  Macy's is looking to widen its customer base by attracting shoppers hunting for deals & discounts in a highly competitive retail environment.  Macy's announced appointments this month aimed at streamlining its online, store & marketing divisions, & said it would buy luxury beauty & spa services retailer Bluemercury $210M.  The company forecast EPS of $4.70-$4.80 for the year ending Jan 2016, lower than the estimate of $4.84.  It expects same-store sales growth to improve to about 2% this year from the 0.7% rise last year.  But total sales are expected to grow about 1% to $28.4B, short of the estimate f $28.6B.  The company plans to open Macy's & Bloomingdale's stores in Abu Dhabi, United Arab Emirates, in 2018 under license agreements with Al Tayer Group.  It already runs Bloomingdale's in Dubai under license agreements with the group.  Net income fell to $793M in Q4 ended Jan 31, from $811M a year earlier.  However, EPS rose to $2.26 from $2.16 due to a lower share count.  Excluding items, EPS was $2.44.  Net sales rose 1.8% to $9.36B.  Analysts had expected EPS of $2.40 on sales of $9.39B.  The stock fell 2.06.  If you would like to learn more about Macy's, click on this link:

Macy's Reports Holiday-Quarter Sales Miss

Macy's (M)

Office Depot expects sales to fall this year due to challenging market conditions & a stronger dollar.  The company, merging with larger rival Staples (SPLS), also reported lower-than-expected quarterly sales as demand fell in North America, its biggest market.  North America retail sales fell 7% in Q4, including the acquisition of OfficeMax.  ODP & SPLS said earlier this month that they would merge to better compete with online retailers.  The cash & stock deal is valued at $6.3B.  ODP North America retail same-store sales fell 2% in Q4, the 8th straight qtr of decline.  Analysts expected a 2.2% fall.  Net loss per share attributable to ODP shareholders narrowed to 15¢ from 34¢ a year earlier.  Excluding items, EPS was 7¢.  Total revenue rose nearly 10% to $3.83B, helped by the OfficeMax acquisition.  Analysts had expected EPS of 4¢ & revenue of $3.9B.  The stock lost a penny.  If you would like to learn more about ODP, click on this link:

Office Depot's Quarterly Sales Rise 10%

Office Depot (ODP)

Janet, in her grandmother way, spoke calm words about fed policies & the markets liked what they heard.  The stock market might get more excited when the first rate hike is announced.  The news from Macy's is disturbing.  Retail sales (for its upscale stores) growth is less than robust.  That's not supposed to happen in a truly strong economy.  Traders were not disturbed as they took the Dow to a new record high.

Dow Jones Industrials

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