January Gone, Beginning Month Fund Flows Should Help
Finally, we are out of January...and with January stock indices positive, we will likely see slightly higher volume today on beginning-of-the-month fund flows.
European manufacturing appears to be accelerating—PMI indexes in Germany, Italy, and France were revised upward for January. German unemployment declined in January to its lowest level since 1992.
Dollar is near a 3-month low.
1) UPS —the largest package delivery service—$1.08 (ex-items), three cents better than expected, 44 percent above a year ago. International volumes were up 4.8 percent year over year. Margins also improved on the company's ability to charge higher rates and pass on higher fuel costs to customers via fuel surcharges.
2011 guidance of $4.12-$4.35 is strong vs. consensus of $4.18. That's an increase of 16 to 22 percent over 2010 estimates. The announcement that they expect to buy back $2 billion in shares in 2011 is very relevant; that's about 3 percent of the float.
2) Cummins —the world's biggest maker of diesel engines—reported earnings of $1.84, above consensus of $1.72, much of it on lower taxes (we have seen this a lot this quarter) more importantly sales were up 22 percent. 2011 guidance of $16 billion in revenues is roughly in line with consensus.
3) Pfizer is the most heavily traded NYSE stock pre-open, falls 2 percent despite beating earnings estimatesby a penny and authorizing a $5 billion buyback program. Sales of a number of its big drugs (Lipitor, Lyrica, Celebrex, Viagra) fell short of Street estimates.
The drug maker's outlook weighed on shares too. With its cholesterol drug Lipitor's patent expiring this year, the Dow component sees 2011 earnings of $2.16-$2.26 (below $2.30 consensus)
4) Archer Daniels Midland jumps 6 percent after the corn processor handily topped estimates ($1.06 vs. $0.78 consensus). Corn processing earnings rose 38 percent thanks to "favorable corn ownership positions" as well as strong ethanol margins and volumes. Earnings at its agriculture services division (grain trading and transportation) were also impressive, surging 54 percent from a year ago.
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