Trader Talk

Alcoa And Australia-Morning Stars


Commodities and commodity stocks higher pre-open on Alcoa earnings. While Alcoa is getting all the attention, Australia is again helping Asian markets due to a much better than expected jobs report there...Australia reported an increase of 40,600 jobs in August versus a forecast of a drop of 10,000 jobs.

Futures also got a modest pop from Initial Jobless Claims, which at 521,000 was 19,000 less than expected and the lowest figure since January.


1) Alcoa up 6 percent pre-open. The good news on Alcoa was that the beat on earnings and revenues seems to have come from the end-market "downstream" businesses (Flat-rolled Products, and Engineered Products and Solutions Business) rather than the "upstream" businesses of Alumina and Primary Metals. This is good news because it indicates increased demand from their customers, with the exception of aerospace which remains weak.

2) Retail sales coming in better than expected. Overall, the gain is 1.1 percent for September compared to the same period a year ago, according to RetailMetrics, versus expectations of a decline of 0.8 percent.

Lots of improved guidance as well: TJX, Ross Stores raised guidance, American Eagle and Aeropostale raised guidance.

Target was in line but guided above consensus for the third quarter.

JC Penney also provided better guidance for the third quarter: $0.03-0.10, prior guidance was a loss of $0.05 to a gain of $0.05. October same store sales will be down 5 to 8 percent, that is better than the 13 percent decline seen in October a year ago.

Sales were better for several retailers: Limited reported positive 1 percent sales, better than a loss of 3.4 percent expected, American Eagle was flat when a decline of 4.6 percent was expected.

  • Dig Deep Into the Sales Here

The downside: traffic appears to have trailed off toward the end of the month.

Rockin' Retail

3) Shares of Ruby Tuesday are up 4% in pre-market trading following the company's announcement that first-quarter earnings jumped even though same-store sales fell 3.1%. The restaurant chain posted a gain of $0.11 a share, up from $0.01 a share just a year ago. Analysts were expecting a gain of $0.09. Ruby Tuesday trimmed five cents of the top of its fiscal 2010 outlook to earnings of $0.50-$0.60 from an earlier estimate of $0.50-$0.65.

4) Marriott International swung to a third quarter loss on write-downs on its timeshare business and lagging revenue in its core hotel business. Marriott previously said it would record impairment charges on the timeshare business because it needed to cut prices, sell undeveloped land, and scale back development. For the quarter, Marriott reported a loss of $1.31 a share. Worldwide revenue per available room decline 23.5% on the quarter. Management pegs fourth quarter earnings between $.20 and $0.23 a share. The company declined to provide typical earnings guidance for FY 2010, but said it expects worldwide REVPAR to decline by as much as 5%.



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