|Dow||+110.24 to 17,972.38|
|S&P 500||+19.95 to 2,088.48|
|Nasdaq||+56.43 to 4,857.61|
|10-YR Yield||-.002 to 1.986%|
|Gold||+$2.10 to $1,221.70|
|Crude Oil||+$2.40 to $51.24|
Tesla Struggles; Cisco, Expedia Shine!
It was a story of trials and triumph in tech-land today!
On the one hand, visionary tech executive Elon Musk took a major hit after the CEO of Tesla Motors (TSLA, Weiss Ratings: D+) failed to deliver. His electric car company reported a loss of 13 cents a share, missing forecasts for a profit of 32 cents a share by a country mile!
What happened? Chinese sales stunk amid skepticism in that country over the convenience and logistics of charging electric cars. Plus, deliveries of new cars came in at just 9,834 – far below the 11,200 that was expected – while sales missed targets by 10 percent. The news knocked almost 5 percent off TSLA’s share price today.
|Tesla’s Elon Musk is prepared to fire overseas executives after dismal sales in China.|
On the other hand, tech darling Cisco Systems (CSCO, Weiss Ratings: B) reported adjusted earnings a share of 53 cents in the most recent quarter. That was up from 47 cents a year earlier and topping forecasts by a couple of pennies.
Even better, revenue jumped 7 percent to $11.9 billion. That was the best sales growth in three years, and it helped propel CSCO shares to their highest level since 2007. CEO John Chambers sounded positively giddy discussing business trends – for the first time in a long time! Result: Shares jumped more than 9 percent!
If you wanted to, you could even label the online travel agency Expedia (EXPE, Weiss Ratings: B) another tech triumph today! The company agreed to buy competitor Orbitz (OWW, Weiss Ratings: C), putting one of the weaker industry players out of its misery. Expedia is paying $1.6 billion, or $12 a share for OWW – 25 percent higher than where it closed yesterday. Yet investors bid its own shares up by more than 14 percent on the assumption the combined company is worth more than its component parts.
|“You need guidance when it comes to identifying the winners and losers in technology.”|
What’s the overall message here? That you need guidance when it comes to identifying the winners and losers in technology – especially because the winners tend to win by a BIG margin, while the losers can disappear into the dustbin of history!
What impact do you see them having? Let me know over at the Money and Markets website – and fasten your seatbelt for one heck of a rollercoaster ride!
|Our Readers Speak|
It seems like hardly a day goes by without another important chapter in the ongoing saga of the currency and energy markets. And I’m glad to see that you are following these developments closely – because for better or for worse, they are hugely influencing U.S. stocks!
Reader William C. noted that Russia could be a huge driver of oil prices in the months ahead. Why? Here’s what he had to say:
“On oil: Can the Russian economy work with $50 oil? No, it cannot as oil is about all they have to export. When is the last time you looked at something that said ‘Made in Russia?’
“So how do they raise the price of oil? Interrupt supply! Russia will continue to have brush fire wars all over the place until they interrupt supply to raise the price of oil. Look for a MUCH more aggressive Russia in 2015.”
On the European drama, Reader Pascal offered the following observation:
“It’s time for Germany to pull out of the euro in a reverse way as to what Switzerland did. Germany reestablishes the Mark and uses its euro-denominated notes as its reserve currency.
“Germany would take a slight hit in exports, but at least the German worker will be working for himself not the rest of Europe. The German worker was never sold on the euro and can’t understand why he has to subsidize everyone else!”
Of course, the crazy currency games going on out there are increasingly unsettling investors – something Reader Howard commented on. His view:
“For some time now, the reserve banks have tried to control a runaway train. People with investment capital don’t trust them, and certainly when the banks don’t know what they are doing. Investors like certainty, trust and some sense of control and without this we are in the lap of the gods. It is now just a waiting game.”
Reader Oliver also noted the absurdity of what central banks are trying to accomplish right now. His thoughts:
“The Wall Street Journal has just reported that the Group of Twenty [G-20] geniuses have come up with a new plan to save the world’s economies: Every currency is to be devalued, which will bring income from offshore to every land and create the jumpstart.
“But how can EVERY currency be devalued? One or more mustn’t be. Yet it’s the strong currencies that need to be devalued and the weak ones can’t get any lower, else they’ll be unable to afford to import what their counterparts want to export. This will accelerate the race-to-the-bottom. Brilliant!”
Bingo, Oliver! It’s a strategy that isn’t well thought out, but I think they are doing it anyway because the attitude is that it’s better than nothing. Doesn’t make much sense to me, but then again, nobody invited me to sit at Janet Yellen’s or Mario Draghi’s table!
Don’t forget – you can add your comments to the mix at the website by using this link. I’d love to hear from you!
|Other Developments of the Day|
Remember all those summits I talked about yesterday? Well, we got a lot of news on that front overnight.
First, the leaders of Germany, France, Russia and Ukraine came to a tentative cease-fire deal after more than 16 hours of negotiations. The deal would see Ukraine army forces and Pro-Russian rebels stop trying to kill each other on Sunday, followed by other weapons- and governance-related actions later.
Will it stick? That remains to be seen. Past deals certainly haven’t. More than 5,000 soldiers, rebels and civilians have died in the conflict, which has lasted for almost a year.
Second, negotiators with Greece and the European Union came thisclose to reaching a tentative deal, before Greece backed off due to language that suggested the current European bailout program would be extended.
Negotiations will now continue in Brussels through Monday, with both European Union leaders and finance ministers involved. But even Greek officials are saying they are “very optimistic” something will get done. Will that “solve” this painful, multi-year, slow-motion crisis? Of course not! But it should help the euro currency for now, given how ridiculously overloaded the short side of the euro trade has gotten.
In other currency news, Sweden became the latest country to experiment with negative interest rates and QE. The Riskbank there cut its benchmark policy rate to negative 0.1 percent from zero, and announced plans to buy 10 billion Swedish kronor worth of bonds.
That’s about $1.2 billion at current exchange rates. Both moves show that the Global Money War is intensifying, just as I also discussed yesterday.
There was more news about a leading TV personality overnight. CBS News correspondent Bob Simon died in a car crash in New York. He was 73. Simon had worked for CBS News and 60 Minutes since 1967, covering an array of global hotspots from Vietnam to the Persian Gulf (where he spent 40 days as Saddam Hussein’s prisoner in 1991).
As you can see, there’s a ton going on out there in the global markets and economy. So be sure you weigh in with your thoughts on it all at the website!
Until next time,