What’s the Story?

by CC July 17, 2012 9:12 am • Commentary


Consumer prices were flat in June as the cost of gasoline dropped, offering some relief for cash-strapped Americans and scope for the Federal Reserve to ease monetary policy further to help the faltering recovery.

The Consumer Price Index fell 0.3 percent in May and June’s reading was in line with economists expectations.

Stripping out food and energy, inflation pressures were also benign. Core CPI rose 0.2 percent for a fourth straight month, the Labor Department said on Tuesday.

The data was the latest sign of tepid domestic demand and provided the Fed with some room to maneuver as it weighs options to aid the economic recovery, which has slowed significantly in recent months.

Minutes of the U.S. central bank’s June meeting released last week showed the Fed was open to buying more Treasury bonds to spur the economy, but the recovery would probably need to weaken further for broad consensus among policymakers.


Goldman Sachs walloped consensus second-quarter profit estimates and nearly matched year-earlier earnings even as CEO Lloyd Blankfein notes “market conditions deteriorated and activity levels” fell amid Europe’s turmoil and ongoing global-growth concerns.

Analysts had rushed in recent weeks to outdo themselves in slashing Goldman earnings estimates, many of them coming in well below a dollar a share.

Profit fell 11% to $1.78 a share compared to the analyst consensus of $1.16 a share.

Revenue fell a less than feared 9% from a year earlier, though it slumped by 1/3 from the first quarter.

Meanwhile, Goldman Sachs’ second-quarter value-at-risk, which refers to the amount of money the firm had on the line on any given trading day, fell to $92 million from $95 million in the first and $101 million a year ago, an indication clients continue to sit out rocky markets.

Second quarter results showed weaker investment banking activity and a 37% gain in fixed income trading from one year ago. But first half results showed weakness across the Goldman’s various businesses, with nearly all of them reporting lower results compared to the first six months of last year.

“Market conditions deteriorated and activity levels for both corporate and investing clients were lower given continued instability in Europe and concerns about global growth,” CEO Blankfein said.


Marissa Mayer, one of the top executives at Google, will be the next chief of Yahoo, making her one of the most prominent women in Silicon Valley and corporate America.

The appointment of Ms. Mayer is consider a coup for Yahoo, which has struggled in recent years to attract top talent in its battle with competitors. One of the few public faces of Google, Ms. Mayer, 37, has been responsible for the look and feel of some of the search company’s most popular products.

Despite her background, Ms. Mayer — who will be Yahoo’s fifth chief executive in less than a year, two of them interim — will face a daunting challenge.



Johnson & Johnson [JNJ  68.45        ] – The medical device maker reported quarterly profit of $1.30 per share, excluding certain items, one cent above estimates. Revenue, however, fell short of analyst estimates, and J&J’s full-year forecast of $5 to $5.07 per share was short of the $5.14 a share consensus.

Coca-Cola[KO  76.48        ] – The beverage maker reported second-quarter earnings of $1.22 per share, excluding certain items, three cents above estimates. Revenue was also above Street forecasts. Worldwide case volume growth was above estimates, though the company’s volume decline in Europe was larger than anticipated.

Comerica[CMA  30.81        ] – The bank reported a quarterly profit of $0.73 per share, well above estimates of $0.62, helped by an increase in commercial loans.

Mattel[MAT  31.04        ] – The toy maker earned $0.28 per share for its second quarter, seven cents above estimates, with revenue slightly above analysts’ forecasts. Lower costs and a strong dollar helped boost Mattel’s bottom line.

Mosaic[MOS  55.37        ] – The fertilizer producer earned $1.25 per share, excluding certain items, for its fourth quarter, four cents above estimates, with revenue also beating consensus. Mosaic also doubled its quarterly dividend to $0.25 per share.

Flir Systems [FLIR  18.33        ] – Flir is expecting second-quarter results below analyst forecasts, and has also cut its full-year forecast. The maker of thermal imaging and camera systems cites weakness in Europe and delays in deliveries.

Cintas[CTAS  39.41        ] – Cintas reported fiscal fourth-quarter profits of $0.60 per share, in line with estimates, with revenues also matching analyst expectations. The uniform rental company also reported improved profit margins.

Mattress Firm Holding[MFRM  29.77        ] – The mattress maker has cut its full-year revenue and same-store sales guidance, although it boosted its full-year earnings guidance at the same time due to its recent acquisition of Mattress Giant. The company’s profit warning is also weighing on shares of rivals Select Comfort[SCSS  23.10        ] and Tempur-Pedic[TPX  25.32        ].

J.B. Hunt Transport[JBHT  58.33        ] – J.B. Hunt reported a 22 percent increase in second-quarter earnings, but the shares came under pressure in after-hours trading as overall revenue growth was below analysts’ estimates.

Alcatel-Lucent[ALU  1.37        ] – The company warned it will miss 2012 profit targets and post a second-quarter loss. The telecommunications equipment maker is feeling the effects of spending cuts by telecom operators around the globe. Alcatel’s warning is also impacting shares of rivals such as Nokia [NOK  1.80        ] and Ericsson[ERIC  8.38        ].

Target – The retailer’s stock has been downgraded to “neutral” from “buy” at Citi, with the price target lowered to $68 from $69. Citi said Target will be negatively impacted by a cautious second-half economic outlook. At the same time, Citi is lowering estimates for rival retailers J.C. Penney, Kohl’s, and Macy’s, while removing J.C. Penney from its “Top Picks Live” list.

Lowe’s[LOW  25.80        ], Home Depot[HD  51.45        ] – Janney Capital has downgraded both home improvement retailers to “neutral” from “buy,” reflecting macroeconomic concerns about the second half of 2012.

Deere[DE  76.78        ] – JPMorgan Chase has downgraded the heavy equipment maker’s stock to “neutral” from “overweight.”

Urban Outfitters [URBN  29.49        ] – Morgan Stanley has added the retailer’s stock to its “Best Ideas” list.

Microsoft [MSFT  29.44        ] – The European Commission has opened an investigation into possible non-compliance by Microsoft regarding its commitments to giving users a choice of web browsers.