Wang’s Happy Trading

Submitted By Optiondragon

John Mayer-Waiting On The World To Change

John Mayer-Waiting On The World To Change

From Briefing.com

Media Digest 4/23/2008 Reuters, WSJ, NYTimes, FT, Bloomberg from 24/7 Wallst.
Acording to Reuters profits at Apple (AAPL) rose but Wall St. did not like margins.

Reuters reports that Starbucks (SBUX) cut its outlook due to the housing crisis.

Reuters writes that Amazon’s (AMZN) pricing drove lower margins.

Reuters reports that Credit Suiss (CS) posted a loss.

The Wall Street Journal writes the Microsoft (MSFT) may withdraw its bid for Yahoo! (YHOO).

The Wall Street Journal writes that Wendy’s (WEN) will announce a deal in which it is sold to Nelson Peltz.

The Wall Street Journal writes that Samsung may knock Motorola (MOT) from its No.1 spot in US handset sales.

The Wall Street Journal writes that Qualcomm (QCOM) posted higher profits.

The Wall Street Journal writes that, after failing to draw customers with fashionable clothing, Wal-Mart (WMT) will try again.

The Wall Street Journal writes that Wall St. is concerned about the growing use of credit default swaps.

The Wall Street Journal writes that Delta (DAL) and Northwest (NWA) posted huge losses.

The Wall Street Journal reports that CostCo (COST) and Wal-Mart (WMT) are rationing rice sales due to huge demand.

The Wall Street Journal writes that Toyota (TM) passed GM (GM) in global sales in Q1.

The New York Times writes that China now has as many web users as the US.

The FT writes that fears of big bank failures are receding based on trading in the credit default markets.

Bloomberg reports that the price of rice rose above $25 for the first time.

China Exporting Wealth & Dropping Investor Tax from 24/7 WallSt.
There were two things that happened in China, both of which should be loved by U.S. and most country investors.

First and foremost, China saw a rally in Shanghai by more than 9% on the local markets after the Chinese lowered a stock trading tax from 0.3% down to 0.1%. MarketWatch noted that this was meant to take some air out of its market last year after major surges had been seen. After the Shanghai market had fallen by 50% from highs, they probably decided to keep confidence from eroding further and declare “mission accomplished.”

The second issue is that China’s sovereign wealth fund, The China Investment Corporation, has kicked up the amount it can invest in entities and assets abroad. According to a report out of the FT (and elsewhere), China’s $200 Billion sovereign wealth fund now has about $90 Billion to purchase assets and entities. Initially it had about $66 Billion, but the government decided it would need less to restructure its Agricultural Bank of China, its China Development Bank and its other struggling state-owned financial institutions.

It looks like the funds will mostly be given to external managers for foreign equities, fixed-income, and in alternative investments that pertain to private equity funds, hedge funds and possibly commodities.

The ordinaries market in Shanghai rallied some 9% today. The extra sovereign wealth funds will be good for whichever country those funds end up in, while the U.S. and other countries might want to note what taking out “transaction costs” can do for investor confidence.

New Solar ETF Outperforms Main US Components So Far (TAN, FSLR, STP, WFR, SPWR) from 24/7 Wallst
On April 15, the Claymore/MAC Global Solar Energy Index ETF (NYSE: TAN) was launched on ETF leader, the NYSE Arca. Under the ticker “TAN,” the ETF tracks 25 solar power industry companies globally for a total market cap of $5.8 billion.

The majority of the businesses are tied to solar in the ETF and are in the U.S., China, and Germany. The active stocks that trade in the U.S. on NYSE or NASDAQ are First Solar Inc. (NASDAQ: FSLR), MEMC Electronic Materials Inc. (NYSE: WFR), and Suntech Power Holdings (NYSE: STP).

Claymore believes that recent “green” trends, favorable government policy, increasing volumes of venture capital investments, and improving technology industry will drive growth and returns for the fund.

It was launched at $25.84 on April 15 and shares closed at $26.90 today. The fund has reached as high as $27.50 (also today) and hasn’t closed below the initial launching price. That puts the solar ETF up 4.1% since the lauch, aven after a drop of 0.7% today.

Of the top four constituents that trade actively in the U.S., the performance based upon todays closed and compared to the open on April 15 for exact comparison is as follows (with the percentage of the ETF for representation):

First Solar Inc. (NASDAQ: FSLR) is over 8% of the ETF weighting, up 0.8% since the ETF opened; .
Suntech Power Holdings (NYSE: STP) is 6.24% of the ETF weighting, up 0.78% since the ETF opened;
MEMC Electronic Materials Inc. (NYSE: WFR) is 5.1% of the ETF weighting, actually down 0.4% since the ETF opened;
SunPower Corp. (NASDAQ: SPWR) is 4.7% of the ETF weighting, actually down by 0.4% since the ETF opened.

Potash Corp. Earnings Kick Ag (POT) from 24/7 Wallst.
Potash Corporation of Saskatchewan Inc. (NYSE: POT) scored a win with earnings.

The potash and fertilizer giant posted $1.74 EPS, a gain of 181% year over year and a gain of 50% sequentially. Revenues came in at $1.89 Billion for the quarter. First Call had estimates pegged at $1.52 EPS on $1.67 Billion in revenues.

Potash noted that the pressure to increase global food production has continued to drive demand for potash, phosphate and nitrogen. It also noted that this pushed prices for all three nutrients to new highs. Each segment contributed record gross margin, and cash from operating activities prior to working capital changes in Q1 reached a record $625.5 million.

It has also shown price increases across the board and it is significantly hiking its guidance (with assumed parity of Canada/US Dollar). Its prior Q2 guidance is now $2.20 to $2.50, while First Call estimates are $2.27. Its old target of $6.25 to $7.25 for the full year is now in a range of $9.50 to $10.50 EPS, while First Call is at $8.62 EPS.

CEO Bill Doyle’s comments here show the belief that this is a not just a fad, but on that will be a norm:

“The global need to increase food production is real and immediate, and it will be a part of our world for the foreseeable future…… It took nearly a decade to empty the global grain cupboard and we can’t refill it overnight…”
We had noted in our full preview that the company would have to orchestrate another “beat and raise” to keep everyone happy after this exponential share growth. This looks like that and then some. So far shares are indicated up about 3% or 4% pre-market after closing at $204.12 yesterday and the 52-week trading range is %58.87 to $215.97.

The only issue we’d bring up is that shares are currently trading at or above many of the official stated price targets from Wall Street analysts. They will have to play catch-up one way or another.

AAPL earnings last night with a beat and conservative guidance here is the analyst take on it.
AAPL: Buy shares on any weakness from gross margins@GSCO
Goldman expects accelerating Mac gains and the new iPhone product cycle to drive shares in 2H08. Shares are Buy rated.
AAPL: Target to $248 from $212, remains top pick in group@SBSH
AAPL: Key takeaway is Mac unit growth@PIPR
Piper said Mac Units growth is accelerating, iPod sales are stabilizing with higher ASPs, and iPhone new releases in 2H08 will be signficant. The firm said upcoming catalysts include 3G iPhone release, Back to School Mac sales, new iPod, and the redisigned MacBook. Shares are Buy rated.
AAPL: Estimates and target raised to $202 from $295@LEHM
Lehman rates shares are Overweight.

Pre-Market Movers: Ahead of the Bell
The session this morning is the busiest of the week following earnings reports from a large number of companies both yesterday and this morning. The volume leader so far today is Ford (F) which is trading up +5.6% following a surprise profit announcement. Apple (AAPL) is trading up +0.9% following what appears to be a mixed bag in terms of earnings. Several firms defended results and raised price targets (see notes here for details). Starbucks (SBUX) is trading down (-11.5%) following far worse than expected earnings results last night after market close. Shares are probing fresh multi-year lows. Whirlpool (WHR) is trading down (-9.37%) following disappointing earnings for Q1 coupled with a negative outlook for the full-year. Autodesk (ADSK) is trading up +8.9% following a positive pre-announcement for their quarter with better forward guidance. The company reports on May 15th. Amazon.com (AMZN) is trading down (-5.3%) following an essentially inline quarter as reported last night after the regular session. Motorola (MOT) is trading down (-3.66%) after posting a wider than expected loss with poor forward guidance this morning before the regular session. Sovereign Bancorp (SOV) is trading down (-7%) after Friedman Billings Ramsey lowered estimates for the company and cut its price target to $6 from $8.

The Durable Goods Orders report showed a decline of -0.3% versus an expected increase of 0.1%. If you take out transportation items, the reading was an increase of 1.5% versus an expected rise of 0.5%. The durable goods report is important because it shows orders that have been placed for products that have a life span of at least three years. An increase in the numbers is a positive sign for the economy. The weekly Initial Jobless Claims report came in at 342,000 versus an expected 375,000.

DryShips-DRYS agrees to buy two drill ships
DryShips Inc announced that it has exercised its option to acquire two advanced capability drillships for use in ultra deep water drilling locations. The drillships are to be constructed by Samsung Heavy Industries Co and are expected to be delivered from the shipyard in the third quarter of 2011. The expected delivered cost of the newbuilding drillships is approximately $800 million per unit. The company expects to receive shortly a firm commitment for the debt portion to finance construction and other payments.
Actionable call watch for strength or sell on the news reaction.

NEM reports Q1 EPS 85c vs. consensus of 54c
Reports Q1 revenue $1.94B vs. consensus of $1.66B.
Great numbers for the worst miner.

AMZN: Believe long-term margin expansion thesis intact@BOFA
BofA said AMZN’s long-term margin thesis remains intact given continued scale from increased global eCommerce share, 3rd party sales, advertising, and new categories. Shares are Buy rated.
AMZN: Solid Qtr but guidance basically unchanged@PIPR
Piper believes share are already pricing in a strong Q1 and maintains their Neutral rating on valuation.

BIDU: Expect slight upside to revenues and EPS tonight@PIPR
Piper expects BIDU to report 2% upside to the Street’s revenue estimate of $75M and a slight upside to GAAP EPS estimates of 60c. The firm expects in line June quarter guidance of $99M. Shares are Buy rated.
BIDU earnings tonight. Should be volatile.

BDK reports Q1 EPS $1.09 vs. consensus of $1.14
Reports Q1 revenue $1.49B vs. consensus $1.53B.
BDK reduces FY08 EPS to $5.25-$5.65 vs. consensus $5.53
Reduces Q2 EPS to $1.40-$1.50 vs. consensus $1.49.
Actionable call watch for weakness.

DO announces $1.25 per share special dividend
Diamond Offshore Drilling, Inc. announced that its Board of Directors has declared a special cash dividend of $1.25 per share of common stock and a regular quarterly cash dividend of $0.125 per share of common stock. Both dividends are payable on June 2, 2008 to shareholders of record on May 2, 2008.

BG reports Q1 EPS $2.10 vs. consensus of $1.14
Reports Q1 revenue $12.47B vs. consensus $11.42B.
Awesome results watch for strength here.

POT reports Q1 EPS $1.74 vs. consensus of $1.52
Reports Q1 revenue $1.8B vs. consensus of $1.67B
POT raises FY08 EPS view to $9.50-$10.50 from $6.25-$7.25
Consensus is for EPS of $8.62. The company sees Q2 EPS $2.20-$2.50 vs. consensus of $2.27.
Excellent results watch for strength or a sell on the news reaction, more likely strength.

ADSK raises Q1 EPS 47c-48c vs. consensus 47c
Raises Q2 Revenue to $590M-$595M from $575M-$585M vs. consensus $578.13. Raises Q2 EPS to 52c-54c from 50c vs. 50c. consensus and Q2 revenue to $600M-$610M from $590M vs.consensus $589.03M. Revises FY09 EPS and revenue to $2.20-$2.30 from $2.15-$2.25 vs. consensus $2.16 and to $2.45-$2.50B from $2.425B-$2.475B vs. consensus $2.41B, respectively.

Fast Money position recap- First moves-
All the traders agree MSFT is a buy ahead of earnings.
Macke Owns (DIS), (INTC), (MSFT), (YHOO); Najarian Owns (AAPL), (CSCO), (XLF), (YHOO), (BEAV); Najarian Owns (CHK) Calls, (MSFT) Calls, (POT) Calls; Finerman Owns (GS); Finerman’s Firm Owns (MO), (MSFT), (PM), (SUN), (TSO), (VLO), (WMT), (YHOO); Finerman’s Firm Owns (FNM) Calls.

A ton of earnings today to watch. Keeping my eye on POT (long), AAPL (long), AMZN (neutral), BG (long), MA (pre earnings run), V (pre earnings run), BDK (short), WHR (short), TEX (long), Msft (long- pre earnings run), BVN or GDX short watch even though with NEM could see a retracement up, GLD short watch.
BIDU, BUCY( pre earnings volatility on both with earnings tonight), also earnings tonight: CF (long), CENX, DECK, SWN, MFE, JNPR, VSEA, DDUP, ACF, MEE, WFR and RIO tomorrow morning.
Taking the cue from Mr. Market for moving tides. Keep positive, stay nimble, stay focused on your goals!
Great trading and great day! Happy (Andy) will be back on Monday from vacation so be prepared for some great trades.