Consumer
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News and Views
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Macro/Technicals
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Earnings
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Sector News, M&A, Capital Raises
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Research Away
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Cantor Research
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Top Events/Earnings Calendar
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Cantor Flows
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News and Views
Equities finished off of the lows, but there was plenty of disappointing news for the market to turn lower. The jobs data was worse than consensus, but even a more compelling negative to the markets were the drastic revisions downward from June. As we pointed out with SSS on Thursday, the consumer and the average Americans are not seeing the light at the end of the tunnel. In addition to the weak payroll report, Goldman Sachs lowered GDP estimates for Q1 2011 and for the year. Because of these things, there should be follow through to the downside in the weeks/months to come as hope is a hard thing to base decisions in and the news is still looking less than favorable. The Education Sector was beaten up again as the witch hunt continues in the space and we have seen, as a firm, long sellers of every kind that are done making fundamental cases for a group that is always one piece of news away from being cut in half……again.
EXPE features as the better long term idea in the WSJ. Negative for PCLN because of multiple.
TGT positive in Barron’s even if economy falters. Positive for WMT and COST.
SLE CEO, Brenda Barns, is stepping down permanently due to health. We would buy it on any weakness.
As a desk we were heavily weighted to the sell side 6-1 Friday. We were long sellers of COCO and CECO in the Education sector and we saw long sellers of Consumer Discretionary stocks with very little buying/covering into the weekend.
Macro/Technicals
SP Futures: 1123.40; +3.90;SPX: 1121.64; -.37
RLX: 416.80; +.57
RTH: 90.70; -.38
XLY: 3232.03; -.68
XLP: 27.09; +.22
VIX: 21.74; -1.63
SPX Cash Resistance: 1130, 1136, 1148;
Leaders: NFLX, MHK, HANS, BID, PCLN, AZO, RL, CROX, SHLD, KFT, GES
Laggards: APEI, OSTH, OFI, HAR, RST, ODP, CECO, DV, WTSLA
Earnings
ADY American Dairy reports Q2 EPS ($0.92), unclear if comparable to Reuters $0.18 ($12.88)
Company reports revenues of $52.2M vs Reuters $60.8M.
- Revenue from branded milk powder products up 9.0% to $35.0M vs. $32.1M in 2Q09
- Revenue from raw milk powder up 223.8% to $13.6M vs. $4.2M in 2Q09
- Guides Q3 revenues to exceed $55M vs Reuters $72.4M.
Sector News, M&A, Capital Raises
RHI Barron's feature argues that Robert Half should benefit from an improving labor market ($25.32)
While acknowledging that Friday's jobs report suggests that it's still early in the recovery, Barron's says that Robert Half's latest earnings report might have marked a turning point in the labor market as year/year earnings rose for the first time in seven quarters. One fund manager that owns RHI shares says that the shares could hit $35 as RHI has more earnings potential than in the past due to the increased attractiveness of temporary (and thus more flexible) staffing.
SYY Barron's portfolio manager interview: WHG Income Opportunity's Mark Freeman positive
TGT Barron's cover story says that Target could hit $70 in a year ($52.32)
Barron's reports that Target should fare well even if the economy does reenter recession, noting the company's excellent cost controls and its merchandising edge. Goldman Sachs analyst Adrianne Shapira is warming up to Target, noting initiatives such as the grocery concept PFresh and a planned 5%-discount program. Barron's also notes that reduced capex with fewer new stores will mean more cash for share buybacks and dividends. Finally, the article argues that while Target was late to address its credit card problems, the portfolio is on the mend.
CRN Cornell Companies announces receipt of Arizona notification not to renew contract ($28.06)
Cornell Companies announced that it has received notification from the Arizona Department of Corrections of its election not to renew its contract at Cornell's 2,048 bed Great Plains Correctional Facility in Hinton, Oklahoma, which is scheduled to expire on September 12, 2010.
LAND Gladstone Land files 12.1M share IPO; expected to price in range of $14-16 per share ($16.37)
Gladstone Land is an externally-managed corporation that currently owns two farms in California that it leases to Dole Fresh Vegetables, a wholly owned subsidiary of Dole Foods (DOLE).
APAC APAC Customer Services CEO Mike Marrow taking leave of absence ($5.04)
COO Art DiBari will serve as interim CEO. Marrow is recovering from a recent, successful medical procedure.
SLE Sara Lee confirms Brenda C. Barnes to step down permanently as Chairman and CEO ($14.84)
SLE announced that Brenda C. Barnes will step down permanently from the positions of Chairman and CEO so she can continue to focus on improving her health.
LBY Libbey files 3.83M share secondary offering for holder through BofA Merrill Lynch ($12.29)
The shares are being sold by holder Merrill Lynch PCG, Inc and LBY will not receive any of the proceeds. After the offering, Merrill Lynch PCG, Inc will beneficially own 1.146M shares, or 5.7%.
EXPE WSJ says Expedia may be a better long-term bet than priceline.com (PCLN) ($24.61)
A "Heard on the Street" column says Priceline is well put together, with a smart business model allowing it to rake in money from hotels, where profits can be made, rather than plane flights, where profits basically can't be made. But Priceline trades at an eye-popping 18 times its forecast for 2010 EBITDA, vs Expedia's seven times. That leaves Priceline vulnerable to a double-dip recession. And starting from a lower point with more travel being booked online, Expedia may have more to gain than Priceline does.
Research Away
Goldman Sachs initiates HRL, SAFM, SFD, and TSN
- Smithfield Foods (SFD) initiated buy with $19 target
- Hormel Foods (HRL) initiated neutral with $45 target
- Sanderson Farms (SAFM) initiated neutral with $40 target
- Tyson Foods (TSN) initiated sell with $15 target. Shares are also added to the Conviction Sell List.
Cantor Research
Click the followg link for Pado’s Perceptions and the Cantor Morning News
Top Events/Earnings Calendar
Today
Earnings
PRE: AOB, BLT, STON, TA, TSN
POST: JADE, BIDZ, COKE, GEOY, INV, IPAR, LOPE, SYUT
Events
KMX— JP Morgan Auto Conference
Cantor Flows
Consumer Staples: SFD, KFT, TSN
Consumer Discretionary: ORLY, HAS,
Consumer Services: COCO, HAR, MWW, ONVI