Oil prices have been falling today, helped by the release of the weekly inventory report which showed larger than expected reserves in the precious crude.
Going into today's report, analysts were expecting to see the Department of Energy announce that oil inventories fell by 1.9 million barrels last week, but in fact we only saw a decline of 1.6 million barrels.
Gasoline is probably more on the minds of most consumers, and what we saw in gasoline demand was even more extreme. Analysts had expected to see a rise of about 500,000 barrels of gasoline supplies last week, but the actual increase came in at 2.9 million barrels, a clear sign that high gasoline prices have forced many of us to cut back on our usage.
My favorite company, Intuitive Surgical Inc. (NASDAQ: ISRG), the maker of the da Vinci Surgical System reported earnings Tuesday afternoon that creamed Street guesstimates by 10 cents per share. Intuitive posted earnings per share of $1.28 versus analyst consensus of $1.18.
For the 23rd quarter in a row, just like clockwork and without missing a beat, Intuitive's top and bottom line growth simply ignored the global economy, blazing its own trail. I wonder how ISRG would have done if the economy was not in the dumps?
Overall, second quarter revenue shot up 56% from $142.2 million to $219.2 million. Instruments and accessories revenue increased 61% to $73.6 million from $45.8 million. Training revenue increased 44% to $29.4 million from $20.3 million during the second quarter of 2007.
Lonnie Smith, Chairman and CEO of Intuitive Surgical, said, "We are pleased with our second quarter revenue and earnings growth. These results reflect the continued adoption of the da Vinci Surgical System platform across a broadening group of surgical procedures."
"Yes, the market is declining. And, yes, it is often scary to buy during such market periods. Nevertheless, there's an adage that 'the best time to invest was yesterday; the next best time is today'.
"Indeed, countless studies have shown that the best thing any investor can do is invest early and often. That is the best way to maximize the power of time, and time will have the greatest bearing on your investment results.
"Thus, investors need to be willing to buy even when it is difficult to do so, or should I so especially when it is difficult to do so. The reason is that we usually are reluctant to buy stocks during market declines. Yet, if you think about it, declining markets should be precisely the time we buy since stocks are cheaper.
"The stock has demonstrated impressive price performance throughout the market volatility in recent months, rising to its highest level in a year above $50 before pulling back.
When you watch your kids playing war games on their computers, it must have occurred to you at some point that this might all be part of some grand scheme to get the next generation well-versed in a new set of skills. Hand-to-hand combat (except with their siblings) is out and unmanned aerial vehicles, or UAVs are in.
The AP (7/20) reported that Raytheon Company (NYSE: RTN) recently unveiled "its new control system for unmanned aerial vehicles, or UAVs." Raytheon's "Universal Control System,...uses some hardware from the gaming world," and is expected to "shorten training time and help prevent crashes of expensive unmanned drone aircraft by providing a more interactive experience for the pilot." The company focused on "making the system more intuitive -- replacing keystrokes with a game console -- after consulting with experts and discovering that thumbs are the most energy-efficient and accurate way to control an aircraft."
Given Iran's recent missile tests and all the saber rattling that goes on around the world, it should be no surprise that governments have been seeking Raytheon's Patriot Missile technology for years, but RTN is also a leader in a wide range of radar systems, guidance systems, airport monitoring and control systems, and of course the latest in UAV technology.
Oil got off to a strong start today, with prices at one point moving up as high as $130.69 a barrel as fears of supply disruptions in Iran have kept the market bullish for the time being.
Prices cool off a bit and are now sitting at $129.40, but you can be sure that as long as the tension between the West and Iran persists, you are going to continue to see prices that just refuse to come back down towards any sort of comfortable level.
Last week, we saw a pretty sizable drop in oil prices (see chart at the end of this post), which could be the main reason why this morning's rally was not able to hold above the $130 mark. Investors are probably still a bit weary of betting that we have hit support yet. What really got the market moving early on was fresh threats from the U.S. that more sanctions would be imposed on oil-rich Iran should it not cease its current nuclear program.
"In a year wracked by economic uncertainty and stumbling global stock markets, Russia has been an unlikely standout performer," explains global investment expert Nick Vardy.
"Even as China is now down by more than 50%, bad boy Russia's performance has been second only to Brazil this year and it actually has outperformed its BRIC rival by a hair during the past three months.
"Despite Russia's reputation as a country rife with corruption, scant respect for genuine democracy and the Rule of Law, it's always hard to argue with success.
"Scan the Russian press, and it quickly becomes apparent that the contrast between the collective economic mood of Russia and the United States couldn't be sharper. While U.S. drivers cringe at $4 per gallon gas, Russia celebrates high oil prices as the source of its newfound wealth.
"To add insult to injury, the most recent Forbes 400 list confirms that Moscow now boasts more billionaires than New York City.
At first glance, the numbers don't look too hot for Mattel. The company announced that profit was off by a pretty hefty 48% in the quarter, down to 3 cents per share on $11.8 million. This is down from $22.8 million, or 6 cents per share, for the same period last year. The company blamed most of the decline in weak demand for its Barbie dolls, and higher costs that it had to endure in the quarter.
From the above paragraph, you may be expecting to see the company being punished in the premarket, but in fact, shares of the stock are trading up a blazing 13.5% as I write this, and were up over 18% as of about 5 minutes ago. Why? Simple, in Wall Street it is all about expectations, and the company was able to outperform analysts estimates for the quarter, which were looking to see only a 2 cent per share report.
Editor's Note:This post was written by Terry Woo, one of Minyanville's sharpest minds AND/OR brightest bulbs. For more perspective AND/OR insight, visit www.minyanville.com.
Crude oil is trading lower for a third day in a row.
Currently there's talk out there of demand destruction in other countries (i.e. China's slowing economic growth and slowing U.S. economy). But I don't think there has been enough coverage on financial television regarding Iran.
Remember crude's breakout when the world speculated Israel was preparing to attack Iran's nuclear facilities. And remember more upward pressure when Iran retaliated by test firing its long-range missiles.
As reported by CNN yesterday, Undersecretary of State William Burns is accompanying an EU delegation and will meet with a top Iranian nuclear official... something that hasn't happened in decades! It's a game changing event. That combined with North Korea (cooperating with the world in giving up its pursuit of nuclear weapons), I believe this is simply the Iranian risk premium being taken out of the price of oil.
OPEC again lowered its forecast for 2008 global oil demand growth, adding that the economic slowdown affecting the United States and other industrialized nations is likely to lower demand growth in 2009 as well, the group announced (pdf).
OPEC lowered its 2008 forecast to 1.20% global oil demand growth, down from 1.28%. It was OPEC's fourth downward revision for oil demand this year. The new price structure and slower global economy "have helped dampen oil demand growth in many regions," the cartel said in its July report.
OPEC, which accounts for about 40% of the global oil supply, now expects 2008 demand to rise by 1.03 million barrels per day, or 70,000 barrels per day less than the group's previous forecast.
On Tuesday, oil plunged $6.44 to $138.74 per barrel -- its biggest decline, in percentage terms, since March 2008 -- following Tuesday morning testimony by U.S. Federal Reserve Chairman Ben Bernanke, during which the Fed chair said credit market write-downs were likely to slow the already anemic U.S. economy even more, Bloomberg News reported Tuesday. Economist Glen Langan told BloggingStocks OPEC's revised forecast is likely to represent another data point the oil bears will like.
"As steel prices continue to climb, one company that is set to profit handsomely is Cleveland-Cliffs (NYSE: CLF)," says Bill Martin.
Adding to the stock's appeal, the editor of BullMarket.com explains, "Event-driven hedge fund Harbinger Capital has been an aggressive buyer of the stock." Here's his review of the situation.
"Shares of Cleveland-Cliffs have been on fire, up over 150% year over year and they have more than doubled year to date. The Cleveland, Ohio-based company is the largest producer of iron ore pellets in North America and a major supplier of metallurgical coal to the global steel-making industry.
"Cleveland-Cliffs benchmarks iron ore prices to the price of steel, so when steel prices rise, so do iron ore prices. The company said all of its North American iron ore mines are producing at or near capacity.
"Cleveland-Cliffs ended the first quarter of 2008 with $186.5 million of cash and cash equivalents and $600 million in borrowings outstanding under an $800 million credit facility. The company expects to generate approximately $700 million in cash from operations in FY08 as it sells through its inventory.
"Event-driven hedge fund Harbinger Capital was an aggressive buyer of the stock in May, paying between $76.96 to $104.75 a share to add to its position in the name. For the month, the firm spent approximately $338.5 million to acquire nearly 3.7 million shares.
"The number one reason I like gold is because of inflation -- now a big problem in the emerging markets and the major economies," says resource expert Eric Roseman.
In his industry-leading Commodity Trend Alert, he says, "One of my favorite companies in the world is Goldcorp (NYSE: GG)." Here, he looks at this gold mining firm.
"Inflation sits at a nine-and-a-half-year high in Asia at 7.5%, a 15-year high in the Euro-zone at 3.7% and in the United States it's at 4.2% -- if you believe government data in the first place. I don't. I say inflation is running closer to 10% in 2008, not 4.2%.
"The cost of living, mainly in food and energy, is now totally out of control and destroying business margins and eroding the purchasing power of consumers, especially in the emerging markets where food and energy consumption devours more than 65% of wages.
"It seems very obvious to me that Asian governments have now lost control of inflation. The same applies to the Gulf countries which peg their currencies to the dollar. And in Europe, the European Central Bank is freaking out because of high inflation.
Oil plunged more than $8 to about $136 Tuesday at mid-day after Fed Chairman Ben Bernanke's indicated the risks to U.S. growth have increased as a result of credit market losses, Bloomberg News reported Tuesday.
Oil fell $9.26 to $135.92 per barrel before recovery slightly. Oil hit a record of $147.27 per barrel on July 11.
The other major energy commodities, likewise, plummeted on the news. Heating oil plunged almost 15 cents to $3.91 per gallon, unleaded gasoline sank almost 17 cents to $3.39 per gallon, and natural gas plunged 44 cents to $11.51 per million BTUs.
"Oil in free-fall"
Energy trader Jim Dietz said "a mini selling frenzy" hit the oil market after Bernanke indicated the U.S. economy was likely to slow further.
"We did have some support for an oil-long trade earlier as an investment when few other investments are working, but that sentiment was quickly wiped out by Bernanke's comments," Dietz said. "We had oil in free-fall for about an hour. The market put 'two and two together.' We had the Fannie Mae and Freddie Mac bailout news yesterday [Monday] and Bernanke's bearish comments today. That led a lot of people to conclude we're going to see a slowdown in oil demand growth, which means lower prices."
The dollar fell to a record low against the euro Tuesday morning as traders calculated that U.S. credit market losses will further hurt U.S. economic growth.
The dollar weakened about 1.25 cents to $1.6048 versus the euro before regaining some ground to $1.5995. The dollar also fell one cent versus the British pound to $2.0057 and 1.85 yen to 104.20 versus Japan's yen.
Currency trader Andrew Resnick told BloggingStocks Tuesday the equation is a basic one: with more dollars in supply, each dollar is worth less.
"The Fannie Mae and Freddie Mac assistance packages will require more federal spending or federal support though guarantees. That action, plus FDIC takeover of problem banks means more federal outlays, which weakens the value of the dollar," Resnick said. "We've been in a period of increasing federal outlays for the past five years, although I don't think anyone in 2003 anticipated that federal spending would increase to this degree."
Investors have watched the precipitous fall in the U.S. dollar over the past few years with trepidation. Investors in Israeli stocks trading in the U.S. have witnessed the once-lowly shekel dominate the dollar (and most other global currencies) over the past two years. It looks, at least from some uber-investors' perspectives, that the dollar may be set to reverse -- a boon for those companies with significant sales in the U.S.
Bloomberg has an article out this morning saying that bond guru, Bill Gross, the manager of the world's largest bond fund, the $129 billion Pimco Total Return Fund, has turned negative on the euro for the first time since its inception in 1999. According to the article, Gross's firm, Pimco, believes that according to purchasing power parity, a measure used to account for differences in exchange rates across countries, the euro is overvalued by 30%.
And Gross isn't the only one who is concerned that Europe may suffer a bigger slowdown than the U.S. in a world confronted with slowing growth and financial snafus. The same Bloomberg article says that according to a recent poll conducted by Bloomberg of global strategists, many think that the euro has seen its day and that the dollar is poised for a rally (hard to believe in the face of Fannie Mae and IndyMac).
Europe's Trichet-led Central Bank has signaled that it may be done raising rates. In fact, given the choice between fighting inflation and re-energizing a sputtering economy, some are betting that the ECB may need to actually lower rates. With a Fed-led plan to bailout the U.S. banking system and the bottoming out of the dollar, it looks like Gross and Co. are betting against the euro for years to come.
Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
Following the Dow and the NASDAQ here in the Americas, European and Asian markets almost unilaterally lost any previous gains, as the major indexes all fell. Both Henry Paulson and Ben Bernanke were both being pitched in the media as potentially saying the credit market losses were hurting the U.S. economy. As a result, the U.S. dollar was at a record low against the euro.
If it's not one thing with the U.S. economy, it's another, when it comes to the complete mess the mortgage overextension problem has created. Said Roberto Mialish from Unicredit Markets & Investment Banking: "The markets are reacting negatively to the renewed credit crisis in the U.S. and that's hurting the dollar across the board ... the market is speculating that Bernanke will offer a gloomy outlook for the U.S. economy.''
Below is a foreign market review for this morning:
European markets:
The Dow Jones Euro Stoxx 50 Pr: at 3,132.37, down 83.87 (-2.61%)
The FTSE 100 Index: at 5,173.10, down 127.30 (-2.40%)
The DAX 30: at 6,049.42, down 150.83 (-2.43%)
The S&P/MIB Index: at 27,059.00, down 689.00 (-2.48%)
Asia/Pacific markets:
Nikkei 225 Average: closed at 12,754.56, down 255.60 (-1.96%)
The S&P/ASX 200 Index: closed at 4,815.70, down 105.30 (-2.14%)
Hang Seng Index: closed at 21,174.77, down 839.69 (-3.81%)
Oil prices have been falling today, helped by the release of the weekly inventory report which showed larger than expected reserves in the precious crude.
Oil got off to a strong start today, with prices at one point moving up as high as $130.69 a barrel as 
Shares of toy maker 
Oil plunged more than $8 to about $136 Tuesday at mid-day after Fed Chairman Ben Bernanke's indicated the risks to U.S. growth have increased as a result of credit market losses, 
Investors have watched the precipitous fall in the U.S. dollar over the past few years with trepidation. Investors in Israeli stocks trading in the U.S. have witnessed the once-lowly shekel dominate the dollar (and most other global currencies) over the past two years. It looks, at least from some uber-investors' perspectives, that the dollar may be set to reverse -- a boon for those companies with significant sales in the U.S.
Earnings preview for Ford
Apple shares rise on report Steve Jobs is free of cancer
Toyota whups GM in the first half of 2008
