Delamaide: Treasury nominee Raskin can spur action

WASHINGTON — Treasury Secretary Jack Lew is about to get a formidable ally in reining in the banks as he pushes financial regulatory agencies to get stiffer rules in place.

Sarah Bloom Raskin, the nominee for the powerful No. 2 spot in the Treasury Department, sailed through her confirmation hearing last week. She is likely to be one of the first nominees approved in the post-filibuster Senate, though it seems she would get the nod in any case.

Raskin is currently a governor on the Federal Reserve Board, and she spent several years on Capitol Hill on the staff of the Senate Banking Committee. But the role where she made her regulatory chops and got noticed by everyone from Lew to consumer advocate Sen. Elizabeth Warren was as Maryland's commissioner for financial regulation.

As state regulator, by all accounts, she was tough on financial institutions. But as former Maryland senator Paul Sarbanes said in endorsing her at last week's hearing before the Senate Finance Committee, she won praise both from banking associations and consumer groups, showing her ability to "bring people together."

The job of deputy Treasury secretary is an open-ended one, embracing anything the secretary wants, plus frontline responsibility for administering the sprawling bureaucracy.

Lew — who reportedly asked for Raskin as his deputy to replace Neal Wolin, who left in early September — certainly has her experience has a regulator in mind.

"Sarah has a deep understanding of banking and financial regulatory issues," Lew said in a statement when her nomination was announced in July, "as well as a firm grasp of how to run large, complex organizations."

In her prepared remarks for the hearing, Raskin ticked off how she saw the challenge in the new post. "From housing finance reform and implementing financial regulatory reform to tailored sanction design and implementation, new trade agreements and tax and entitlement reform," she said, "we have the chance to make important long-term an! d durable progress for the country."

Lew has expressed his frustration that the myriad bank regulatory agencies have been slow in formulating rules mandated by the Dodd-Frank financial reform, especially the Volcker Rule requiring banks to spin off speculative trading activities. In July, he strongly urged the agencies to complete these rules by the end of the year.

In that same month, Raskin told an audience of graduate business students in Colorado that she had opposed a draft for the Volcker Rule at the Fed because it was too soft.

"I was concerned that, as proposed, the guard rails were too broad and would allow banks to be able to go too far off the road," she said in a speech in Boulder. "Further, I was concerned that the guard rails as crafted could be subject to significant abuse — abuse that would be very hard for even the best supervisors to catch."

Raskin also reportedly opposed the $25 billion settlement with banks on loan servicing and foreclosure abuses in 2012 as too lenient, but the Fed was not the lead agency in negotiating that settlement and her objections did not carry the day.

As a state regulator, Raskin was in the forefront in seeking foreclosure relief for homeowners, striking a deal with mortgage servicing companies in 2008, still early in the crisis.

Raskin spent some time in the private sector between her work on Capitol Hill and her return to public service, much of it, ironically, at Promontory Financial Group, a consulting firm that came under fire earlier this year for charging excessive fees in yet another regulatory action on faulty foreclosure practices.

But she returned to public service in 2007 as a state regulator and now has ascended rapidly to one of the most influential posts in government, with impeccable bona fides as a consumer advocate.

In her testimony last week, Raskin said that for all the economic analyses and data available at the Fed she had learned more than she "ever imagined possible" during her tenure! as gover! nor from impromptu visits to job fairs and unemployment centers.

"Talking to people trying to avoid falling off the economic ledge reminds us of the urgent public purposes that must infuse our work here if we are to be authentically successful," she said. "I make it a continuing commitment to throw everything I have into seeking ways to broaden the opportunities for prosperity for all Americans."

It was a declaration that should have bipartisan appeal. The top Republican on the Senate panel, Orrin Hatch of Utah, in fact said afterwards that Raskin had his vote, making it almost certain that she will be confirmed rapidly and Lew will have a consumer advocate deputy at Treasury.

Darrell Delamaide has reported on business and economics from New York, Paris, Berlin and Washington for Dow Jones news service, Barron's, Institutional Investor and Bloomberg News service, among others. He is the author of four books, including the financial thriller Gold.

Mid-Day Market Update: Agilent Shares Rise On Upbeat Earnings; Western Union Drops

Midway through trading Friday, the Dow traded up 0.27 percent to 15,919.54 while the NASDAQ gained 0.08 percent to 3,975.79. The S&P also rose, surging 0.12 percent to 1,792.81.

Top Headline
Nordstrom (NYSE: JWN) reported upbeat third-quarter net income.

Nordstrom's quarterly net income declined to $137 million, or $0.69 per share, from $146 million, or $0.71 per share, in the year-earlier period.

Its revenue climbed 3% to $2.88 billion from $2.81 billion, while revenue from stores open at least a year gained 0.1 percent. However, analysts were projecting earnings of $0.67 per share on revenue of $2.87 billion.

Equities Trading UP
Voxeljet AG (NYSE: VJET) shot up 12.58 percent to $58.99 after the company reported its unaudited financial results for the third quarter and nine months ending September 30, 2013.

Shares of Youku Tudou (NYSE: YOKU) got a boost, shooting up 11.08 percent to $29.28 after the company reported a Q3 gross profit of RMB82.3 million (US$13.4 million).

Agilent Technologies (NYSE: A) was also up, gaining 8.75 percent to $54.96 after the company reported an upbeat Q4 profit.

Equities Trading DOWN
Shares of Tile Shop Holdings (NASDAQ: TTS) were down 2.16 percent to $12.67. Citigroup downgraded Tile Shop from Buy to Neutral.

Gogo (NASDAQ: GOGO) shares tumbled 2.01 percent to $28.22 after Morgan Stanley downgraded the stock from Equal-weight to Underweight.

The Western Union Company (NYSE: WU) was down, falling 5.26 percent to $16.53 after the company announced that Scott T. Scheirman , Executive Vice President and Chief Financial Officer, will be leaving the company.

Commodities
In commodity news, oil traded up 0.03 percent to $93.79, while gold traded up 0.09 percent to $1,287.40.

Silver traded up 0.06 percent Friday to $20.74, while copper rose 0.30 percent to $3.18.

Eurozone
European shares were mostly higher today. The Spanish Ibex Index fell 0.10 percent, while Italy's FTSE MIB Index fell 0.41 percent. Meanwhile, the German DAX gained 0.29 percent and the French CAC 40 climbed 0.19 percent while U.K. shares rose 0.45 percent.

Economics
US import prices declined 0.7 percent in October, versus economists' expectations for a 0.5 percent fall. Export prices fell 0.5 percent in October.

The Empire State's general business conditions index declined to negative 2.2, versus positive 1.5 in October. However, economists were estimating a positive reading of 5.0.

Industrial production dropped 0.1 percent in October. However, economists were projecting no change in production.

US wholesale inventories rose 0.40 percent for September, versus economists' expectations for a 0.40 percent gain.

Posted-In: Earnings News Guidance Eurozone Commodities Forex Global Econ #s Economics Hot Intraday Update Markets Movers Tech

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Merck reports profit drop

Pharmaceutical giant Merck reported that third-quarter profit dropped 35% amid competition from generic drugs. But the company posted profits that beat analyst estimates as sales of some of its drugs rose.

Company earnings, including one-time items, were 92 cents per share, four cents higher than the average of estimates compiled by Thomson Financial Network.

Still, the $11.03 in third-quarter revenue posted by the world's second-largest drug maker didn't meet the roughly $11.1 billion analysts expected.

The company reported that worldwide sales of its top selling drug, Januvia, a Type 2 diabetes medication, dipped 1% to $1.4 billion in the third quarter.

Similarly, sales of Singulair, a once-a-day oral medication for asthma, dropped 53% to $280 million during the quarter, the firm reported.

However, Merck also said combined sales of Remicade and Simponi, treatments for inflammatory diseases, rose 22% to $700 million. The company also said sales of Gardasil, a vaccine to prevent some diseases caused by the human papillomavirus, were up 15% during the quarter to $665 million.

Merck narrowed its profit forecast to $1.61 to $1.79 per share. The company had forecast $1.84 to $2.05 in July. The company also said it continued to anticipate full-year 2013 sales would be approximately 5% to 6% below last year's levels, with foreign exchange accounting for roughly 2.5% of the decline.

Earlier this month Merck announced it would lay off 8,500 workers, cut $2.5 billion in costs over two years and restructure its research and development efforts.

"We are improving productivity and focusing our R&D and commercial resources more precisely to enable our investments in the best opportunities for innovation and growth," Merck CEO Kenneth Frazier said in a statement issued with Monday's earnings report.

Merck shares were down more than 2.2% at $45.50 in premarket trading about an hour before U.S. financial markets opened Monday.

Oxford Industries Posts Higher Q2 Net Sales, EPS: Beats EPS Estimates (OXM)

After the bell on Tuesday, Oxford Industries (OXM) announced its second quarter earnings, posting a 14% increase in net sales from last year’s same quarter.

The Atlanta, GA-based apparel company announced second quarter consolidated net sales of $235 million, which were up from last year’s Q2 figure of $206.9 million. The company’s EPS, on an adjusted basis, came in at $1.01, a 55% increase from last year’s 65 cents.

Oxford Industries beat analysts’ Q2 EPS estimates of 98 cents, but missed the analyst revenue consensus of $243.5 million.

Looking forward to full-year 2013, Oxford Industries lowered its EPS guidance to a range of $2.90 to $3.05. This comes in below the analysts’ consensus of $3.12.

OXM shares were up 86 cents, or 1.33%, at the end of trading on Tuesday. YTD the stock is up more than 40%.

2 Big Reasons for Ultrashort Bond Funds

With ultrashort bond funds, it all depends on the definition of modest.

We don’t cover many of these funds anymore,” said Sarah Bush, senior mutual fund analyst with Morningstar, told ThinkAdvisor recently. "Ultrashorts were yielding too little and got really small, and we just felt we needed to deploy our resources elsewhere.”

But when Bush took a second look, she found a surprise.

“The category has experienced modest inflows really since the beginning of the recovery in 2009,” she explained, adding that this includes the massive bond fund outflows seen in June.

A closer look at Morningstar data reveals modest net flows of $4.4 billion and $2.3 billion in 2010 and 2011, respectively, for corresponding total assets of $35.4 billion and $37.8 billion.

But in 2012 the asset class took off, comparatively, racking up $9.5 billion in net flows and $48.4 billion in total assets. So far, this year looks even better, with $5.4 billion in net flows and $54 billion in assets through July.

So why ultrashorts, and why now? The answer is yield, of course, and interest rates.

In an investing environment where the dual problems of low yield and increasing interest rate risk dominate headlines daily, ultrashort bond funds might be the trick.

“If [investors] have a 10% or 20% allocation to cash because they’re defensive or they’re looking for better entry points into the equity or fixed income markets and they don’t want to earn zero in a money-market fund, then an ultrashort fund makes sense,” says Charles Melchreit, manager of Pioneer Investments Multi-Asset Ultrashort Income Fund (MCFRX).

Another appeal, in particular, is their flexibility.

For instance, Melchreit’s fund, co-managed with Seth Roman and Jonathan Sharkey, is “massively diversified” in that it hits a lot of different levers across a lot of different sectors.

 “I don’t think that’s as unusual now as it once was within this space," he said. "We’re looking to invest in sectors that are not terribly correlated. Most sectors have some correlation, but we’re really trying to take advantage of any imperfect correlations that we can in the short-duration space.”

The fund has a heavy focus on risk management and trying to manage net asset value volatility so it doesn’t experience massive swings.

“The ultrashort world is now using a lot of different sectors in corporates and mortgages and even bank loans, money-market instruments and cat bonds," Melchreit said, "all of which appeal to different investors and present for us as an investment manager different pools of liquidity.”

Meaning if faced with a period of high redemptions, he has a choice of which securities to sell.

---

Check out an Ultra-Strong Case for Ultra-Short Funds on ThinkAdvisor.

Will Schwab Earnings Rise With Stocks at Record Highs?

Charles Schwab (NYSE: SCHW  ) will release its quarterly report next Tuesday, and investors aren't expecting a blowout quarter for the discount brokerage company. Yet with the stock trading near five-year highs, there's rising optimism that the company has put its worst days behind it, and that Schwab earnings could easily rise considerably from here.

As a broker, Schwab benefits from interest in the stock market, yet even though stocks have moved dramatically higher in recent years, they've done so without the usual chorus of retail investors getting back into the market. How can the broker engineer a comeback? Let's take an early look at what's been happening with Charles Schwab over the past quarter and what we're likely to see in its quarterly report.

Stats on Charles Schwab

Analyst EPS Estimate	$0.19
Change From Year-Ago EPS	(5%)
Revenue Estimate	$1.32 billion
Change From Year-Ago Revenue	2.7%
Earnings Beats in Past 4 Quarters	2

Source: Yahoo! Finance.

How will Schwab's earnings climb from here?
Analysts haven't made many changes in recent months to their earnings calls for Schwab, boosting their June quarter estimates by a penny per share but keeping their full-year 2013 and 2014 calls unchanged. The stock, though, has risen considerably, jumping 27% since early April.

We've already gotten a hint of how Schwab has been performing from its monthly activity reports. In May, for instance, Schwab saw a net decrease in new assets of $1.9 billion, with a single mutual-fund clearing services client accounting for a $10.3 billion outflow. Schwab anticipates more than $60 billion in additional outflows from this client in the future. Yet overall, total client assets reached a record $2.11 trillion, and daily average trades among clients rose 8% from April and 17% from the year-ago month, showing strength in customer activity.

The problem for Schwab, though, is that its competitors have seen similarly strong performance lately. TD AMERITRADE (NYSE: AMTD  ) weighed in with a 9% increase in daily average revenue trades in May, posting its best level in a year as it has gone head-to-head with Schwab with their similarly sized offerings of commission-free ETFs. Meanwhile, shares of E*TRADE Financial (NASDAQ: ETFC  ) hit a 52-week high earlier this week, as the company rode on its own success with a 15% gain in trades from May. As the industry has gotten more cutthroat, brokers have been fighting to boost business, giving out expensive incentives to draw new customers in an effort to capture long-term relationships.

Just as important for Schwab, though, is the interest rate environment. Schwab has lost money having to subsidize its money market mutual fund offerings for some time, as rock-bottom short-term rates have made extraordinary measures necessary to keep money market rates from going negative. As some begin to foresee a move higher for rates, the corresponding boost to Schwab earnings from not having to provide fund subsidies could help the stock climb higher.

In Schwab's earnings report, look for signs of how its expansion of its commission-free ETF menu earlier this year has done in bringing in new customers. With ETFs continuing to grow, staying strong in that niche could give Schwab earnings power it might not otherwise have.

ETFs are valuable not just for brokers like Schwab but for investors as well. Find out about three ETFs that are set to soar in this free special report from the Motley Fool. Just click here to access it now.

Click here to add Charles Schwab to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Is Buying Intel Stock a Smart Health Care Play?

Healthcare is bigger than just health care. That's been my driving thought over the last couple of weeks as I have explored the pros and cons of why some companies that aren't truly health care companies just might be smart health care investments. With this in mind, my latest focus is on whether buying Intel (NASDAQ: INTC  ) stock could make sense for investors looking to profit from the growth of health care. What's the verdict? Let's take a look.

The next space race
Eric Dishman, Intel fellow and general manager of the company's Health Strategy & Solutions Group, says that building out a health care infrastructure to handle global aging is the "space race of the 21st century." When asked why Intel is so heavily involved in health care, Dishman responded by pointing out how microprocessors have become part of the "fabric of our everyday lives." Since health care is part of those everday lives, "Intel is in health care."

Dishman isn't kidding. Intel is in health care in a major way. Perhaps the most obvious example is the company's Care Innovations joint venture with General Electric (NYSE: GE  ) . GE Healthcare and Intel teamed up in 2011 to develop home-based health technologies. GE Healthcare contributed its Quiet Care remote passive activity and behavioral monitoring system for seniors to the venture, while Intel threw in its Intel Health Guide personal health and monitoring system.

Care Innovations also offers other products and services, including consulting to help senior living organizations deploy patient monitoring technology. The joint venture has seen some successes, particularly being named by Frost & Sullivan as its 2012 North American Competitive Strategy Leadership Award winner.

Intel joined forces in March with several other big companies -- Dell (NASDAQ: DELL  ) , RedHat (NYSE: RHT  ) , VMWare (NYSE: VMW  ) , and Epic Systems. The companies, going by the acronym DRIVE, operate a facility near Epic's headquarters in Wisconsin that allows hospitals to test and deploy new software on Linux servers. Epic provides the software. Dell provides the servers -- with Intel inside, of course. Those servers use RedHat's Enterprise Linux operating system and VMWare's VSphere virtualization platform. The goal of this effort is to demonstrate to small and medium-sized hospitals that the solution involving the DRIVE companies is a cost-effective approach that meets their needs. 

The giant chipmaker also recently announced a partnership with Oregon Health & Science University to develop high-performance computing technologies for personalized medicine. The collaboration's first projects will attempt to create genetic profiles of tumors with the goal of identifying patterns that help determine how effective targeted treatments might be. 

Of course, Intel's bread and butter comes from supplying processors for mobile devices, personal computers, and servers. Use of all of this hardware is growing as government regulations and competitive pressures push health care providers to implement technology. The company's product line includes cloud solutions for electronic medical record systems and health information exchanges and security solutions for ensuring the privacy and security of health data. 

Gold rush
While I like Dishman's space race metaphor, there's another analogy that fits -- a gold rush. Back in the days of America's previous gold rushes, lots of players rushed to the scene as soon as gold was discovered. Some struck it rich, but many didn't do so well. That same scenario will likely play out with the health care gold rush. There's a lot of money to be made, but not all will succeed.

I think Intel will be one of the success stories. The main reason why I think so is that Intel is more akin to the suppliers of shovels than the gold miners themselves. Intel can win in nearly every facet of health care -- providers, payers, pharmaceutical companies, medical device makers, software companies, and more -- by providing solid underlying technology that helps these organizations succeed. Is buying Intel stock a smart health care play? It just might be as good as gold.

When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, a Motley Fool analyst runs through all of the key topics investors should understand about the chip giant. Click here now to learn more.

Earnings Scheduled For October 7, 2013

Tower Group International (NASDAQ: TWGP) is expected to post a Q3 loss at $1.04 per share on revenue of $428.87 million.

Posted-In: Earnings scheduleEarnings News Pre-Market Outlook Markets

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Cruise Investors Smell a Fire Sale

The fire aboard Royal Caribbean's (NYSE: RCL  ) Grandeur of the Seas was put out within two hours, but not before disrupting the travel plans of passengers on board and those set to board the ship this Friday. Both sailings have been nixed, and even though Royal Caribbean is doing things right by issuing refunds and discounts on future sailings, this is going to be a big hit for the cruise industry.

Royal Caribbean, NCL (NYSE: NCL  ) , and ship spa services provider Steiner Leisure (NASDAQ: STNR  ) all hit new 52-week highs earlier this month. Unlike Carnival (NYSE: CCL  ) -- which has been sluggish in light of several mishaps at sea since last year -- everyone seemed to view the negative instances as Carnival-specific events. Now Royal Caribbean's fire may lead folks to question booking on any cruise line in the near future.

In this video, longtime Fool contributor Rick Munarriz -- who experienced a kitchen fire aboard the QE2 and whose parents suffered a nixed Hawaiian cruise when the S.S. Independence ceased operations several years ago -- takes a look at the reputation problems that the industry may experience in light of Monday's fire.

Around the world
Profiting from our increasingly global economy can be as easy as investing in your own backyard. The Motley Fool's free report "3 American Companies Set to Dominate the World" shows you how. Click here to get your free copy before it's gone.

Sprint Is About to Pass the No. 3 Title to T-Mobile

Earlier this year, T-Mobile (NYSE: TMUS  ) CEO John Legere made a prediction: the Un-Carrier would overtake Sprint (NYSE: S  ) in total subscribers by year's end. Sprint released earningsMonday night, and Legere's forecast is inching closer to becoming a reality.

Sprint shareholders are losing patience with the company's turnaround, with shares down 22% at the low today. How bad were the results?

T-Mobile is catching up in a big way
Total revenue was $8.5 billion, and Sprint saw an operating loss of $192 million during the third quarter. The company saw a total net loss of $765 million, and Sprint continues to bleed postpaid subscribers, the most valuable customers in the industry.

Specifically, the No. 3 (for now) carrier saw 336,000 retail postpaid subscribers jump ship, along with 20,000 retail prepaid subscriber losses. A small silver lining is that Sprint added 840,000 wholesale connections, enough to grow total connections to just over 55 million. Still, postpaid connections are where it matters, and Sprint fell short in this department.

Meanwhile, T-Mobile just reported its strongest growth in the company's history, adding 2.3 million total customers during the third quarter. Of that total, 1.4 million were branded postpaid additions. That puts T-Mobile's total subscriber base at 52.9 million -- within spitting distance of Sprint.

Source: SEC filings.

At this rate, it's entirely possible that T-Mobile will overtake Sprint as the No. 3 domestic carrier next quarter if it can maintain its momentum, and there's no reason to doubt Legere now. T-Mobile's postpaid customer churn continues to trend lower, while Sprint's is heading the opposite direction.

One of these days
New CEO Marcelo Claure acknowledged that the company's pricing plans were too cumbersome and uncompetitive, particularly given the intensifying competition within the industry right now. Claure revamped Sprint's pricing structure just weeks after being named CEO in August.

Sprint is expecting higher costs due to increased upgrade volumes in the current quarter, although the company still expects wireless revenues to be under pressure from mounting postpaid customer losses. Sprint is still expected to meet its 800 MHz and 2.5 GHz LTE deployment targets this year, and 2014 capital expenditures should be nearly $6 billion.

Sprint's purported turnaround has been a decade in the making, yet the company has made little meaningful progress. Former CEO Dan Hesse failed to revitalize the company, and now Claure is taking a shot. Still, one of these days, investors are going to run out of patience.

$19 trillion industry could destroy the Internet
One bleeding-edge technology is about to put the World-Wide-Web to bed. It could make early investors wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism... The Economist is calling it "transformative"... But you'll probably just call it "how I made my millions." Don't be too late to the party— click here for 1 stock to own when the web goes dark.

Markets Gain; BlackBerry Posts Narrower Loss

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Following the market opening Friday, the Dow traded up 0.44 percent to 17,020.80 while the NASDAQ surged 0.42 percent to 4,485.47. The S&P also rose, gaining 0.35 percent to 1,972.93.

Leading and Lagging Sectors

In trading on Friday, cyclical consumer goods & services shares gained 0.61 percent. Top gainers in the sector included Nike (NYSE: NKE), up 10 percent, and Research Frontiers (NASDAQ: REFR), up 5.6 percent.

Utilities shares fell 0.35 percent on Friday. Top losers in the sector included Huaneng Power International (NYSE: HNP), down 1.9 percent, and PPL Corp (NYSE: PPL), off 1.2 percent.

Top Headline

BlackBerry (NASDAQ: BBRY) reported a narrower-than-expected second-quarter loss.

The Waterloo, Canada-based company posted a quarterly net loss of $207 million, or $0.39 per share, versus a year-ago loss of $965 million, or $1.84 per share. Excluding non-recurring items, it posted an adjusted loss of $0.02 per share.

Its revenue declined to $916 million from $1.57 billion. However, analysts were expecting a loss of $0.16 per share on revenue of $942.93 million.

Equities Trading UP

Janus Capital Group (NYSE: JNS) shares shot up 34.56 percent to $14.95 following news that Bill Gross will be joining the company. PIMCO also confirmed the departure of Bill Gross.

Shares of Nike (NYSE: NKE) got a boost, shooting up 10.56 percent to $88.18 after the company reported stronger-than-expected fiscal first-quarter results. Analysts at Janney Capital upgraded Nike from Neutral to Buy.

Micron Technology (NASDAQ: MU) shares were also up, gaining 6.78 percent to $33.85 after the company posted better-than-expected fiscal fourth-quarter results and issued a strong revenue forecast for the fiscal first quarter.

Equities Trading DOWN

Shares of Finish Line (NASDAQ: FINL) were down 11.25 percent to $26.10 after the company reported downbeat second-quarter results.

Powell Industries (NASDAQ: POWL) shares tumbled 8.79 percent to $45.35 after the company lowered its FY14 outlook.

Philip Morris International (NYSE: PM) was down, falling 1.12 percent to $82.76. Analysts at Bank of America downgraded Philip Morris International from Buy to Neutral and lowered the target price to $87.

Commodities

In commodity news, oil traded up 0.31 percent to $92.82, while gold traded down 0.37 percent to $1,217.40.

Silver traded up 0.33 percent Friday to $17.50, while copper rose 0.12 percent to $3.03.

Eurozone

European shares were mostly higher today. The eurozone’s STOXX 600 gained 0.06 percent, the Spanish Ibex Index rose 0.15 percent, while Italy’s FTSE MIB Index surged 0.76 percent. Meanwhile, the German DAX dropped 0.35 percent and the French CAC 40 rose 0.44 percent while UK shares fell 0.02 percent.

Economics

The US economy expanded at an annual pace of 4.6% in the second quarter, versus a prior reading of 4.2% growth.

The Reuters/University of Michigan's consumer sentiment index came in flat at 84.60 in September, versus economists’ expectations for a reading of 84.80.

Posted-In: Earnings News Guidance Eurozone Futures Commodities Global Markets

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Feeling Sick About Walgreen’s Earnings? Analysts Aren’t

Walgreen (WAG) has dropped 1.2% today after missing earnings forecasts and removing its guidance. Analysts, however, think Walgreen has caught a cold–not a more serious illness.

AP

Earlier today, Walgreen reported fiscal third quarter earnings of $722 million, or 75 cents a share, up from $624 million and 65 cents a share a year prior. Excluding items, Walgreen reported a profit of 91 cents a share, missing forecasts for 94 cents. Quarterly net sales were $19.40 billion, up from $18.31 billion a year prior, missing forecasts for $19.48 billion.

WSJ's Anna Prior notes that Walgreen also removed its 2016 guidance while it restructures a few things, including flirting with the idea of a move to buy up even more Alliance Boots to satisfy shareholder demand.

With all this going on, we wondered what analysts thought about Walgreen today. Two weighed in bullishly.

Ann Hynes of Mizuho writes: "Our proforma estimates are currently under review. But we expect little change to our $4.85 proforma fiscal 2016 EPS estimate given our operating profit goals of $8.7 billion were already below the expected $9.0-9.5 billion range and should easily be offset by higher synergies, coupled with the potential for the deal to be structured as a tax inversion and lower debt costs. We view the fact that Walgreen's intends to disclose its plans with the second step of the Alliance Boots transaction on an earlier timetable as positive and sends a signal the board is listening to shareholders."

David Larsen of Leerink agrees: "We still remain positive on Walgreen's, despite near-term margin pressure. We believe that Alliance Boots and AmerisourceBergen synergies are tracking slightly ahead of plan, there will be a long-term benefit from Affordable Care Act volumes and specialty, and we are positive on management’s ability to work through near-term reimbursement challenges."

Why Hewlett-Packard Has Limited Upside

Hewlett-Packard (HPQ) stepped on the gas in 2013 with shares almost doubling. Its improved performance during the fourth quarter fueled optimism about the company's recent efforts to stage a turnaround. While revenue for the period was ahead of analyst expectations at $29.1 billion, HP's adjusted earnings were also better than Street estimates at $1.01 per share.

However, the general scenario continues to remain bleak as HP's top and bottom lines fell on a year-over-year basis by 3% and 13%, respectively. In addition, CEO Meg Whitman repeated her earlier guidance of declining revenue for the financial year ending 2014. Thus, it is clear that investors have bid up shares under the hope that HP will rebound, but are they right in thinking so? Let's try and find out.

Enterprise Spending Cues

The primary reason behind HP's decent fourth-quarter earnings was a 1.8% increase in revenue from the enterprise division that accounts for roughly 25% of overall sales. In fact, the results have been a complete turnaround, considering that HP's enterprise division revenue actually fell by as much as 9% during the earlier quarter, indicating that the company may still be able to count on its corporate customers.

Not So Sure Here

A major part of HP's current enterprise division results may be attributed to the fact that a lot of companies are scrambling to upgrade to Microsoft's newest version of Windows operating system, as the latter officially ends support for the earlier Windows XP in April 2014. In effect, this might be a temporary bright spot for HP.

Moreover, HP might not see much relief from the current 10% uptick in server sales because many companies continue to move systems to the cloud, instead of purchasing expensive on-site equipment, which is the reason why companies like Amazon.com (AMZN) and Salesforce.com (CRM) are thriving in today's tech environment.

Also, declining server and networking equipment sales to HP's enterprise customers seem to have prompted competitor Cisco to predict a fall in its current quarter's revenue, the first in four years. Cisco continues to bear the brunt of a slow pickup in the economy in crucial markets such as Europe and China, a fact which HP's management has also acknowledged.

More Trouble

Apart from enterprises, the tendency among individual customers to upgrade to the newest version of Windows may also have been the reason why revenue for HP's personal systems division -- the one that includes PCs -- fell by a less-than-expected 2%. With research firm IDC predicting a continued decline in PC shipments through 2014, the gap in revenue is expected to widen further.

HP also faces the problem of competitive pricing by industry competitor and fellow PC manufacturer, Dell. After the latter's LBO, Dell faces a heavy debt burden that has prompted it to follow a "no holds barred" price-cutting policy in a desperate bid to gain more market share, a fact that has resulted in thinner profit margins for HP.

Also, HP seems destined to continue facing macroeconomic headwinds for quite some time, as the global economic recovery has been much slower than expected. The company can't even fall back on generating sales in emerging markets such as China, whose economy faces an uncertain future, a fact corroborated by rivals Cisco and IBM. Although HP has, supposedly, taken corrective measures (such as the recent appointment of Robert Mao, a market veteran, as its head of operations for China), only time will tell how things will actually shape up there.

What Next?

The only good things that can be attributed to Whitman, so far, are a substantial reduction of the company's once-massive pile of debt and an increase in free cash flow by almost $9 billion this fiscal year. But beyond that, I'm not very confident in HP's turnaround efforts, given that the company still hasn't been able to zero in on a substantial revenue stream that can offset the continued downslide in PC-based fortunes.

Although HP's planned dividend and buyback scenario are impressive and provide very good reasons to hold on to the stock, I doubt if it will be worthy of remaining in your portfolio by this time next year.

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Ford's Mulally: 'No change' in retirement plan

Ford CEO Alan Mulally says he is not leaving yet.

"No change to the plan," Mulally said this morning on a conference call with investors and media when asked about reports he is preparing to retire before year's end to pursue other interests.

When Mark Fields was named to the new position of chief operating officer in 2012, Mulally said he would remain as CEO through the end of 2014, if not longer.

Last year that premise was tested when Mulally's name was repeatedly mentioned as a top candidate to become CEO of Microsoft. The speculation, which was proving distracting at Ford by year's end, prompted Mulally to end his coy remarks and state plainly his intention was to remain with Ford through 2014.

Indications have arisen anew that Mulally will pass the baton to Fields sooner rather than later and clarity on the timing could be forthcoming next month.

"We don't comment on speculation and have no change to the plan," Mulally said repeatedly today.

He said he and Executive Chairman Bill Ford seven years ago put a high priority on developing a robust leadership team and strong succession plan.

Mulally made the comments on a call to discuss Ford first-quarter earnings. Ford reported a $989 million profit in the first quarter, down 39% from a year ago with some warranty charges and higher expenses as the automaker kicks off its most aggressive year of product launches in 50 years.

Canada’s Economy Outpaces the US

Although Canada's economy has yet to shift to export-driven growth, that didn't stop the country's gross domestic product (GDP) from powering through the fourth quarter with 2.9 percent annualized growth. That beat private-sector economists' consensus forecast by a significant three-tenths of a percentage point, based on a survey by Bloomberg, and it was also an acceleration of two-tenths of a point from the third quarter.

Growth in prior quarters was also revised higher, with the first quarter coming in at 2.9 percent versus the initial estimate of 2.3 percent, while the economy grew at a 2.2 percent annualized rate in the second quarter, as opposed to the earlier estimate of 1.6 percent.

Even better, Canada's economy actually grew a tenth of a point more than the US economy for full-year 2013, with each country's GDP climbing 2 percent and 1.9 percent, respectively. However, the US economy has exhibited slightly greater momentum in more recent quarters, which should ultimately be helpful toward Canada's eventual rebound, as the US is Canada's largest trading partner.

As we've written on numerous occasions, Bank of Canada Governor Stephen Poloz is hoping the country's economy will transition from its dependence on consumer spending in favor of exports and business investment.

The trade deficit widened in December, to CAD1.7 billion, though we did note a few positive trends among the underlying data in our most recent issue. Nevertheless, trade still added about two-tenths of a point to fourth-quarter growth, with exports outpacing imports by 1.7 percent versus 0.9 percent.

Meanwhile, business investment fell 1.9 percent during the fourth quarter, though spending on machinery and equipment climbed by more than 3 percent annualized after three quarters of consecutive declines.

The debt-burdened Canadian consumer continues to be a big part of the story, with consumer ! spending rising by 3.1 percent annualized during the fourth quarter, despite bad weather in December. In fact, consumer spending was seven-tenths of a point higher than in the prior quarter.

The other major part of the story is the substantial rise in inventories, which jumped to CAD18.1 billion from CAD12.4 billion in the third quarter, accounting for about half the gain in GDP. Of course, this will likely detract from growth in GDP in subsequent quarters until inventories are drawn down.

Indeed, while we should take a moment to revel in the upside surprise of these data, it's important to note that economists predict growth will slow to a 2.1 percent annualized pace during the first quarter.

Subsequent quarters are expected to show a modest reacceleration, with full-year 2014 GDP projected to grow by 2.3 percent according to the Bank of Canada (BoC) as well as the consensus among private-sector economists. As we've noted previously, the central bank has said GDP must grow at a 2.5 percent annualized pace to remove excess slack from the economy.

The fourth-quarter results along with the 1.5 percent increase in the consumer price index (CPI) during January, which beat expectations by two-tenths of a point, will likely forestall another rate cut by the BoC, at least for now.