Tiffany's Earnings Look Golden, and the Nasdaq Hits 4,000 Points
Trading's been so slow on Wall Street during this holiday-shortened week that we assume investors are stuffing themselves with this newest glorious hybrid dessert craze (move over, "Cronut") to stay awake. The Dow barely budged up a point on Tuesday, while the tech stock-heavy Nasdaq index reached 4,000 points for the first time in 13 years on some solid econ data. Time to dig in ...
1. Men's Wearhouse tries to buy Jos. A. Bank
It's called the ol' switcheroo -- just three weeks after rejecting Jos. A. Bank's acquisition offer, Men's Wearhouse responded Tuesday with a counteroffer of its own to purchase Jos. A. Bank for a smooth $1.2 billion using company cash and some debt. Clearly, the two companies want to combine forces to create a men's suiting union. The only point of contention is, who's going to be on top?
Men's Wearhouse is about twice the size of Jos. A. Bank, so it's sensible that it would be the acquirer, not the acquiree. The final structure of the MW/JOSB two-piece suiting company is uncertain, but clearly Wall Street is excited about the earnings benefit of the potential merger. Both companies wrote long explanations of the upsides of the deal in their official offers, including scale (a combined 1,700 stores) and growth potential without having to battle each other over "eight suits for the price of two socks" commercials.
If only George Zimmer were here to see this. Since firing the legendary "You're going to like the way you look" CEO in June, MW is up more than 40%. MW and JOSB rose 7.5% and 11.3%, respectively, on the news of the merger offer. The benefits of the merger are so obvious (and borderline monopolistic), that the hedge funds and main shareholders of the two companies are forcing this marriage.
2. Tiffany's stock sparkles on Chinese demand
The pretty blue box is the new black. Tiffany released its earnings report Tuesday, showing global sales rose 7% to $912 million last quarter -- that's a lot more carats than analysts were expecting.
What's driving the demand? China. Sales in Chairman Mao's backyard rose 22% last quarter, and the company is adding four new stores to bring its Chinese total up to a glittery 26. Tiffany may still be the bat mitzvah present of choice on Long Island, but elsewhere in the company's home American market, sales haven't been great.
The takeaway is that this time of year is all about holiday sales. And Tiffany handed investors a pretty sizable rock -- the jeweler raised its sales forecast for the rest of the year. Investors were flushed. It was quite a moment, and the stock rose nearly 9% Tuesday on the news.
3. Hewlett-Packard beats earnings estimates on new strategy
CEO Meg Whitman has put Hewlett-Packard back on the Bay Area tech map, and old-school techies are celebrating with the original tablet, the bulky HP palm PC from the '90s (we beat you to that one, Steve Jobs). With personal computer demand continuing to plummet, HP reported third-quarter earnings of $1.4 billion -- far better than the $6 billion loss the same time a year ago. The earnings beat analyst projections, so the stock rose 5% on the good news.
Revenues are continuing to fall, though, and the new strategy is harder to pin down than the computer virus you got from your stupid HP laptop. Here are the many problems: Laptop sales are falling; people lease software online instead of buying it; and there's this cloud thing that's a total game-changer. What about HP's printers? Who cares about printers.
The takeaway is that Whitman has managed to fire some executives and shift around others to make HP a leader in "a new style of IT." Her revamping of the huge tech company has driven the stock up 100% in the past 12 months.
4. Housing prices up 13.3% from last year
Here's something to discuss at dinner on Thursday ... U.S. home prices are rising at their fastest pace since 2006 -- up 13.3% on average from this time last year. That's according to the legendary S&P Case-Shiller Home Price Index, which tracks single-family homes in 20 American metropolitan areas.
The mother of all housing price reports had some interesting details by region. The West has been the best, with home prices in Las Vegas and San Francisco (and also Detroit) up more than 40% since 2012. Stable interest rates and consistent employment gains each month don't hurt.
The takeaway is that this week is all about housing data (and not just because you're heading home to crush turkey). Yesterday, pending home sales kind of disappointed, but overall investors have seen an upward trend in prices over the past year as a sign that the housing market has been recovering strongly since the housing crisis. Time to bring back that show Cribs, MTV.
Today:
Eat your Wheaties ... it's a big Wednesday before Thanksgiving
Weekly jobless claims (a day early)
Reuters/UMich consumer sentiment poll
Durable goods orders
STOCK MARKET CLOSED THURSDAY
MarketSnacks Fact of the Day: A serving of dark turkey meat and jellied cranberry sauce has as much sugar as 27 chocolate eclairs.
As Originally Published on MarketSnacks.com
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