The chase by Marty Cej:
For market direction today earnings may get the nod. Apple topped expectations by a wide margin (My breathless style of reportage was honed at Bloomberg) last night, reporting a near-doubling in second-quarter profit to $11.6 billion US, or $12.30 a share, more than $2 above analysts' average expectation. The result appears to have put to rest recent concern that growth is slowing and may make the two-week 12-percent slide by the stock look a little silly. The stock is up almost 8 percent in the pre-market.
But it's not all about Apple, no. Rogers Communications reported after the close yesterday as well, and its take on Apple's success may be a little different than the financial markets'. Profit and revenue fell short of expectations even as it activated 35 percent more iPhones in the quarter. Trouble is, retention costs such as subsidies for longer-term contracts also rose as wireless data growth slowed. The battle for dominance in the Canadian smartphone and tablet market won't be cheap.
Canadian energy heavyweights EnCana, Nexen and Cenovus reported this morning with EnCana looking to be the market standout. The company reported first-quarter earnings per share, ex-items, of $1.33. The average estimate? Three cents! (insert smug snort here) Analysts who cover the sector put more emphasis on cashflow per share, however, which provides a better metric for the companies' ability to put more money into the ground to get oil and gas out of it. EnCana reported cashflow per share of $1.39 vs. an estimate of $1.12; Nexen say cashflow per share hold steady at $1.27, still topping the $1.22 estimate, and Cenovus saw cashflow per share rise to $1.19, exceeding the average forecast by 7 cents. The energy sector will be one to watch today.
Caterpillar will be one to watch today as well after the company topped first-quarter expectations and raised its forecast for the full year on the back of growing demand for construction equipment in the U.S. As it stands, U.S. companies are topping expectations at the highest rate in two years, according to Bloomberg data, thanks in large part to an improving U.S. economy. We are also watching earnings today from Boeing, Harley-Davidson, Sprint-Nextel, Delta Airlines, Nasda OMX, and Eli Lilly.
Other Canadian names to keep an eye on include Methanex, Goldcorp, CGI Group and Bell Aliant.
While U.S. companies have plenty good to say about the U.S. economy, the Fed is likely to be a little more circumspect when it releases a statement on interest rates at 12:30 p.m. ET, then provides more details on its economic forecasts at 2:00 p.m. and sits Ben Bernanke down in front of a room full of journalists at 2:15 p.m. Some say that the Fed's increased transparency and rate forecasts are forcing the central bank into a corner that it can't escape, like Rocky Balboa trapped on the ropes by a furious Clubber Lang (get outta there, Rock!!!), but Bernanke may surprise with his bobbing and weaving this afternoon.
We may even see a bit of offense.