NYSE Euronext (NYSE: NYX) and Deutsche Boerse will try to save their merger with a case for EC regulators. (Reuters)

Fannie Mae’s CEO to depart. (Reuters)

New York State is examining the use of force-place insurance by Bank of America (NYSE: BAC) and other large financial firms. (Reuters)

Motorola (NYSE: MMI) and Lenovo will launch smartphones powered by Intel (NYSE: INTC). (Reuters)

Apple (NASDAQ: AAPL) will have substantial exhibits at the Consumer Electronics Show. (Reuters)

Kodak (NYSE: EK) sues Apple and HTC over patent infringements. (Reuters)

Some of Spain’s banks continue to make home loans despite an oversupply. (WSJ)

The Fed gives the U.S. Treasury $76.9 billion in profits. (WSJ)

Orange juice futures hit a record high. (WSJ)

Alpha Natural Resources (NYSE: ANR) reaches a settlement with miner families arising from an explosion in a Massey mine in 2010. (WSJ)

Egypt will ask the International Monetary Fund for money. (WSJ)

Fitch says that Italy is the largest risk to the euro. (WSJ)

The Hostess relationship with unions may determine whether it can stay out of bankruptcy. (WSJ)

The New Republic is for sale. (WSJ)

Tiffany’s (NYSE: TIF) sales stumble. (WSJ)

Google (NASDAQ: GOOG) launches a new product to tie search more closely to its social network. (WSJ)

The head of WebMD (NASDAQ: WBMD) departs. (WSJ)

Office owners hurt by expiring five-year leases. (WSJ)

Bank of NY Mellon (NYSE: BK) is close to settling on overcharging for currency trade cases. (WSJ)

Copper rises on demand from China. (WSJ)

Some Chinese exporters have such a large share of market that they cannot expand. (WSJ)

Investors add to positions in Greek bonds on the assumption of a bailout in March. (NYT)

Dividend increases are a sign of better corporate recoveries. (NYT)

India will again offer foreign retailers more access to its markets after reneging on an earlier arrangement. (NYT)

The head of Citigroup (NYSE: C) says banks should disclose more of the risk assessments of their assets. (FT)

Carlyle Group will list on the Nasdaq. (FT)

The battle between Intel and Qualcomm (NASDAQ: QCOM) over smartphone chips intensifies. (FT)

Microsoft (NASDAQ: MSFT) sues more Chinese companies over piracy. (FT)

Banks in the eurozone continue to cut lending despite European Central Bank attempts to change the practice. (Bloomberg)

State-funded pensions in Europe are $39 trillion short on money to fund obligations. (Bloomberg)

Germany’s economy contracts in Q4. (Bloomberg)

Microsoft says interruptions of parts supplies from Thailand will slow PC sales. (Bloomberg)

Douglas A. McIntyre

The unofficial closing bells put the DJIA up nearly 70 points to 12,462.47 (0.56%), the NASDAQ rose nearly 26 points (0.97%) to 2,702.50, and the S&P 500 rose 0.89% or more than 11 points to 1,292.08.

There were several analyst upgrades and downgrades today, including Intel Corp. (NASDAQ: INTC) maintained as ‘top tech/semiconductor’ pick at Credit Suisse; Netflix Inc. (NASDAQ: NFLX) cut from ‘neutral’ to ‘underperform’ at BofA/ML; Starbucks Corp. (NASDAQ: SBUX) reiterated as ‘buy’ and estimates raised at Argus; The Walt Disney Co. (NYSE: DIS) cut to ‘equal-weight’ at Barclays; and Macy’s Inc. (NYSE: M) reiterated as ‘outperform’ and price target raised from $32 to $36 at Credit Suisse.

Earnings reports of note since markets closed yesterday include: Alcoa is up 0.27% at $9.45; Emulex Corp. (NYSE: ELX) is up more than 13% at $8.38; and BSD Medical Corp. (NASDAQ: BSDM) is down more than -7% at $2.09. After markets close today Synnex Corp. (NYSE: SNX) reports earnings and tomorrow’s earnings schedule includes Lennar Corp. (NYSE: LEN) and Supervalu Inc. (NYSE: SVU).

Other standouts from today include the following stocks:

WebMD Health Corp. (NASDAQ: WBMD) is down more than -28% at $26.41, after posting a new 52-week low of $25.01 earlier today. The web-based healthcare company’s CEO resigned, the search for an acquirer was terminated, and the revenue outlook for 2012 was lowered.

Complete Genomics Inc. (NASDAQ: GNOM) is down nearly -26% at $2.88. The biotechnology company shipped fewer genomes than expected in the fourth quarter.

Idenix Pharmaceuticals Inc. (NASDAQ: IDIX) is up more than 25% at $12.10, a new 52-week high. The drug maker continues to bask in the reflected glow of yesterday’s takeover of Inhibitex Inc. (NASDAQ: INHX) by Bristol Myers Squibb (NYSE: BMY).

Tiffany & Co. (NYSE: TIF) is down more than -10% at $59.97. The company reported weak earnings and a lower forecast this morning.

Liz Claiborne Inc. (NYSE: LIZ) is down more than -13% at $8.63. The clothing company’s CFO resigned and the company lowered 2012 revenue estimates.

Stay tuned for Wednesday. Chicago Fed President Charles Evans, Atlanta Fed President Dennis Lockhart, and Philadelphia Fed President Charles Plosser are giving speeches. Here are the noteworthy events on the schedule (all times Eastern):

• 7:00 a.m. – Mortgage Bankers Association purchase applications
• 10:30 a.m. – EIA weekly petroleum status report
• 1:00 p.m. – 10-year Treasury note auction
• 2:00 p.m. – Federal Reserve Beige Book released

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Paul Ausick

Currently, there is are no extreme price alerts to consider.  At $74.00 (after a 6.5% gain on Monday), the 52-week trading range is $54.58 to $84.49 and a rounded price target consensus from Thomson Reuters is $83.00. During the extreme selling in September shares broke under $60.00.

As far as the charts are concerned, there appears to be the case for support if today’s prices hold up.  The chart from stockcharts.com shows that $72.49 is the 50-day moving average and $69.62 is the 200-day moving average.  This is very different from online rival Blue Nile Inc. (NASDAQ: NILE), where the $34.28 price compares to a 52-week range of $30.32 to $64.45 and a consensus Thomson Reuters price target of $36.00 (shares were closer to $48 before its earnings, ouch!).

Zale Corporation (NYSE: ZLC) also is surging ahead of Tiffany earnings as it is considered more leveraged financially and to the public.  Zale is up 10% on Monday at $3.42 and the 52-week range is $2.06 to $6.90.

We would note that Goldman Sachs has just maintained its “Neutral” rating on Tiffany and its $72.00 price target.  With the decline we have seen in diamond prices, this may help to offset the higher gold prices from a year earlier.

As far as history, Tiffany beat second quarter estimates to $3.65 to $3.75 EPS and that allowed it to raise guidance.  We’ll see if “bashing the wealthy” has had any real impact or not.

JON C. OGG

Tuesday

Zoltek Companies Inc. (NASDAQ: ZOLT) makes the lightweight carbon fiber composites used in a variety of high-tech products including wind turbine blades. The company has posted four straight quarterly EPS losses and this quarter is not expected to reverse that trend. Zoltek is expected to post an EPS loss of -$0.02 on revenue of $44.5 million for its third quarter ended in September.

Tiffany & Co. (NYSE: TIF) is expected to ride the wave of better earnings at luxury retailers. The consensus estimate is for EPS of $0.61 on revenue of $802.1 million, compared with EPS of $0.46 on revenue of $681.7 million in the same period a year ago.

Wednesday

Aeropostale Inc. (NYSE: ARO) is a mall-based retailer of teen clothing. The consensus estimates call for EPS of $0.28 on revenue of $576.4 million. A year ago the company posted EPS of $0.67 on revenue of $602.8 million. The company posted an EPS loss of -$0.02 in its July quarter this year.

American Eagle Outfitters Inc. (NYSE: AEO) is another clothing retailer with offerings aimed at a wider range of ages than is Aeropostale. The consensus estimates call for EPS of $0.27 on $781 million in revenue. In the same period last year, American Eagle posted EPS of $0.29 on $751.5 million in revenue.

Thursday

Jos. A. Banks Clothiers Inc. (NASDAQ: JOSB) is a men’s clothing store with more than 500 outlets in 42 states. The consensus estimates call for EPS of $0.51 on $196 million in revenue. A year ago, Banks posted EPS of $0.45 on $173.3 million in revenue.

Lululemon Athletica Inc. (NASDAQ: LULU) makes athletic apparel for men, women, and children and operates about 148 stores in the US, Canada, and Australia. The consensus estimates call for EPS of $0.25 on $235.9 million in revenue. In the same period last year, the company posted EPS of $0.18 on revenue of $175.8 million.

Zumiez Inc. (NASDAQ: ZUMZ) offers athletic apparel and other sporting goods to teens and young adults at more than 430 stores in the US and Canada. The consensus estimates call for EPS of $0.42 on $153.1 million in revenue. Last year the company posted EPS of $0.40 on revenue of $135.9 million.

Barnes & Noble Inc. (NYSE: BKS) has been integrating its acquisition of the assets of the failed Borders chain and recently introduced a new version of its Nook e-reader to compete with the new Kindles from Amazon.com (NASDAQ: AMZN). The consensus estimates call for EPS of $0.02 on $1.98 billion in revenue. Last year in the same period the company posted an EPS loss of -$0.13 on revenue of $1.91 billion. B&N has missed EPS estimates for the last four quarters.

Friday

Big Lots Inc. (NYSE: BIG) operates more than 1,500 closeout stores in the US and Canada. The consensus estimates call for EPS of $0.09 on $1.13 billion in revenue. A year ago the company posted earnings of $0.23 on $1.06 billion in revenue.

Other Happenings Next Week

On Monday we get the new home sales report from the federal government.

Tuesday sees the release of the latest Case-Schiller housing price index, the Conference Board’s Consumer Confidence index, the State Street Investor Confidence index, and speeches from two Federal Reserve Bank presidents, Janet Yellen and Narayana Kocherlakota.

On Wednesday the Mortgage Bankers Association reports purchase applications, the Challenger Job-cut report, the ADP employment report, the Chicago purchasing manager’s index (PMI), and the release of the Fed’s Beige Book.

Thursday’s reports include chain store sales, motor vehicle sales, the Industrial Supply Managment (ISM) manufacturing index, and a report on construction spending.

Friday closes out the week with the report from the Census Bureau and the Department of Labor on the employment situation.

Have a great weekend!

Paul Ausick

Consumers who plan to spend less this year (42 percent) largely point to the higher costs impacting their household budgets. Six out of ten cite higher food prices (63 percent) and higher gas prices (60 percent) as the top two reasons for spending less this year.

 

Gasoline prices have fallen from nearly $4 to about $3.50 over the last few months. It appears that is not enough of a drop to help most people who want to buy gifts in November and December.

Bricks and mortar retailers can expect to do worse than e-commerce companies:

Of the 68 percent who plan to change the way they shop to save money, 51 percent plan to head online to find better prices – a 10 percentage point jump from last year – while 46 percent plan to buy more items that qualify for free shipping. The Internet also climbed 13 percentage points to tie discounters as the #1 destination to purchase gifts.

Shareholders in Target (NYSE: TGT), Best Buy (NYSE: BBY), Barnes & Noble (NYSE: BKS), and Sears (NASDAQ: SHLD) may as well drop whatever expectations they had for the stocks. Consumers won’t be driving to malls this year.

The top 1% of the the holiday shoppers by income have no intention to cut their budgets:

Households earning $100,000 or more annually expect to trim a mere 2 percent off gift spending to shell out an average of $812 on presents, compared with a 26 percent drop to $291 on gifts among those earning less than $100,000

It will be a good year for Tiffany (NYSE: TIF)

Douglas A. McIntyre

Even though the NRF is predicting lower per capita spending, the group is estimating that holiday sales will increase by 2.8% in November and December compared with last year. The NRF also said yesterday that cargo volume at the major US container ports is expected to jump by 2.6% in October over last year’s volume. Container traffic was down -7% in August, the last month for which final figures are known.

The NRF has discounted the falling volume as an aberration in 2010, when a projected shortage of shipping containers caused US buyers to ship holiday goods in July and August. Estimated September 2011 cargo volume grew by 2.7% year-over-year, October volume is expected to grow by 2.6%, November by 4%, and December by 2.7%. Total container volume for 2011 is expected to rise 1.8% year-over-year, very far below the 16% growth in 2010 over 2009.

On-line buying is expected to increase from 43.9% of consumers last year to 46.7%. On-line shoppers also expect to spend more than average — about 22% more. Smartphones and tablets are gaining ground as on-line shopping aids. Nearly 53% of smartphone owners will use their phones for shopping and buying, and 70% of tablet owners will do the same. The trend is particularly strong among college-age adults, where 72% say they will use smartphones and 86% say they’ll use their tablets.

These are impressive numbers, but perhaps more impressive is the fact that nearly 57% of survey respondents say they do not yet own a smartphone or a tablet. That suggests that the mobile devices could indeed be a hot item for holiday buying, whether as a gift or for personal use.

Retail spending growth this year will not equal last year’s large uptick. Partly that’s because 2009 was such a weak holiday selling season that 2010 had to clear a very low bar. But earlier this year, 2011 projections for holiday selling were 5% higher than 2010. The projection now is for 2.6%, and that is largely due to US consumers’ worries about the economy.

Paul Ausick

American Capital Agency (NASDAQ: AGNC) Cut to Market Perform at JMP Securities.
Apple Inc. (NASDAQ: AAPL) Reiterated Outperform with $500 target at Credit Suisse.
Archer Daniels Midland Company (NYSE: ADM) Started as Hold at Argus.
Cal-Maine Foods, Inc. (NASDAQ: CALM) named value stock of the day at Zacks.
Caterpillar Inc. (NYSE: CAT) Raised to Buy at Goldman Sachs.
Dollar Tree, Inc. (NASDAQ: DLTR) Cut to Equal-Weight at Barclays.
Family Dollar Stores, Inc. (NYSE: FDO) Raised to Overweight at Barclays.
Hewlett-Packard Co. (NYSE: HPQ) Reiterated Buy with $40 target at Argus.
Kirkland’s, Inc. (NASDAQ: KIRK) Cut to Underperform as bear of the day at Zacks.
Lincoln National Corporation (NYSE: LNC) Added to the U.S. 1 List at BofA/ML.
Monsanto Company (NYSE: MON) Reiterated Outperform as Bull of the Day at Zacks.
Navistar International Corp. (NYSE: NAV) Cut to Sell at Goldman Sachs.
Tiffany & Co. (NYSE: TIF) Started as Buy at Stern Agee.
Veeco Instruments Inc. (NASDAQ: VECO) Cut to Sell at Canaccord Genuity.

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JON C. OGG

High-end US retailers include Tiffany & Co. (NYSE: TIF), Saks Inc. (NYSE: SKS), the Bloomingdale’s stores owned by Macy’s Inc. (NYSE: M), Norstrom Inc. (NYSE: JWN), Polo Ralph Lauren Corp. (NYSE: RL), and Coach, Inc. (NYSE: COH). Same-store sales have been good at these retailers and the outlook for the third quarter for all has been very solid.

Tiffany doesn’t report monthly sales, but its second-quarter revenues were 24% higher year-over-year and same-store sales in the quarter rose 22%. Earnings rose 33% and the company posted adjusted EPS of $0.86, more than 20% higher than analysts expected. For the company’s fiscal year, which ends in January 2012, Tiffany expects a sales boost in the high-teens, a rise in operating margin of 1%, and an increase in EPS from a previously guided $3.45-$3.55 to $3.65-$3.75.

For Tiffany’s third quarter, analysts are expecting EPS of $0.60 on revenues of $806 million, rising to EPS of $1.64 on revenues of $1.27 billion in the fourth quarter. The third quarter revenue estimate is lower than the company’s second-quarter total. That is likely due to an expected drop in sales in emerging countries, particularly China, where growth in the sales of luxury goods is expected to fall as the country’s economy cools off.

Saks Fifth Avenue reported same-store sales growth of 9.3% in September and a two-month jump of 8.0%. For the year-to-date, Saks’ same-store sales are up 11.5%. For the current quarter, which ends this month, Saks is expected to post revenue of $698 million and EPS of $0.09. For its fourth quarter, expectations rise to EPS of $0.16 on revenue of $916 million.

Macy’s reported same-store sales rose 4.9% in September and said that sales for the third and fourth quarters would be at the high-end of guidance at 4%-4.5%. Analysts are forecasting that Macy’s third-quarter EPS will be  $0.16, rising to $1.66 in the fourth quarter. Revenue for the third quarter is forecast at $5.88 billion, rising to $8.6 billion in the fourth quarter.

Nordstrom’s same-store sales jumped 10.7% in September, more than double analysts’ expectations. Third-quarter revenue is expected to reach $2.34 billion with EPS of $0.57. In the fourth quarter, revenue is expected to rise to $3.1 billion and EPS is forecast at $1.11.

Ralph Lauren does not report monthly sales. The company’s revenues are nearly equally split between its retail stores and its wholesale and licensing businesses. For the third quarter, analysts are expecting EPS of $2.23 on revenue of $1.84 billion. For the fourth quarter, EPS is expected to reach $1.74 on revenue of $1.77 billion. Compared with the same periods a year ago, third-quarter EPS is expected to rise nearly 7%, while fourth-quarter EPS is expected to rise by just over 1%.

Coach reported fiscal year 2011 numbers in August, including a jump in same-store sales of 10.6% for the year. For its first fiscal quarter of 2012, the company is expected to post EPS of $0.70 on revenue of $1.02 billion. For the second quarter, ending in December, EPS is expected to reach $1.14 on sales of $1.42 billion.

According to a recent survey, consumers with discretionary incomes above $250,000 plan to spend about 7% more during this year’s holiday season. [http://www.jckonline.com/2011/10/10/only-richest-consumers-spending-more-this-holiday] Those with incomes between $100,000 and $250,000, however, are expecting to spend about 17% less. For those with incomes below $100,000, spending will fall by 28%.

Those with discretionary incomes above $100,000 who say they plan to spend less this year are not worried about the economy. They claim that they already have too much stuff.

At the other end of the spectrum, an indicator of expectations at the lower end of the income distribution is the number of containers arriving at US ports. The Port of Long Beach is expecting a 15% drop year-over-year from last September, and the number of containers coming into New York-New Jersey is only flat with last year.

Jewelry and high-end handbags don’t make up those shipments, but goods headed to Wal-Mart Stores Inc. (NYSE: WMT) do. That pretty well sums up the state of the US economy and this year’s outlook for holiday sales.

Paul Ausick