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Two Ways To Play: Credit American Express With Market Volatility?

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Strengthen your portfolio in good times and bad.

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AXP's Big Miss

Earnings from American Express (AXP) are weighing on the markets this morning. Bloomberg reports the largest U.S. credit card company by purchases missed analysts' expectations and CEO Kenneth Chenault withdrew his 2008 forecast. AXP reported earnings of 56 cents a share, far short of consensus estimates of 82 cents per share.

The company also added $600 million for its loan loss reserves, and said it is" no longer tracking" its prior EPS growth forecast of 4-6 percent. Chenault said in a statement that the company won't meet its longer-term targets until the economy improves. Did Todd see this coming in Where We Are and Where We're Going?

From the Bull Pen: Will MasterCard (MA) get unfairly taken out because of AXP's earnings? Bulls can fade (read: buy) the stock into the $240 level. Sell-stops set below.

From the Bear Cave: AXP's results provide ursine ammo to press the downside in luxury retailers like Coach (COH) and Tiffany (TIF). Buy-stops can be set above $28.60 and $40.80 respectively.

Big CAT

Bloomberg reports Caterpillar (CAT), the world's largest maker of earth-moving equipment, beat analysts' estimates for the second quarter. The company said net income jumped to $1.74 per share from $1.24 per share a year earlier and above expectations of $1.54 per share. Revenues jumped 20% to $13.6 billion vs. consensus figures of $12.69 billion.
CAT forecasts for the full-year profits of $6 per share which is within the range of $5.64 to $6.18 per share it projected in October and revenue between $47.2 billion to $49.5 billion. On average, analysts expect $6.03 per share with revenues of $48 billion. Todd mentioned CAT in yesterday's Monday Morning Quarterback.

From the Bull Pen: Is a better upside play in AGCO Corp. (AG)? Bulls can test the upside with near-term sell-stops below $52.

From the Bear Cave: Can the emerging markets continue to save CAT? Those bearish can fade (read: sell) the stock into $75 resistance. Buy-stops can be set above.


For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.


Quick Check Around the World

Asian trading closed with the Hang Seng -0.02%, Nikkei +2.98%, Sensex +1.84%, Taiwan -0.28% and Shanghai -0.53%.

A quick check across the pond finds the CAC -0.94%, DAX -1.06%, FTSE -1.64%

As of 8:25 AM EST, S&P futures are down -10.5 points to 1251, and Nasdaq futures are lower -31 points to 1796.


A Look At Commodities

Crude oil is higher +0.17 to 131.21. Gold is up +11.70 points to 975.40. Silver is higher +0.223 to 18.585, and copper is up +1.00 to 372.00.

The dollar index is down -0.185 to 71.813.


On the Radar

Economics

10:00 Richmond Fed Manufacturing Index: -10 cons, -12 prior
10:00 Housing Index MoM: -0.8% prior
17:00 ABC Consumer Confidence: -41 prior

Click here for the full trading radar.


Good luck today!
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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