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Before The Bell: Disney Shines; Commercial Property Warning Signs


Disney shines and believes it can weather a downturn. Warnings signs are rumbling in the commercial property sector. Futures are higher.


Morning Perspective: Disney Shines

Walt Disney (DIS) reported results for the first quarter yesterday. Profits came in at $0.63 per share, $0.11 ahead of analyst estimates of $0.52. Revenues rose 9.1% year-over-year to $10.45 bln vs. estimates of $10.04 bln. In its conference call, the company said it was pleased with its vacation club business which has been resistant to downturns adding that room reservations were ahead of levels achieved this time last year. Further, the company stated it increased its inventory of affordable rooms and introduced a value-based pricing package to further weather any downturns in a slowing economy. Professor Jeff Macke wrote about Walt Disney recently in Who's Holding Up In Retail?

From the Bull Pen: Bulls may play the upside in DIS, sell-stops below $28.

From the Bear Cave: In the media and entertainment space, bears can look to the downside in Time Warner (TWX); buy-stops above $16.

Commercial Property, The Next Shoe

FT reports hints of credit turmoil are emerging in the U.S. commercial property sector. Although the default rate in this sector has been relatively low, recent evidence is showing defaults are on the rise. One example includes the recent slump in the CMBX, an index of derivatives linked to commercial real estate securities. A Fitch report said the performance implied that investors expected the 10-year default rates to climb to 24%, approximately three times above historic levels. Professor Mike Shedlock mentioned this story recently in Implications of Commercial Real Estate Collapse.

From the Bull Pen:
Bulls may find a real estate play in Thornburg Mortgage (TMA). The stock was upgraded this morning from "Hold" to "Buy" by Jefferies and its target price was increased as well from $10 to $14. Sell-stops can be set below $11.

From the Bear Cave: Bears can play the downside in the iShares Dow Jones U.S. Real Estate Index (IYR); buy-stops can be set above $70 (minor resistance which coincides with the 100-DMA).

For more ideas, see Minyanville's Spotlight Stocks.

Quick Check Around the World

Traders head to the top of the Hump Day tape and find foreign markets all mixed up.

Asian trading closed mostly lower with the Hang Seng -5.40%, Nikkei -4.70%, Sensex -2.81%, Taiwan +2.03% and Shanghai -1.55%.

A glance towards Europe shows the CAC +0.58%, DAX +0.54%, FTSE +0.07%, ATX -0.65%, Swiss Mkt. -0.66% and Stockholm +0.08%.

A Look At Commodities

Commodities are stronger. Crude oil is up +0.22 to 88.63. Gold is higher +11.10 to 897.00. Silver is up +0.160 to 16.505, and copper is down -1.35 to 319.00.

The dollar index is up +0.034 to 76.150.

As of 8:45 AM EST, S&P futures are up +4.70 points to 1347, and Nasdaq futures are higher by 4.75 points to 1789.

On the Radar


MBA Mortgage Applications: 3% vs. 7.5% Prior
Nonfarm Productivity 1.8% vs. +0.5% consensus, prior revised to +6.0% from +6.3%
Labor Costs 2.1% vs. 3.5% consensus

Click here for Minyanville's full trading radar.

What's worse than a hangover hump day. Good luck!

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No positions in stocks mentioned.

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