What's Important in the Financial World (11/14/2011) Boeing Record Order, Walmart Earnings

Big retailer earnings due this week. Earnings from Dell (NASDAQ: DELL), Target (NYSE: TGT) and Walmart (NYSE: WMT) are due this week. The numbers from Target and Walmart, particularly their guidance for the current quarter, could easily drive equity markets higher or lower. The forecasts from the country’s two largest retailers will be a critical sign of whether holiday sales will be reasonably good or very slow, as they have been each season since the recession started. The forecasts will be particularly telling about how middle-class and lower-class shoppers react to what remains a very sluggish economy in which high unemployment is still a strong concern. Dell’s earnings likely will confirm a sharp drop in interest in traditional PCs. Apple (NASDAQ: AAPL) and several Google (NASDAQ: GOOG) Android-powered tablet PCs, as well as new tablets from Amazon.com (NASDAQ: AMZN) and Barnes & Noble (NYSE: BKS), are part of a trend in which consumers reject the purchase of laptops and desktops in favor of tablets.

Italy’s high debt yields will hurt. Italy’s recent debt auction did little to encourage those who hoped the perceptions of the nation’s finances would change rapidly with the election of new prime minister Mario Monti. As Italy raised $4.1 billion, the yield on five-year bonds rose to 6.29% from a yield of 5.32% in a previous sale in October. Italy cannot sustain borrowing at interest rates that are that high, which will cause more concern that its sovereign debt situation will worsen. Italy is often described as “too big to fail” because it is the eurozone’s third-largest economy. It is also described as “too big to rescue” because eurozone nations lack the will, and perhaps the capital, to bail out the country. The ECB has shown little interest to act as the lender of last support, perhaps afraid that it could be the instrument of moral hazard and contagion.

Boeing orders. Boeing (NYSE: BA) can brag that it is once again clearly the world’s largest aircraft manufacturer. The company reported that Dubai-based Emirates Airline announced an order for 50 Boeing 777-300ERs plus options for an additional 20 of the commercial jetliner. The order, with a value of $18 billion, makes this the single largest commercial airplane order in Boeing’s history by dollar value. Aircraft orders usually are measured based on the list price of the planes, which is misleading. Purchases the size of Emirates Airline one always are done at sharp discounts. That does not take away the substantial victory that this is for Boeing or the defeat it represents for rival Airbus.

iPhone battery woes. The release of new software to fix battery-life weakness in the new iPhone 4S does not seem to have satisfied a number of owners of the smartphone. The iOS 5.0.1. software release was to address the battery drain problem. As long as there is vocal criticism of the battery problem, Apple will face its most difficult product launch in years. iPhone 4S sales have been extremely strong. A flaw in the smartphone’s performance could hurt that.

Asia markets: Nikkei 225, up 1.05% to 8,604; Hang Seng higher by 1.94% to 19,508.

Europe open: FTSE 100 down 0.38% to 5,524 on troubled Italy bond auction; DAX down 0.41% to 6.032.

WTI crude down 0.42% to $98.54. Gold off 0.4% to $1,781. U.S. 10-year up 0.02 to 2.08%

Douglas A. McIntyre