Did you know that Miami is one of the vertices on the Bermuda Triangle? Every time a cruise ship leaves Government Cut and heads out to sea, it is actually entering the Bermuda Triangle. Keep that in mind next time you hear about how many ships have been lost in the Bermuda Triangle. The statistics won’t sound so impressive, considering the “law of large numbers”.
Meanwhile, Miami-based Royal Caribbean Cruise Lines (RCL) sailed into what many market watchers considered mysterious waters on Thursday, when its stock abruptly sank by 12.58%. Those who read this report from Reuters learned only that RCL “lowered its full-year earnings per share outlook by 30 cents at the midpoint to a range of $2.90 to $3.20, mainly in order to reflect a revision to how it accounts for interest expense.” Nevertheless, Unsolved Mysteries buffs – such as myself – who kept sleuthing around, were likely to find this story at MSN Money, revealing that the former Attorney General of Louisiana, Charles C. Foti, Jr. of the law firm of Kahn Swick & Foti, LLC announced the commencement of an investigation into Royal Caribbean to determine whether it has violated federal securities laws by issuing false and misleading statements to its shareholders. Business Wire provided this:
Shares of Royal Caribbean plunged almost 10%, or over $3.25 per share, on July 28, 2011, the day the Company revealed that an accounting error would force a revision of its full-year profit guidance. The prior day, the Company reported a second-quarter profit, but said it would have to revise prior statements because of an error in the way it accounted for interest expenses for amortizing financing fees. It reduced its full-year earnings guidance by 10 cents per share even without the accounting change, and by 20 cents per share with the change.
The three major stock indices continued to struggle with concerns over the debt ceiling debate. The usual market cheerleaders got the market off to a positive start by focusing on a “less bad” report on initial unemployment claims from the Department of Labor:
In the week ending July 23, the advance figure for seasonally adjusted initial claims was 398,000, a decrease of 24,000 from the previous week’s revised figure of 422,000. The 4-week moving average was 413,750, a decrease of 8,500 from the previous week’s revised average of 422,250.
We were supposed to feel excited by the fact that the advance figure for the week had fallen below the seemingly impenetrable threshold of 400,000. Nevertheless, by next week, we will probably learn this advance figure is revised to a number above 400,000, given the slim margin.
As 3:00 approached, the optimism wore off and consensual attention was refocused back to the dysfunction in our nation’s capitol. The Dow Jones Industrial Average fell by 62 points on Thursday, to close at 12,204 for a loss of 51 basis points (0.51 percent). The S&P 500 lost only 32 basis points (0.32 percent) to finish at 1,300. The NASDAQ Composite managed to stay in the green for a gain of 5 basis points (0.05 percent) to end the day at 2,766.
Miami-based corporations had a mixed day on Thursday. Lennar (LEN) was the only member of the group to finish the day in positive territory, with a gain of 1.03% to close at 17.64. Ryder System (R) lost 1.28% to finish at 57.14. Carnival Cruise Lines (CCL) sank by 3.15% to close at 33.87. As discussed above, Royal Caribbean (RCL) had a classically-dreadful day, sinking by 12.58% to end the session at 31.26.
The following companies will be playing “beat the number” on Friday, with the release of their quarterly earnings reports: American Axle (AXL), Amgen (AMGN), Arch Coal (ACI), Calpine (CPN), Chevron (CVX), ITT Corp (ITT), Merck (MRK), Newell Rubbermaid (NWL), Newmont Mining (NEM), OneBeacon Insurance Group (OB), Ruth’s Hospitality Group (RUTH), Standard Register (SR) and Weyerhaeuser (WY). Good luck!