Fed Minutes, Hotel IPOs, and Some Toilet-Worthy Bed Bath & Beyond Earnings

Good evening, good lookin'. Here are the three things you need to know on April 10.

Apr 9, 2014 at 11:00PM
Man, can the Fed be fun. The day after the first-quarter earnings season kicked off, some key details from America's central bank helped the Dow Jones Industrial Average (DJINDICES:^DJI) surge 181 points Wednesday.
 
1. Bed Bath & Beyond earnings get flushed
You can't wash away an earnings report like this, Bed, Bath & Beyond (NASDAQ:BBBY). Shares of your mom's favorite retailer (behind Crate & Barrel) dropped over 5% in after-hours trading Wednesday following the company's somewhat toilet bowl-worthy earnings report for the final quarter of 2013.

How were the numbers? A tad dirty. Revenue nationwide dropped almost 6% in the all-important, holiday-heavy fourth quarter of the year, for a total of $3.2 billion in sales. While that not-so-hot figure matched analysts' downward expectations, the real stain was the small 1.7% rise in same-store sales, notably below the 2.5% rise during the same quarter last year -- plus, the company lowered its first-quarter projections for 2014.

The interesting thing is that CEO Steven Temares didn't offer investors any commentary on the report, but earlier in March he played the foul-weather game, commenting that, like other retailers, the brutal winter weather affected his company's shoppers, too. Wall Street now hopes the company won't have to wait for success until the fall, when incoming college freshmen crush Bed Bath & Beyond stores nationwide to pack their small dorms with plastic toiletry accessories.

2. Fed minutes reveal stimulus details
According to the juicy, gossipy details of the Federal Reserve's last meeting, Fed representatives aren't planning to slow down stimulus as quickly as investors had initially thought. Those meeting minutes are based on the central bank's eight-times-per-year policy-setting meeting that took place last month, and the detes are released at a later date, so investors don't too aggressively move the market after the initial meeting.

Keep in mind that investors love the Fed's economy-boosting stimulus policies like they're caffeinated milkshakes (we're talking really good milkshakes). Under the Fed's quantitative easing policy, it's been buying long-term bonds monthly to lower interest rates and encourage borrowing -- but as the economy has improved, the Fed has decreased its purchases from $85 billion to $55 billion in those bonds, which stim-cravin' Wall Street wasn't fond of.

The takeaway is that in the minutes, members of the Fed made clear that they "overstated the shift in the projections" regarding how much they would tighten the stimulus policy by. Investors like stimulus so much that just those key points hinting at stimulus lasting longer than originally expected was enough to get stocks poppin' like they're hot.
 
3. La Quinta is the newest Blackstone hotel IPO
Blackstone Investment Firm likes to buy companies, invest in certain areas of the business and cut back in others -- and then hire Alicia Silverstone to give them makeovers to win over the men and women on Wall Street. Such is the business of private equity firms, and Blackstone's hotel La Quinta (NYSE:LQ) debuted Wednesday on the New York Stock exchange by gaining 0.7% from the IPO price of $17 per share.   
 
It's not tech, but IPOs are always sexy in Wall Street's eyes. The Blackstone Group (NYSE:BX) bought the mid-price hotel chain in 2006. It cleaned up the place, exterminated the cockroaches, and doubled the size to 834 hotels as of 2013. By spilling a bucket of LQ shares onto the floor of the New York Stock Exchange on Wednesday, Blackstone raised $650 million cash for the company, which will be used to pay down debt.
 
How did the IPO work out for Blackstone? As Blackstone begins to say goodbye to its baby, it wants to realize profits. It was hoping for $18-$21 per share but only got $17. The $17 price dove right after the bell by 4% but eventually climbed up to about even on the first day.
 
It's also the third hotel chain that Blackstone dumped in the past six months. Hilton Hotels (NYSE: HLT) and Extended Stay America (NYSE: STAY) both went public recently, so clearly the Wall Street private equity firm is done with the hotels. Hotel businesses suffered badly during the depressing lows of the financial crisis, so the time is right for Blackstone cash in on their investments.

Thursday:
  • Weekly jobless claims
  • First-quarter earnings reports: Rite Aid, Family Dollar Stores

As originally published on MarketSnacks.com

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