Archive for 2007

• Lindsay Campbell for Seasonique
  Eddy Elfenbein, July 22nd, 2007 at 4:56 pm

  I could’ve sworn I’ve seen this girl somewhere before.
  Oh right! It’s WallStrip‘s Lindsay Campbell promoting Barr Pharmaceuticals‘s (BRL) Seasonique.
  I wasn’t really paying attention to what the product is used for. (I think it’s girl’s stuff.) But I’m amazed at Lindsay’s footwork. I’ve watched it a few times and she stops the ball without looking. See for yourself.
  Let’s see David Beckham do that.

• The Strangest Market Stat You’ll Read All Day
  Eddy Elfenbein, July 20th, 2007 at 2:49 pm

  Since the beginning of the 2006, here are the cumulative S&P 500 returns by days of the week:
  Monday 1.40%
  Tuesday -0.36%
  Wednesday 18.72%
  Thursday 4.36%
  Friday -0.61%
  So what’s the deal with Hump Day? It’s responsible for over three-quarters of the S&P 500’s return. And today’s data point will make it even more.
  Told ya it was a strange stat.

• Bond Rally
  Eddy Elfenbein, July 20th, 2007 at 1:18 pm

  Stocks may be down, but bonds are taking off. That tells us where all the money is going. The yield on the 10-year (^TNX) is below 5%. The cylicals are getting slammed.
  

• Looking at Gold
  Eddy Elfenbein, July 20th, 2007 at 9:22 am

  Here’s an interesting chart. This is gold priced in dollars (black line) and euros (gold line):
  
  You can see how the two lines have drifted farther apart, meaning the euro has gained against the dollar. But in euro terms, the price of gold has been fairly stable in the past few months. If I were a technical analyst, I might want to call that a trading range.

• BambiTV
  Eddy Elfenbein, July 20th, 2007 at 9:13 am

  Lindsay chats with Bambi Francisco, formerly of MarketWatch, about Vator.tv.
  

• Three Buy List Earnings Reports
  Eddy Elfenbein, July 19th, 2007 at 10:33 am

  Harley-Davidson (HOG) reported earnings of $1.14 a share this morning which is a penny better than expectations and a 25.3% increase over last year. The company said that it expects full-year growth of 4% to 6%. For 2008 and 2009, the company expects growth of 11% to 17%. Hmmm, those numbers strike me as unusually exact.
  These are decent results but I was expecting more from HOG. Last quarter, Harley beat by two cents, the stock jumped from $61 to $66, then slipped back to the low $60s for much of the last three months. The stock is down sharply this morning.
  After excluding some charges, Danaher (DHR) beat by a penny a share. This is a very solid stock. The company made 94 cents a share compared with 80 cents last year. The company now expects Q3 EPS of 92 cents to 97 cents. DHR also bumped up its full-year range from $3.70-$3.80 to $3.74-$3.82.
  The stock had been in a trading range for several months, but finally broke out a few weeks ago. Shares of DHR are down a bit today.
  UnitedHealth (UNH) is getting smacked around this morning. The company earned 87 cents a share, six cents better than estimates. That’s a big jump from the 70 cents a share it made last year.
  I’m not really sure why the market is so unhappy with UNH. The company’s projections are basically in line with Street’s forecast. UNH expects Q3 EPS of 91 to 93 cents, the Street expects 92 cents. For the year, UNH is looking for $3.43 to $3.48, the Street expects $3.45.

• The Stock Market Adjusted For Inflation
  Eddy Elfenbein, July 18th, 2007 at 5:48 pm

  Here’s a look at the S&P 500 including dividends and adjusted for inflation. You can see that we’re just shy of the market’s peak from a few years ago.
  

• Associated Banc-Corp
  Eddy Elfenbein, July 18th, 2007 at 11:32 am

  Here’s another example of a stock with a great long-term track record that no one has ever heard of. Associated Banc-Corp (ASBC) is a mid-cap bank based in Green Bay, WI.
  What’s interesting is that ASBC pays a generous dividend and it often has 10% or 20% stock dividends, so the stock’s true long-term record is a bit hidden.
  Here’s a chart going back to the beginning of 1985. Since then, ASBC has had a total return of over 2,140%. The S&P 500 is up about 1,506%.
  
  The stock is currently going for less than 14 times earnings and it’s yielding 3.8%.

• Amphenol Beats Earnings and Raises Guidance
  Eddy Elfenbein, July 18th, 2007 at 11:10 am

  This morning, Amphenol (APH) reported earnings of 46 cents a share, one penny more than expectations. Net income rose 58% over last year. Sales rose 14% to $688.8 million which was also above expectations.
  The company boosted its full-year EPS guidance to $1.79 to $1.83, up from earlier guidance of $1.75 to $1.80. APH also expects full-year sales in the range of $2.71 billion to $2.75 billion, up from its previous range of $2.67 billion to $2.72 billion.
  For this quarter, the company is expecting EPS of 44 to 46 cents. The Street is expecting 45 cents.
  The stock is currently down this morning, but it’s really giving back its gain from late yesterday.

• Bernanke’s Testimony
  Eddy Elfenbein, July 18th, 2007 at 10:51 am

  Here’s the key part of Bernanke’s testimony today:

  Overall, the U.S. economy appears likely to expand at a moderate pace over the second half of 2007, with growth then strengthening a bit in 2008 to a rate close to the economy’s underlying trend. Such an assessment was made around the time of the June meeting of the Federal Open Market Committee (FOMC) by the members of the Board of Governors and the presidents of the Reserve Banks, all of whom participate in deliberations on monetary policy. The central tendency of the growth forecasts, which are conditioned on the assumption of appropriate monetary policy, is for real GDP to expand roughly 2-1/4 to 2-1/2 percent this year and 2-1/2 to 2-3/4 percent in 2008. The forecasted performance for this year is about 1/4 percentage point below that projected in February, the difference being largely the result of weaker-than-expected residential construction activity this year. The unemployment rate is anticipated to edge up to between 4-1/2 and 4-3/4 percent over the balance of this year and about 4-3/4 percent in 2008, a trajectory about the same as the one expected in February.
  I turn now to the inflation situation. Sizable increases in food and energy prices have boosted overall inflation and eroded real incomes in recent months–both unwelcome developments. As measured by changes in the price index for personal consumption expenditures (PCE inflation), inflation ran at an annual rate of 4.4 percent over the first five months of this year, a rate that, if maintained, would clearly be inconsistent with the objective of price stability. Because monetary policy works with a lag, however, policymakers must focus on the economic outlook. Food and energy prices tend to be quite volatile, so that, looking forward, core inflation (which excludes food and energy prices) may be a better gauge than overall inflation of underlying inflation trends. (I’m glad Bernanke said this. There’s a myth that the Fed ignores food and energy. That’s simply not true. – Eddy) Core inflation has moderated slightly over the past few months, with core PCE inflation coming in at an annual rate of about 2 percent so far this year.
  Although the most recent readings on core inflation have been favorable, month-to-month movements in inflation are subject to considerable noise, and some of the recent improvement could also be the result of transitory influences. However, with long-term inflation expectations contained, futures prices suggesting that investors expect energy and other commodity prices to flatten out, and pressures in both labor and product markets likely to ease modestly, core inflation should edge a bit lower, on net, over the remainder of this year and next year. The central tendency of FOMC participants’ forecasts for core PCE inflation–2 to 2-1/4 percent for 2007 and 1-3/4 to 2 percent in 2008–is unchanged from February. If energy prices level off as currently anticipated, overall inflation should slow to a pace close to that of core inflation in coming quarters.
  At each of its four meetings so far this year, the FOMC maintained its target for the federal funds rate at 5-1/4 percent, judging that the existing stance of policy was likely to be consistent with growth running near trend and inflation staying on a moderating path. As always, in determining the appropriate stance of policy, we will be alert to the possibility that the economy is not evolving in the way we currently judge to be the most likely. One risk to the outlook is that the ongoing housing correction might prove larger than anticipated, with possible spillovers onto consumer spending. Alternatively, consumer spending, which has advanced relatively vigorously, on balance, in recent quarters, might expand more quickly than expected; in that case, economic growth could rebound to a pace above its trend. With the level of resource utilization already elevated, the resulting pressures in labor and product markets could lead to increased inflation over time. Yet another risk is that energy and commodity prices could continue to rise sharply, leading to further increases in headline inflation and, if those costs passed through to the prices of non-energy goods and services, to higher core inflation as well. Moreover, if inflation were to move higher for an extended period and that increase became embedded in longer-term inflation expectations, the re-establishment of price stability would become more difficult and costly to achieve. With the level of resource utilization relatively high and with a sustained moderation in inflation pressures yet to be convincingly demonstrated, the FOMC has consistently stated that upside risks to inflation are its predominant policy concern.