Archive for 2013

• The 20-Year View
  Eddy Elfenbein, August 1st, 2013 at 11:50 am

  The S&P 500 broke 1,700 today. The index first broke 170 almost exactly 30 years ago today.

  

• DirecTV Earnings Miss
  Eddy Elfenbein, August 1st, 2013 at 11:19 am

  We had one disappointment today with DirecTV ($DTV). For the second quarter, DTV earned $1.18 per share which was 16 cents below expectations. Revenues rose 6.6% to $7.7 billion which was slightly below forecasts.

  The big problem for the satellite-TV company was Latin America. Analysts were expecting the Latam subscriber count to rise by more than 420,000. Instead, it rose by just 165,000. To put this into context, last year, DTV added 645,000 new subscribers in that region. The company said that macroeconomic conditions were partly to blame, especially in Brazil. In the U.S., subscriber count fell by 84,000.

  The stock is currently down about 3% today

• The S&P 500 Smashes 1,700
  Eddy Elfenbein, August 1st, 2013 at 10:13 am

  The stock market is up again today. For the first time ever, the S&P 500 broke 1,700. Our Buy List is also doing well, except for DirecTV ($DTV), which is down about 3% after a disappointing earnings report.

  The big jobs report is tomorrow, but today we learned that initial jobless claims dropped to a 67-month low. A total of 326,000 Americans filed for first time jobless claims last week.

  

  Since it’s the first trading day of the month, the ISM report came out this morning and the number was an impressive 55.4. The Street had been expecting 52.0. Any reading above 50 indicates the factory sector of the economy is expanding. Below 50 is a contraction. July was the best month in more than two years.

  

  Ford ($F) reported that sales rose 11% in July. It seems that a lot of contractors have been running out to replace their trucks they’ve had since before the recession. The AP reports, “F-Series truck sales rose 23 percent to 60,449, or one of every three vehicles Ford sold.” The stock is currently up to $17.10 per share.

• Morning News: August 1, 2013
  Eddy Elfenbein, August 1st, 2013 at 6:39 am

  ECB’s Draghi Can’t Afford To Sound All-Clear Yet

  Italy Banks Bad Loans Underline Southern Europe Malaise

  China Pledges to Keep Growth Within ‘Reasonable Zone’

  Shell to Chevron Move Offshore as Nigerian Risks Mount

  FOMC Keeps QE Juice Flowing At $85 Billion, Bernanke Taper Should Come Later This Year

  Obama to Nominate Raskin as First Female U.S. Treasury Deputy

  Swipe-Fee Rule Rejection to Help Merchants at Banks’ Cost

  Shell’s Earnings Fall in 2nd Quarter

  Dell Takeover Bid in Peril as a Voting Rule Remains

  Sony Reports $35 Million Net Profit For First Quarter

  Lloyds to Start Dividend Talks After Swinging Into Profit

  Sanofi CEO: Lower Earnings Won’t Affect Shareholder Return Policy

  ArcelorMittal Q2 Results Show Fall In Earnings

  Howard Lindzon: The Future is Messy…That is How You Make Money!

  Roger Nusbaum: Currency ETF Palooza

  Be sure to follow me on Twitter.

• New Highs on Strong Earnings
  Eddy Elfenbein, July 31st, 2013 at 9:28 pm

  Today was another good day for the Buy List. Our 20 stocks gained 0.45% today compared with a 0.01% loss for the S&P 500. This is the fourth day in a row that we’ve beaten the market. Our Buy List is now up 22.93% for the year compared with 18.20% for the S&P 500. Interestingly, this is the third day in a row that the S&P 500 closed with a 1,685 handle.

  Our big winner today was obviously Fiserv ($FISV) which closed the day at $96.24 or 4.03% higher. At one point today, Fiserv came within 12 cents of $100 per share which was a gain of 8% on the day. This is what a good earnings report will do.

  AFLAC ($AFL) also rallied on its earnings report, although I feared the stock was going to lose ground today. Shares of AFL got as high as $62.55 today which was a new 52-week high. At the close, AFLAC finished at $61.68 for a 1.36% gain. The AP noted that analysts are still favorable on the stock.

  WEX Inc. (WEX) also hit a new high today thanks to its earnings report. WEX got as high as $88.59 today before it closed at $86.94 for a 1.25% gain. In the last three months, WEX has gained 28%.

  We also had new highs from CR Bard ($BCR), Harris ($HRS) and Bed Bath & Beyond ($BBBY), plus Stryker ($SYK) and Medtronic ($MDT) came very close to new highs.

• “We’ve been the best performing tech company in Europe”
  Eddy Elfenbein, July 31st, 2013 at 9:11 pm

  Mark Hurd was on CNBC:

• Today’s Fed Statement
  Eddy Elfenbein, July 31st, 2013 at 2:01 pm

  Here’s today’s Fed statement:

  Information received since the Federal Open Market Committee met in June suggests that economic activity expanded at a modest pace during the first half of the year. Labor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen somewhat and fiscal policy is restraining economic growth. Partly reflecting transitory influences, inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable.

  Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.

  To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

  The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.

  To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

  Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

  Phil Izzo at the WSJ has the changes from the last statement.

• The Government Revises All GDP Data
  Eddy Elfenbein, July 31st, 2013 at 12:37 pm

  Do you feel wealthier today? According to the government, the economy is about 3% larger than originally reported. The reason is that the number collectors are now looking at intangibles in the economy. The Bureau of Economic Analysis revised the entire NIPA data series today.

  Here’s a look at real GDP growth since 1947 (in trillions of dollars). The Old Series is based on 2005 prices. The new one is based on 2009 prices.

  

  It turns out that the recent recession wasn’t as severe as originally believed. From Q4 2007 to Q2 of 2009, the economy shrank by -4.26% instead of the original -4.69%. The recovery was a bit stronger as well. Interestingly, the first-quarter of 2011 previously had shown very meager growth. It turns out, the economy slightly receded.

  Here’s a comparison between the two data series. The increase in the adjustment has been pretty continuous over the last 65 years. Note that 2005 is used for the old series and 2009 is for the new, so the chart below is not a 1-to-1 comparison. There’s a difference of about 9% due to inflation between the data series.

  

• Fiserv Jumps 5% in Early Trading
  Eddy Elfenbein, July 31st, 2013 at 9:54 am

  Big market day today. The S&P 500 is above 1,692 this morning. The big winner on our Buy List is Fiserv ($FISV) which is currently up 5.44% thanks to its strong earnings report. While AFLAC’s ($AFL) earnings were above expectations, that guidance was below the Street. Still, the reasons are understandable and the shares are only down 64 cents which is about 1%.

  Reuters ran the numbers and found that Ford Motor ($F) could close its pension gap by the end of next year. That was unthinkable not that long ago.

  The government reported that the U.S. economy grew by 1.7% last quarter. That was actually faster than expected. Economists were expecting an increase of less than 1%. Growth for Q1 was revised downward from 1.8% to 1.1%.

  ADP, the private payroll firm, said that the economy created 200,000 new jobs last month. That’s right inline with what the economy has done for the last three months. On Friday, we get the official report from the Feds.

• Dan Amos on CNBC
  Eddy Elfenbein, July 31st, 2013 at 9:28 am

  Here’s AFLAC’s CEO on CNBC: