Archive for 2013

  • Ford Beating GM in Europe
    , January 28th, 2013 at 4:55 pm

    Interesting but not a surprise.

    When Ford Motor Co. (F) posts fourth- quarter results tomorrow, the numbers probably won’t look great, likely the lowest operating profit of the year. Those figures mask the optimism coming from an unlikely place: Europe.

    Using its turnaround in the U.S. as a road map, Ford is moving more briskly to recover in Europe than its competitors. While Ford will report a loss of more than $1.5 billion for the full year in Europe and has forecast a similar result for 2013, Chief Financial Officer Bob Shanks said in an interview this month during the Detroit auto show, those losses will begin to disappear in about two years.

    Ford will be about a year ahead of General Motors Co. (GM) in efforts to revamp operations in the region, said Peter Nesvold, a Jefferies Group Inc. analyst with a buy rating on the shares. Ford’s board signaled increased conviction in the company’s European restructuring plan by doubling the quarterly dividend earlier this month, he said.

    “In the case of Ford, ultimately, this is the team that without external help was able to accomplish in North America what almost nobody thought was going to be possible,” Nesvold, who is based in New York, said in a telephone interview. “The problems aren’t identical in Europe, but they are similar.”

  • The 10-Year Yield Hits 2%
    , January 28th, 2013 at 1:58 pm

    Today the market seems to be dancing around important price points. The yield on the 10-year Treasury touched 2%. Of course, that’s very low but it’s the highest yield in nine months. This is another example of investors favoring riskier assets.

    The S&P 500 is right at 1,500 on the nose. It’s moving just a few fractions above or below. According to Bloomberg, 150 companies in the S&P 500 have reported so far. Of those, 75% have beaten on earnings and 67% have beaten on sales.

    The latest numbers I have show analysts’ forecast earnings of $112.21 for the S&P 500 for this year. While the Q4 numbers for 2012 are still coming in, the Street sees full-year earnings on track for $97.51. Interestingly, Wall Street expects earnings growth to accelerate all year. Last April, the Street thought 2013 earnings would be $119.

    I see that Oracle ($ORCL) has been as high as $35.72 today. That’s the highest price since last May. Medtronic ($MDT) and WEX Inc. ($WXS) both hit new 52-week highs.

  • Going for Nine in a Row
    , January 28th, 2013 at 10:08 am

    The S&P 500 is going for its ninth-straight rally in a row, but the market is down a bit right now. JoS. A Bank ($JOSB) is having a very rough morning. The shares are down about 16%.

    On our Buy List, Bed Bath & Beyond ($BBBY) is getting clipped by 2.6% thanks to a downgrade at Goldman Sachs.

    The good economic news today was that orders for durable goods rose by 4.6% last month.

    The gains were led by a 56.4 percent increase in military aircraft orders and a 10.1 percent increase in commercial aircraft orders.

    Orders for machinery, communications equipment and primary metals such as steel also showed increases.

    Still, demand for core capital goods, a measure of business investment plans, rose just 0.2 percent. That followed two straight monthly gains of 3 percent.

    Orders for durable goods, which are expected to last at least three years, can fluctuate from month to month. For all of 2012, durable goods orders rose 4.1 percent. But demand for core capital goods fell 0.3 percent for the year.

  • JoS. A Bank Warns
    , January 28th, 2013 at 7:14 am

    At the end of last year, I decided to take JoS. A Bank Clothiers ($JOSB) off our Buy List. It wasn’t too much of a surprise for long-term readers of our humble blog. The company had not one, but two awful, terrible earnings reports last year.

    As I often point out, business problems aren’t like a sports team in a slump. You can’t just shake them off. If there’s a problem, there’s usually something important driving it and the problem will most likely get worse before its resolved.

    This past Friday evening at 8 pm, JOSB issued a press release. Without knowing too much about PR, you can be pretty sure that anything in a press release going out at that time isn’t going to be good news. And in this case, you would be correct.

    Joey Banks said that net income for FY 2012 would be “approximately 20%” lower than the year before. The silk tie has hit the fan. Neal Black, the CEO, said:

    The fourth quarter started out slowly, as the first two weeks of fiscal November were negatively impacted by the aftermath of Hurricane Sandy, the distractions created by the presidential election and the uncertainty of the fiscal cliff. Going into the critical holiday selling season, starting on Black Friday, we believed we had a strong marketing and promotional strategy for the period. However, many of the promotional items and a large part of our holiday assortment were items that sell best in cold weather and the weather was unseasonably warm.

    Oh dear lord. This is a cartoonish example of someone refusing to take responsibility; Hurricane Sandy, the fiscal cliff, the election and unseasonably warm weather. You gotta be kidding me. I hate to inform Mr. Black that presidential elections aren’t what we call unforeseen events.

    Let’s run some math. Last year, JOSB earned $3.49 per share, so a 20% decline would be earnings to $2.79 per share. For the first three quarters of this fiscal year (which ends at the end of the month), JOSB earned $1.83 per share. So that translates to Q4 earnings of 96 cents per share. How bad is that? Wall Street had been expecting $1.76 per share. In other words, this is a massive shortfall.

    I’m glad we got this dog off the Buy List. Monday’s opening trade will not be pretty.

  • Morning News: January 28, 2013
    , January 28th, 2013 at 6:47 am

    Davos Money Men Say World Emerges From Doldrums Fretting Relapse

    The Great Central-Banking Experiment: Will Unlimited Cash Solve Problems or Cause Them?

    ECB Says Impact of Proposed Banking Rules May Vary Across EU

    Euro Crisis Seen Reaping Social Toll With Record Jobless

    Monti Repeats Backing For Bank Of Italy Over Monte Paschi

    At Fed, Nascent Debate on When to Slow Asset Buying

    Toyota Retakes Global Lead From GM on Disaster Recovery

    Goldman Launches ICBC Selldown Of About $1 Billion

    Japan Eased Safety Standards Ahead Of Boeing 787 Rollout

    Boeing Risks $5 Billion in Revenue on 787 Probe’s Outcome

    Ryanair Boosts Full-Year Profit Forecast on Holiday Sales

    ERA Former Chairman Surprised by Caterpillar’s Siwei Writedown

    Beneath the Calm, SAC Works to Contain Fallout From Inquiry

    Edward Harrison: The Fed Changing Private Portfolio Preferences Through Quantitative Easing

    Jeff Carter: Microeconomics Monday-The Invisible Hand

    Be sure to follow me on Twitter.

  • Frontline: The Untouchables
    , January 26th, 2013 at 7:33 pm

    Watch The Untouchables on PBS. See more from FRONTLINE.

    Watch The Untouchables on PBS. See more from FRONTLINE.

    Watch The Untouchables on PBS. See more from FRONTLINE.

    Watch The Untouchables on PBS. See more from FRONTLINE.

  • The Stock Market Is At an All-Time High
    , January 25th, 2013 at 6:49 pm

    It took us more than five years, but the broadest measure of the U.S. stock market finally closed at an all-time high today. The Wilshire 5000 finished the day at 15,878.72. The previous high close came on October 9, 2007 at 15,806.69.

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    Meanwhile, the more popular S&P 500 still needs to gain another 4.13% before it breaks its all-time high from 62 months ago. The reason for the difference between the two indexes is that small-cap stocks have done much better than large-caps.

    Since the S&P 500 is limited to the very largest stocks on Wall Street, it tends to lag when mega-caps are out of favor. Other small-cap indexes like the Russell 2000, the S&P 600 Small-Cap and S&P 400 Mid-Cap have already made all-time highs.

    Since the previous high, dividends have added 11.4% to the Wilshire’s total return while inflation has totaled 9.9%.

  • Ackman Vs Icahn
    , January 25th, 2013 at 2:11 pm

    CNBC had a surreal moment today when billionaires Carl Icahn and Bill Ackman traded insults.

  • The Market Is Going for Eight in a Row
    , January 25th, 2013 at 10:33 am

    The S&P 500 is looking to close higher for the eighth day in a row. That would be the longest winning streak in more than eight years. The index has been as high as 1,502.26. Yesterday’s intra-day high was 1,502.27.

    I noticed that Microsoft ($MSFT) is having a decent morning following yesterday’s earnings report. The shares are up about 1.7%. What’s interesting is that the stock was actually down in yesterday’s after-hours market. It’s wise not to place too much faith in those prices.

    I also see that JPMorgan ($JPM) got to a new 52-week high earlier today.

    As far as earnings season goes, the most recent numbers show that nearly 75% of the 143 companies in the S&P 500 that have reported so far have topped expectations.

  • Moog Lowers Guidance
    , January 25th, 2013 at 9:57 am

    We got our first disappointment of this earnings season. Moog ($MOG-A) said today that it’s lowering its full-year guidance. The previous range was $3.50 to $3.70 per share. The new range is $3.50 to $3.60 per share. That’s honestly not that bad and the CEO was quite candid:

    “We’re off to a slow start in 2013,” said John Scannell, CEO. “The weakness in the major economies around the world is affecting our industrial business. On the other hand, the aircraft market is strong. We have moderated our forecast for the year slightly but we are still projecting growth in both sales and earnings in 2013, despite the headwinds in our industrial markets.”

    Quarterly revenues were up 3% to $621 million. Net earnings dropped 6% to $34 million. On a per-share basis, Moog made 75 cents last quarter. Since no one follows them, I can’t say if that beat or missed expectations.

    At one point early in today’s trading, Moog was as low as $40.06 which is a drop of 11.6%. The stock, however, quickly recovered and is now down 60 cents which is a loss of 1.3%. If you own Moog, there’s no need to worry about today’s news. The stock still looks good for the long-term.