The Yen’s Impact on the Stock Market
Posted by Eddy Elfenbein on March 29th, 2011 at 10:17 am

Here’s a look at the yen’s impact on the stock market. More correctly, I should say this is a look at how the yen is correlated with the U.S. stock market.

I looked at all the daily market activity from 1989 through 2010 and then I annualized what the stock market did on days when the yen rose against the dollar and on days when it fell against the dollar. The results are below.

As you might expect, the movement of the currencies has the least impact on domestic-oriented sectors like staples and healthcare, but it has a big impact on areas like tech and finance.

Today’s Case-Shiller Index
Posted by Eddy Elfenbein on March 29th, 2011 at 9:22 am

The latest Case-Shiller numbers came out this morning. This is a home-price index. There’s a bit of a lag in these numbers, so today’s report covers January.

The bottom line is that home prices aren’t doing much of anything. In fact, they’re backsliding some. Below are the seasonally-adjusted numbers for the Case-Shiller’s 10 City Index and for their 20 City Index. The 10-City numbers go back to 1987. Both indexes have declined for the last seven months in a row.

The 10-City Index is currently just 2.2% above its recent low from May 2009. The 20-City Index is less than 1% above its level from that same month.

Both indexes peaked in April 2006 and both are currently down 31% since then.

It’s odd, but I remember when folks thought the home price decline of the early 90s was severe. The chart shows us that this decline was nothing compared to what was going to happen.

Morning News: March 29, 2011
Posted by Eddy Elfenbein on March 29th, 2011 at 7:12 am

In Brazil, No Room for Leverage at Buyout Firms

Crude Oil Trades Near One-Week Low in New York as Libyan Rebels Make Gains

Gold Drifts Lower In Subdued Asian Trade

Amber Waves to Ivory Bolls

U.S. Stock Futures Rebound; Halliburton Drops on Middle East

Fed’s Bullard Says QE2 Exit Debate Likely ‘Key’ 2011 Issue

One Sign That The Housing Bust Could End Soon

World Events Affect Your Mortgage Rate

Exemptive Relief Update: Russell Pulls Out, Janus Pledges Transparency

AT&T Outguns Sprint in Lobbying

EBay scores over Amazon, Acquires GSI for $2.4-billion

Hutchison Profit Beats Estimates on 3G Sales, Retail Chains

Paul Kedrosky: Calling a Top to the Tech Bubble: June 17, 2013 at 10:17 a.m. (EST)

Joshua Brown: Bernanke Represent

Howard Lindzon: Ebay and The Telephone are Cool Again…WTF!

New High for JOSB
Posted by Eddy Elfenbein on March 28th, 2011 at 10:31 am

The stock market is up in early trading so far. It seems like a fairly quiet day on Wall Street. One of our Buy List stocks, Jos. A Bank Clothiers ($JOSB), is doing quite well and is at a new 52-week high. JOSB is a 20% winner for us on the year so far.

Reynolds American ($RAI) is also doing well; the stock came within three pennies of hitting a new 52-week high this morning. Even with the higher share price, RAI still yields 6.2%.

We had some decent economic news this morning. Consumer spending rose 0.7% last month which was an increase from 0.3% in January. Personal income rose by 0.3% so people are saving less.

It’s still early but the S&P 500 may close today at a three-week high.

Morning News: March 28, 2011
Posted by Eddy Elfenbein on March 28th, 2011 at 7:05 am

European Central Bank’s Nowotny Sees Monetary Policy ‘Normalization’

Most European Stocks Rise as Alcatel, Nokia Climb; Porsche Drops

Ireland Seeks to Force Losses on Banks’ Senior Bondholders

Egypt Rallies Most Since 2009 on Speculation Drop Overdone

People’s Bank of China to Sell 99 Billion Yuan 1-yr Bills, Most In a Year

Once Again, World Markets Are Rallying, And Totally Ignoring All The Crises

Oil Drops for a Third Day Following Victories By Libyan Rebels

Dollar Strengthens Before Spending Data on Fed Easing Concern

Investing Like It’s 1999

Sinopec 2010 Net Rises 14%, Curbed by State Anti-Inflation Efforts on Fuel

Glencore to Seek Hong Kong IPO Approval This Week

Philips Loss From Television Swells as Price Pressure Mounts

Porsche, Schaeffler Sell $9.6 Billion in Stock to Reduce Debt

Howard Lindzon: The ONLY ‘Bubble’ is at The Government and Federal Reserve

Joshua Brown: Reality Check for the Big Bounce

Buffett In India
Posted by Eddy Elfenbein on March 27th, 2011 at 1:00 pm

The investing guru is touring India and charming them with his folksy wisdom:

At one point, Mr. Buffett said Berkshire Hathaway kept about $10 billion in cash on hand just in case “Ben Bernanke runs off to South America with Lindsay Lohan,” a remark that of course drew laughter. “We have to be prepared for anything.”

Barron’s on Oracle
Posted by Eddy Elfenbein on March 26th, 2011 at 6:39 pm

In today’s Barron’s, Miriam Gottfried explains why Oracle ($ORCL) kicks ass:

Fourth-quarter guidance was strong with management forecasting above-consensus revenue, new software licenses and earnings for the seasonally strong close to the year. Analysts say margins could come in at peak levels of 51%—reached before the 2010 acquisition of Sun Microsystems—over the next several years as businesses continue to ramp up spending. That Sun acquisition appears to be paying off, much to the surprise of numerous skeptics, driving sales of hardware without damaging margins.

Oracle offers a squeaky clean balance sheet with $9.7 billion, or $1.87 a share, in cash. And to top it off, shares trade at a reasonable 14.5 times projected-forward earnings.

“Oracle’s engineered systems are resonating (50% sequential-Exadata growth), enterprise application spending is firmly back, and gross and operating margins continue to positively surprise,” wrote Ross MacMillan, an analyst with Jefferies & Co.

(…)

Oracle shares have historically outperformed in June as investors anticipate strong fourth-quarter results, according to Citigroup analyst Walter H. Pritchard.

“Shares trade at a 10% premium to the S&P versus a historical ceiling of 20%, leaving some room for multiple expansion,” he wrote in a note. “We’d continue to buy as we see trends as sustainable, seasonal strength on tap and headroom to valuation.”

We would follow that advice and snap up some Oracle shares on the promise of a profitable, growth-fueled future.

Earl Scruggs And Lester Flatt – Cripple Creek
Posted by Eddy Elfenbein on March 25th, 2011 at 4:12 pm

The trading week is over. Let Lester and Earl get your weekend started right.

Good Day for Oracle
Posted by Eddy Elfenbein on March 25th, 2011 at 12:48 pm

Nice movement on the earnings report. The shares briefly broke $34 this morning.

Oracle ($ORCL) also offered guidance for this quarter (fiscal Q4) of 69 to 73 cents per share.

Q4 GDP Growth = 3.1%
Posted by Eddy Elfenbein on March 25th, 2011 at 9:26 am

In January, the first report on Q4 GDP said that the economy grew by 3.2%. Then in February, that was revised down to 2.8%. Then this morning, it was revised back up to 3.1%.

Glad that’s all cleared up!

Economists had expected G.D.P. growth, which measures total goods and services output in the United States, to be revised up to 3.0 percent. The economy expanded at a 2.6 percent rate in the third quarter. For the whole of 2010, the economy grew 2.9 percent, while corporate profits grew 20.4 percent, the most since 2004.

Data so far suggest that the economy maintained this growth pace in the first quarter of this year, but there are concerns that rising oil prices could crimp consumer spending and slow the economic recovery.

The pick-up in growth has been acknowledged by the Federal Reserve, which injected huge amounts of money into the economy to stimulate demand. The central bank is expected to end its $600 billion government bond buying program at the end of June.

The raised fourth-quarter growth estimates reflect stronger business spending and inventory accumulation.

Business investment rose at a 7.7 percent rate instead of 5.3 percent, lifted by spending on equipment and software (Oracle Hint Hint!!), as well as on structures. Spending grew at a 10.0 percent pace in the third quarter.

Spending on software and equipment increased at a 7.7 percent rate instead of 5.5 percent. Investment in structures rose at a solid 7.6 percent, the first increase since the second quarter of 2008.

Business inventories increased $16.2 billion instead of the $7.1 billion estimated last month, subtracting a smaller 3.42 percentage points from G.D.P. growth rather than the previously reported 3.70 percentage points.

Excluding inventories, the economy expanded at an unrevised 6.7 percent pace, the fastest increase in domestic and foreign demand since 1998. Domestic purchases grew at a 3.2 percent rate instead of 3.1 percent.

Consumer spending, which accounts for more than two-thirds of United States economic activity, grew at a 4.0 percent rate in the final three months of 2010 instead of 4.1 percent. It was still the fastest since the last three months of 2006, and an acceleration from the third quarter’s 2.4 percent rate.

The growth in exports was not as strong as previously estimated, while imports were revised a touch down. Trade added 3.27 percentage points to G.D.P. growth instead of 3.35 percentage points. Government spending contracted at a 1.7 percent rate rather than 1.5 percent, because of weak state and local government outlays.

The G.D.P. report confirmed a pick-up in inflation pressures on surging food and gasoline prices. The personal consumption expenditures index rose at a revised 1.7 percent rate in the fourth quarter instead of 1.8 percent. That compared with the third quarter’s 0.8 percent increase.

But a “core” price index closely watched by the Fed advanced at a revised 0.4 percent rate instead of 0.5 percent. The increase was the smallest rise on record.