November ISM = 56.6
Posted by Eddy Elfenbein on December 1st, 2010 at 10:07 am

The ISM for November came out at 56.6 which beat Wall Street’s view by 0.1. The ISM has now been above 52.4 for 16 months in a row.

Two other items to pass along this morning: First, the dollar was the top-performing asset last month. The greenback beat stocks, bonds and commodities. This news will completely baffle the legions who have predicted the dollar’s imminent demise.

Second, Q3 productivity was revised higher to 2.3%.

Buy List Performance YTD
Posted by Eddy Elfenbein on December 1st, 2010 at 9:07 am

With 11 months now under our belt, let’s take a look at the Buy List‘s year-to-date performance.

Through yesterday, the 20 stocks on our Buy List are up 9.83% compared with 5.87% for the S&P 500.

Including dividends, we’re up 11.39% while the S&P 500 is up 7.86%.

If beta still means anything to you, ours is 0.9458.

JoS. A. Bank Earns 42 Cents Per Share
Posted by Eddy Elfenbein on December 1st, 2010 at 8:37 am

JoS. A. Bank Clothiers (JOSB) reported earnings today of 42 cents per share. Wall Street was expecting 50 cents per share and I was expecting even more.

While business is still going well for JOSB, this is a big disappointment:

JoS. A. Bank Clothiers, Inc. (Nasdaq Global Select Market: JOSB) announces that net income for the third quarter of fiscal year 2010 increased 7.1% to $12.6 million, as compared to $11.7 million for the third quarter of fiscal year 2009. Earnings per share for the third quarter of fiscal year 2010 increased 7.1% to $0.45 per share, as compared to $0.42 per share for the third quarter of fiscal year 2009. The third quarter of fiscal year 2010 ended October 30, 2010; the third quarter of fiscal year 2009 ended October 31, 2009.

Total sales for the third quarter of fiscal year 2010 increased 7.4% to $173.3 million from $161.3 million in the third quarter of fiscal year 2009, while comparable store sales increased 3.0% and Direct Marketing sales increased 14.9%.

Comparing the first nine months of fiscal year 2010 with the first nine months of fiscal year 2009, net income increased 25.6% to $44.9 million, as compared to $35.7 million and earnings per share increased 24.8% to $1.61 per share, as compared to $1.29 per share. Total sales for the first nine months of fiscal year 2010 increased 9.9% to $539.8 million from $491.0 million for the first nine months of fiscal year 2009, while comparable store sales increased 7.6% and Direct Marketing sales increased 8.4%.

“Sales for the quarter were positive but started out below plan in August and then picked up in September and October with each month getting progressively better, and then were even stronger in November and early December,” commented R. Neal Black, President and CEO of JoS. A. Bank Clothiers, Inc. “The hot weather in August was hard on us and it was tough to stage a big rebound after that due to the election; however, with these third quarter results, we have achieved record earnings growth in 36 of the past 37 quarters when compared to the respective prior year periods, including 18 quarters in a row. Right now, to date, the fourth quarter has started out strong. November suit sales and total sales were up substantially compared to last year and were ahead of our plans. Our fourth quarter results last year were very strong. Therefore we remain cautious, but our merchandising and marketing plans are in place for the most important selling period of the quarter and the year and we have confidence in those plans,” continued Mr. Black.

Morning News: December 1, 2010
Posted by Eddy Elfenbein on December 1st, 2010 at 7:30 am

Euro Gets Respite as Yield Spreads Tighten

U.K. Manufacturing Surges in November

Oil Rises After Biggest Drop in Two Weeks on U.S. Supply Outlook

Fed to Name Recipients of $3.3 Trillion in Aid During Crisis

Contagion May Force EU to Expand Arsenal to Fight Debt Crisis

Dollar Proves Best-Returning Asset in November, Defies Skeptics

Output Climbs Led by Asia, Despite Euro Crisis

Spain Banks Face Funding Hurdle Amid Bailout Threat

Google Gambit for Groupon Raises Concern

Motorola to Break into Two on January 4, 2011

Dude…That Internet Gold Rush Stole my Real Gold Rush

RBC Sees Gilead Climbing 31% in 12 Months
Posted by Eddy Elfenbein on November 30th, 2010 at 6:54 pm

Barron’s gives Gilead Sciences (GILD) some love:

Gilead, however, may yet prove its critics wrong.

It dominates a $13 billion global market for AIDS drugs, generates huge amounts of cash and has a promising pipeline that could produce new blockbuster AIDS medications in the next two years.

And at just over nine times earnings, the stock offers investors a compelling bargain.

“The stock’s fall from grace has been too significant, and I see it grinding its way higher,” says Kris Jenner, manager of the T. Rowe Price Health Sciences Fund.

How high?

RBC Capital Markets sees the stock climbing 31% in the next 12 months. Meanwhile, UBS Securities analyst Matt Roden launched a Buy rating on the stock on Nov. 16 and a $44 target price.

“It trades at a multiple that’s in-line with Big Pharma, but Gilead’s growth prospects are comparatively better,” says Roden.

California Is Voted Off the Island
Posted by Eddy Elfenbein on November 30th, 2010 at 3:38 pm

Here are the results of the poll I ran a few days ago asking which state would you most like to see kicked out of the union:

With 556 votes in, California was the big winner with just over 40% of the vote. Texas came in a distant second with 14%. Mississippi was third with just over 5%. After that, no other state could get more than 3.5%.

I’m not surprised that California won, but I was a little shocked that states like New York and Florida got so few votes.

If the results were adjusted for each state’s population, then Alaska would be the winner. Our northernmost state had a rate twice as much as #2 Mississippi. Then came Wyoming, Hawaii and California. (Who wants Hawaii out??)

Bank of America Drops on 13-Month-Old News
Posted by Eddy Elfenbein on November 30th, 2010 at 2:52 pm

Shares of Bank of America (BAC) are down today.

Why? It’s because Julian Assange of Wikileaks fame said yesterday that early next year he will release information that could take down “one or two banks.”

So, what banks?

Raw Story found that last October he told Computer World that he had 5GB from Bank of America.

In other words, the stock is down today on news that was first reported 13 months ago.

Exxon Mobil’s Taxes
Posted by Eddy Elfenbein on November 30th, 2010 at 1:46 pm

Senator Bernie Sanders of Vermont has tweeted:

Last year Exxon made $19 BILLION in profit. Guess what? They paid zero in taxes & got $156 mill. refund from the IRS.

This is technically accurate but very misleading. Exxon Mobil (XOM) paid zero federal taxes but they indeed had a massive tax bill last year.

Before taxes, XOM recorded a profit of $34.8 billion. They paid $15.1 billion in taxes to foreign countries. The U.S. tax code allows them to deduct that tax bill from what’s due to the IRS.

CNN/Money explains:

Exxon paid the most taxes last year of any U.S. company, by far — but not a cent went to the IRS for income taxes. That’s because the oil giant does business in some of the mostly highly taxed countries in the world. Want to extract petroleum in Nigeria? Be prepared to fork over up to 85% of your profit in tax payments.

Exxon doled out more than $15 billion in income tax payments to foreign countries last year. U.S. tax codes allow companies to take massive deductions in light of those international charges, which knocked Exxon’s federal income-tax bill down into negative territory.

That said, Uncle Sam gets his money in other ways. Including sales taxes and duties, Exxon recorded $7.7 billion in U.S. tax costs last year, and paid even more overseas.

Its grand total in global taxes for the year? A whopping $78.6 billion. The company’s effective income tax rate was a hefty 47%, its highest in three years.

Investor Quiz
Posted by Eddy Elfenbein on November 30th, 2010 at 10:44 am

According to the BIS, how large is the swaps market?

I’ll give you a hint: $583 trillion.

To put that into proper perspective, think of it this way: If you took that sum in the form of $100 bills, then stacked those bills on the floor of the Grand Canyon, that’s a shitload of money.

Right at the 50-DMA
Posted by Eddy Elfenbein on November 30th, 2010 at 10:26 am

The S&P 500 is currently battling with its 50-day moving average. For a brief period yesterday, the index fell below the 50-DMA, and we’re fighting it again today.

The current reading for the 50-DMA is 1177.31.

I’m not a big fan of technical analysis but I make an exception for the 50-DMA. It’s one of those dumb ideas that works for a really smart reason. The key is that the stock market is a momentum-driven data series. What happens yesterday impacts what happens today. Each day’s move is not independent of the day before.

What this means for investors is that once the market gets moving in one direction, the odds are very likely that it will continue in that direction. The turning point is just about impossible to know. Historically, however, once the market breaks its average close for the past 50 trading sessions, that is often a decent indicator. It’s not good, but it’s good enough.