Morning News: November 26, 2020
Posted by Eddy Elfenbein on November 26th, 2020 at 6:35 am

A Soaring Monument to Beauty in China Is Stirring Passions. Mostly Anger.

Expats Are Snubbing London, Paris and Hong Kong

U.S. Economy Stumbles as the Coronavirus Spreads Widely

Bitcoin Plunges Along With Other Coins

The Russell 2000 Has Had A Powerful November — And The Gains Aren’t Over

Here’s Why Elon Musk Isn’t the World’s 2nd Richest Man

Bezos Targeted by Shipping Groups to Save Stranded Seafarers

UPS and FedEx Reportedly Facing Shortage of Delivery Vans

Disney Increases Planned Layoffs to 32,000 As Virus Hits Theme Parks

Penguin Random House to Buy Simon & Schuster

Foxconn to Shift Some Apple Production to Vietnam to Minimise China Risk

After Admitting Mistake, AstraZeneca Faces Difficult Questions About Its Vaccine

Teva, Cephalon Fined $72 Million by EU for Pay-for-Delay Pact

Joshua Brown: Morgan Housel, Christine Benz, Brian Portnoy and I Talk Money & Investing

Howard Lindzon: Dow 30,000 and High Performance Underwear

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The Dow Rises 100-fold in 92 Years
Posted by Eddy Elfenbein on November 25th, 2020 at 11:17 am

The S&P 500 closed yesterday at another all-time high. The Dow closed above 30,000 for the first time ever.

The Dow closed at 300.00 on the nose on December 31, 1928, so that’s 100-fold in 92 years. The index first closed above 3,000 on April 17, 1991.

The market is down so far today. This morning, the government said the report on Q3 GDP growth was unrevised at 33.1%. Bear in mind, this comes after a massive drop for Q2.

Initial jobless claims rose to 778,000. This is the second weekly rise in a row. This is not a good sign, but I want to see more data.

New home sales for October came in at 999,000. That’s the annualized number. The three months prior to that were all revised higher.

For October, personal spending increased by 0.5% while personal income decreased by 0.7%.

Morning News: November 25, 2020
Posted by Eddy Elfenbein on November 25th, 2020 at 7:04 am

In A Year of No Trade Fairs, Germany Takes It Hard

India Import Hurdles Hit Apple iPhone, Xiaomi Devices from China

China Vaccine Maker Seeks Approval for Public Use of Covid Shot

Yellen Set to Restore Treasury-Fed Cooperation, With Eye on GOP

Mnuchin Plans to Put $455 Billion Beyond Yellen’s Easy Reach

Catch-All Travel Insurance Booms As U.S. Flyers Take Thanksgiving Risks

From Buffett w/Love: Meet Activists Shaking Up Small Caps

‘Thumb-Stopping.’ ‘Humaning.’ ‘B4H.’ The Strange Language of Modern Marketing.

Here’s What’s Pushing Tesla Stock Toward $600 — and Beyond

Purdue Pharma Pleads Guilty To Criminal Charges In Opioid Case

Ben Carlson: What Happens to Small Caps After a Huge Monthly Gain?

Nick Maggiulli: We Begin Our Lives as Growth Stocks, But End Our Lives As Value Stocks

Howard Lindzon: The FOMO Is Back…BUT…What If This Is The Start Of The Bull Market?

Michael Batnick: The Winners Won & Animal Spirits: Is Bitcoin the New Gold?

Joshua Brown: Who Are You Listening To?, The Fortune 2021 Roundtable & The Bears Get Slaughtered. Again

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Becton, Dickinson Hikes Dividend for 49th Year in a Row
Posted by Eddy Elfenbein on November 24th, 2020 at 5:48 pm

Becton, Dickinson (BDX) is raising its quarterly dividend from 79 to 83 cents per share. That’s an increase of 5.1%.

This is their 49th annual dividend increase in a row.

The dividend will be payable on December 31 to holders of record on December 10. The indicated annual dividend rate for fiscal year 2021 is $3.32 per share.

“This is the 49th consecutive fiscal year in which we have raised our dividend. This increase reflects our confidence in our long-term outlook, as well as our ongoing commitment to return capital to our shareholders and create value for all stakeholders,” said Tom Polen, CEO and president of BD. “COVID-19 has a significant impact on health care utilization globally. However, our strong execution enabled us to respond swiftly to the pandemic and close the year delivering revenue growth in fiscal Q4, offsetting continued COVID-19 headwinds with the launch of multiple innovative COVID-19 diagnostic solutions while at the same time advancing our long-term growth strategy. We remain focused on partnering with governments, health care systems, and health care professionals to navigate the COVID-19 pandemic—including providing access to our SARS-CoV-2 diagnostics tests and injection devices for future global vaccinations campaigns—as well as supplying products and solutions for ongoing care for patients around the world. We are steadfast in our commitments, including completing our Alaris 510(k) submission, investing in growth initiatives, simplifying our processes, and empowering our organization.”

Hormel Foods Reports Fiscal Q4 Earnings
Posted by Eddy Elfenbein on November 24th, 2020 at 10:17 am

The Case-Shiller report came out this morning and it showed a 7% increase in home prices for the 12 months ending in September. Because of this week’s holiday, we’re getting reports on GDP, initial claims and durable goods tomorrow.

The stock exchanges will be closed on Thursday for Thanksgiving. Trading will reopen on Friday, but the exchanges will close at 1 pm ET.

This morning, Hormel Foods (HRL) reported fiscal Q4 earnings of 43 cents per share. That was one penny below Wall Street’s forecast.

Here are some details:

• Volume of 1.2 billion lbs., down 2%; organic volume1 down 3%
• Net sales of $2.4 billion, down 3%; organic net sales1 down 4%
• Operating margin of 11.4% compared to 12.8% last year
• Effective tax rate of 15.9% compared to 21.0% last year
• Diluted earnings per share of $0.43, down 9% from $0.47

The shares are currently down a little over 2%.

Morning News: November 24, 2020
Posted by Eddy Elfenbein on November 24th, 2020 at 7:07 am

Janet Yellen, Biden’s Expected Treasury Pick, Has Broken More Than Gender Barriers

Bitcoin Close To All-Time High After Topping $19,000

Tech Analysts See Signs of Excessive Optimism in 2020’s Rally

As Customers Move Online, So Does the Holiday Shopping Season

Millions of Americans Expect to Lose Their Homes as Covid Rages

Ad Council’s Challenge: Persuade Skeptics to Believe in Covid Vaccines

Ford’s New CEO Tackles Warranty Costs In Bid To Boost Profit

GM Hits Reverse On Trump Effort To Bar California Emissions Rules

Elon Musk Overtakes Bill Gates to Grab World’s Second-Richest Ranking

Trump Wars II: The Loser Strikes Back

Japan Committed ‘Abuse’ By Keeping Carlos Ghosn in Jail, UN Panel Says

Apple Security Chief Accused Of Trying To Bribe Sheriff’s Office

Ben Carlson: The Youths Are Coming For The Housing Market

Joshua Brown: New Home Sales Up A Cartoonish 48% Year-Over-Year! LOL & Small Caps Break Out of Two Year Consolidation

Michael Batnick: Move Over, Millennials & Total Household Debt

Jeff Carter: Classic Business Principles Matter-Especially For Venture Returns

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Hormel Foods Hikes Dividend by 5.4%
Posted by Eddy Elfenbein on November 23rd, 2020 at 5:34 pm

Hormel Foods (HRL) is increasing its quarterly dividend from 23.25 cents to 24.5 cents per share. This is the 55th annual dividend increase in a row.

The first dividend will be paid on February 16 to stockholders of record at the close of business on January 11.

Since becoming a public company in 1928, Hormel Foods has paid a regular quarterly dividend without interruption.

Morning News: November 23, 2020
Posted by Eddy Elfenbein on November 23rd, 2020 at 7:08 am

China’s Surveillance State Sucks Up Data. U.S. Tech Is Key to Sorting It.

Europe Is Trying to Crack the Door Open for Christmas

With End of Crisis Programs, Fed Faces Tricky Post-Pandemic Transition

JPMorgan Sees Possible $300 Billion Rebalancing Flow From Stocks

Pipe Dreams Leave U.S. Energy Firms Caught In Climate Trap

Astra-Oxford Vaccine Found Highly Effective in Preventing Covid

Bill Gates, the Virus and the Quest to Vaccinate the World

Hollywood’s ‘We’re Not in Kansas Anymore’ Moment

‘Very Stressful’: COVID-19 Surge Slices U.S. Demand For Big Thanksgiving Turkeys

A Day in the Life of an Amazon Warehouse Worker

Michael Batnick: Animal Spirits: Direct Indexing

Joshua Brown: The Year-End Melt-Up & Pay Attention To The New Breadth Thrust

Howard Lindzon: What A Year For Fashology and Brad Gerstner On High Flying Growth

Jeff Miller: Weighing the Week Ahead: Will Algos Go Wild?

Ben Carlson: The 3 Most Important Words in Finance, Bigger Problem: Student Loans or Credit Card Debt? & The Biggest Stock Market Reversal in History

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CWS Market Review – November 20, 2020
Posted by Eddy Elfenbein on November 20th, 2020 at 7:08 am

”One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.” – William Feather

The stock market raced to a new all-time high last week on the news of Pfizer’s encouraging results for a Covid vaccine. The good news continued into this week with a similar announcement from Moderna. Their results were even better. The S&P 500 closed Monday at a new all-time high. Both the index and our Buy List are now up by double digits this year. (Who would have predicted that just eight months ago?!)

There are, however, some worrying signs. Coronavirus cases are surging, and the labor market may be a bit shaky. Also, Uncle Sam’s enormous stimulus may soon be coming to an end, and there are no plans, as of yet, to extend it.

In this week’s issue, I first want to focus on some recent economic news. We also had some very good news from our Buy List stocks. AFLAC hiked its dividend by 18%. This is the 38th year in a row that the duck stock has sweetened its dividend.

We also got very nice earnings news from Ross Stores. The deep-discounter is doing a commendable job of staying profitable in a very tough environment. I was glad to see Fiserv’s board approve a 60-million-share buyback. That’s a nice wad of cash they’re spending! I’ll have more to say on those stocks in just a bit. But first, let’s see how the economy is faring.

Coronavirus Cases Are Surging

Thursday’s jobless-claims report came in at 742,000. That’s weaker than I had been expecting, and I wasn’t alone. It was above Wall Street’s forecast as well. This could be a minor bump in a long-term downward trend. However, I am concerned about the possibility of cracks reappearing in the U.S. economy.

While the Covid vaccine news is promising, the surging numbers of new cases are alarming. As a result, more areas are falling under new lockdown orders. It appears that Thanksgiving will be a very scaled-down event this year.

These lockdowns are very unequal. While the stock market had an unpleasant few weeks in February and March, we bounced back. My fear is that a renewed lockdown will cause most harm to people who were already hurting. The most recent retail-sales report showed the slowest growth since May. As a friend said to me recently, “You can’t install drywall over Zoom.”

This week, Fed Chairman Jerome Powell said, “The concern is that people will lose confidence in efforts to control the pandemic, and…we’re seeing signs of that already.” The news may be getting worse. On Thursday, Treasury Secretary Steven Mnuchin said he would not extend the Fed’s emergency-lending programs. The programs are due to expire at the end of the year. In a very rare event, the Fed criticized the move. I honestly can’t remember the last time the Fed publicly criticized the Treasury Department.

The move is even more surprising given that Powell recently said that the Fed is committed to using these programs as long as they’re needed. He showed no indication that the time was ripe to wind down these efforts. In fact, most of the money the Treasury allocated to the Fed hasn’t yet been committed to any specific program. Another stimulus bill is on its way, although the details and timetable are uncertain.

The bond market has rebounded over the past week, which could be another sign that Wall Street sees slower growth ahead. This also boosts the theme I’ve covered the past few weeks: namely, value stocks outperforming growth stocks. Whenever the economy catches a cold, higher-quality and more stable stocks typically outperform. If you recall, our Buy List got hammered in February and March, but not as much as the overall market.

Make sure your portfolio has a healthy allocation of high-quality stocks, and pay special attention to those with good dividends. That will help protect you when the storms come. Now let’s look at this week’s earnings report from Ross Stores.

Ross Stores Beats the Street

On Thursday, Ross Stores (ROST) reported very impressive earnings for its fiscal third quarter. Or more accurately, Ross reported impressive earnings, all things considered.

The reason I said that is because this has been a very difficult environment for the deep-discounter, and they’ve managed themselves very well. For the 13 weeks ending November 2, Ross Stores earned 37 cents per share, but that includes a charge of 65 cents per share due to a major debt refinancing. Add that back in, and it works out to a quarterly profit of $1.02 per share. Wall Street had been expecting earnings of just 61 cents per share. Ross earned $1.03 per share for last year’s Q3. Sales for the quarter fell by 2% to $3.8 billion, and comparable-store sales were down 3%.

CEO Barbara Rentler said, “Sales trends accelerated during the third quarter following a slower start in August, driven by an improvement in our merchandise assortments, a later back-to-school season, stronger performance in our larger markets, and our return to more normal store hours.”

She also noted that “Core-business results improved during the quarter, demonstrating consumers’ continued focus on value, and our ongoing ability to deliver the bargains our customers have come to expect from us.”

Ross continues to have a strong financial position, with over $5.2 billion in total liquidity. The company also repaid its $800 million revolving-credit facility. That will significantly cut down on interest costs.

What about the current quarter, which includes the big holiday shopping season? Unfortunately, the outlook is very uncertain. So far, sales are down in November. The big concern is how Ross will be impacted by a new wave of lockdowns. Ross has wisely decided not to provide any sales or earnings guidance for Q3.

The good news is that this was a solid quarter for Ross. As long as the company is allowed to make a profit, it will. I’m lifting my Buy Below on Ross Stores to $120 per share.

Earnings Preview for Hormel Foods

Hormel Foods (HRL) is due to report its fiscal Q4 earnings before the market opens on Tuesday, November 24. This will be for the three months ending on October 31.

Hormel had a decent quarter for Q3. The Spam people earned 37 cents per share, which beat the Street by three cents per share. Overall sales rose 4% to $2.4 billion. Sales volume also rose by 4%. That’s important, because you don’t want to rely overly on price increases. Hormel’s operating free-cash flow rose 72% to $242 million.

Hormel has four key operating segments: refrigerated foods, grocery products, Jennie-O Turkey and international. For Q3, the grocery products had a great quarter, while the turkey biz was weak.

Hormel has a solid balance sheet. Its cash on hand is now $1.7 billion. That’s due to a bond offering, and also halting share buybacks. Total debt is up to $1.3 billion from $0.3 billion a year ago.

Hormel expects to see Q4 mirror the strength of Q3. Hormel’s CEO said he expects the food service to post a year-over-year decrease for Q4. The consensus on Wall Street is for earnings of 44 cents per share. That’s down from the 47 cents per share HRL made in last year’s Q4.

Buy List Updates

Fiserv (FISV) has had a tough year in 2020. The company delivered good news this week in the form of a massive stock buyback. Fiserv’s authorized a 60-million-share buyback program.

It’s a huge block of shares. In dollar terms, that’s around $6.5 billion. Fiserv currently has 660 million shares outstanding. This week, I’m raising my Buy Below on Fiserv to $120 per share.

We also received good news this week from AFLAC (AFL). The duck stock raised its quarterly dividend from 28 cents to 33 cents per share. That’s a hefty increase. It adds up to a 17.9% increase.

What’s most impressive is that this is AFLAC’s 38th annual dividend increase in a row. That’s a remarkable streak.

Commenting on the announcement, AFLAC Incorporated Chairman and Chief Executive Officer Daniel P. Amos said: “I am pleased with the Board’s action to increase the first-quarter-2021 dividend. We treasure our record of 38 consecutive years of dividend increases, and we are looking to reward our shareholders by extending that track record in 2021. We remain committed to maintaining strong capital ratios on behalf of our policyholders and balance this financial strength with a focus on increasing the dividend, repurchasing shares and reinvesting in our business. Our dividend track record is supported by the strength of our capital and cash flows.”

The new dividend will be payable on March 1 to shareholders of record at the close of business on February 17. Based on Thursday’s closing price, the new dividend yields just over 3%.

I’m going to keep AFLAC’s Buy Below price at $44 per share, but our other financial stocks have been rallying quite well lately (it’s about time).

Globe Life (GL), for example, is up 15% for us this month. I’m lifting our Buy Below on GL to $100 per share. Our other financial stock that’s been soaring for us has been Eagle Bancorp (EGBN). The little bank has rallied nearly 50% in two months. This week, I’m raising our Buy Below on Eagle to $42 per share.

That’s all for now. There will be no newsletter next week. I’m taking my traditional Thanksgiving break. The U.S. stock market will be closed on Thursday for Thanksgiving, and it will close at 1 p.m. on Friday, November 27. There’s not much in the way of economic news scheduled for next week. On Wednesday, the jobless-claims report is due out. On that same day, we’ll also get a revision to Q3 GDP. The initial report said that the economy grew by 33.1% last quarter. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

Morning News: November 20, 2020
Posted by Eddy Elfenbein on November 20th, 2020 at 7:02 am

WHO Tells Doctors Not To Use Gilead’s Remdesivir As A Coronavirus Treatment, Splitting With FDA

Gap Between Vaccine Hopes and Pandemic Reality Poses Market Hazard

Mnuchin to End Key Fed Emergency Programs, Limiting Biden

Mnuchin-Powell Split Shows Rare Discord as Economy Struggles

U.S. Financial Groups, Wary Of Crackdown, Feel Out Biden Transition Team

Gen Z Trading Prodigy Wins Over Wall Street Backers for Startup

In Pandemic Christmas, U.S. Rivals Aim to Challenge Amazon Under the Tree

BuzzFeed to Acquire HuffPost From Verizon Media

How Airbnb’s CEO Succumbed to An IPO He Resisted

G.M. Accelerates Its Ambitions for Electric Vehicles

Dutch Grocery Giant Ahold Delhaize Buying Majority Stake in FreshDirect

Air Travel Was Gaining Momentum. Now What?

How Steve Bannon and A Chinese Billionaire Created a Right-Wing Coronavirus Media Sensation

Howard Lindzon: Founder and CEO of Extend Woodrow Levin Joins Me on Panic with Friends to Discuss Recovering from Failure and Building the ‘AppleCare’ of Online Retailers

Joshua Brown: This is the part where you and I step up and become heroes.

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