Morning News: May 3, 2019
Posted by Eddy Elfenbein on May 3rd, 2019 at 7:05 am

Pig ‘Ebola’ Virus Sends Shock Waves Through Global Food Chain

Iran’s Oil Minister Warns That OPEC Collapse Is Likely

Euro-Area Inflation Accelerates After String of Upbeat Data

Hungary Added a ‘Slave Law’ to Meet Labor Shortages. It’s Not Working So Well.

Puerto Rico Seeks to Have $9 Billion in Debt Ruled Unconstitutional

Ginnie Mae Moves to Crack Down on Repeated Refinancings

Buffett Finally Embraces Amazon as Berkshire Acquires Stake

Tesla Ends ‘Spartan Diet’ and Seeks $2.3 Billion to Fund Expansion

Microsoft Rolls Out New Cloud Services for AI and Blockchain

Facebook Building Cryptocurrency-Based Payments System

Verizon is Trying to Sell Tumblr, the Blogging Site Once Worth $1.1 Billion

How a Lone Norwegian Trader Shook the World’s Financial System

Lawrence Hamtil: The “Pain” of Low-Volatility Investing

Cullen Roche: Whom Would I Nominate for the Federal Reserve?

Jeff Miller: The Future “Ain’t” What It Used To Be

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Morning News: May 2, 2019
Posted by Eddy Elfenbein on May 2nd, 2019 at 7:05 am

Euro-Area Factory Slump Eases in April as Italy Exceeds Estimate

Dalio Says Something Like MMT Is Coming, Whether We Like It Or Not

Capitalists Fear a Socialist Revolt

Facebook Set to Create Privacy Positions as Part of F.T.C. Settlement

How a Canadian Chain Is Reinventing Book Selling

The Most Valuable Company (for Now) Is Having a Nadellaissance

Apple’s Upbeat Forecast Pushes Market Value Back Toward $1 Trillion

Qualcomm Hangs on to Most Apple Gains After Earnings Report

Bombardier Says to Create Single Aviation Unit, Sell Non-Core Assets

How America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

Burger King Takes on McDonald’s With a Range of ‘Unhappy’ Meals

Where the Good Jobs Are

Nick Maggiulli: The Errors That I Don’t See

Roger Nusbaum: Don’t Let Retirement News Gloom Keep You Down

Howard Lindzon: Lindzanity – Episode 2 – Koyfin Founder Rob Koyfman

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Today’s Fed Statement
Posted by Eddy Elfenbein on May 1st, 2019 at 7:05 pm

No change on rates.

Information received since the Federal Open Market Committee met in March indicates that the labor market remains strong and that economic activity rose at a solid rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Growth of household spending and business fixed investment slowed in the first quarter. On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

Voting for the FOMC monetary policy action were: Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren.

Seems pretty anodyne to me, but for whatever reason, the market got a little nervous in the afternoon.

Morning News: May 1, 2019
Posted by Eddy Elfenbein on May 1st, 2019 at 7:11 am

The Debate Behind Trump’s Move to Tighten Iran Oil Sanctions

Trump Wants to Block Deutsche Bank From Sharing His Financial Records

F.D.A. Permits the Sale of IQOS, a New Tobacco Device

U.S. Banks’ Bad-Debt Pile Creeps Higher With Credit-Card Losses

$1 Billion Surprise From Boeing

Apple Trade-Ins and Discounts Spark iPhone Revival

Vanguard Patented a Way to Avoid Taxes on Mutual Funds

Facebook Unveils Redesign as It Tries to Move Past Privacy Scandals

Warren Buffett Backs Occidental’s Bid for Anadarko With $10 Billion Investment

Alphabet Throws a Wet Blanket on Wall Street

America Is Running Out of Impossible Burgers

SEC Commissioner Decries Agency’s Deal with Tesla’s Musk

Michael Batnick: The Accidental Case for Market Timing

Ben Carlson: Things That Were Said During the Bear Market & Why We Believe in Magic

Joshua Brown: Big and Slowing or Small and Growing & How Endgame Smashed All the Records

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Fiserv Earned 84 Cents per Share
Posted by Eddy Elfenbein on April 30th, 2019 at 4:05 pm

After the bell on Tuesday, Fiserv (FISV) released a pretty good earnings report. This is a relief because the Q4 report wasn’t so hot. For Q1, the company made 84 cents per share. That’s an increase of 12% over last year. It also beat expectations by two cents per share. Quarterly revenues rose 5% to $1.43 billion. Free cash flow was $302 million, and adjusted operating margin came in at 31.9%. Those are nice numbers.

“We are off to a strong start to the year, with first quarter internal revenue growth and sales ahead of our initial expectations,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “In addition to strong financial performance, we are well into integration planning and looking forward to completing the First Data acquisition in the second half of the year.”

In January, Fiserv said it’s going to merge with First Data in a major deal. The plans are moving ahead. The company sees the deal being completed in the second half of this year. Due to the pending merger, Fiserv has suspended all stock buybacks. Fiserv reiterated its full-year earnings range of $3.39 to $3.52 per share.

Update: From Fiserv’s earnings call, this is what Jeffery W. Yabuki has to say about Q2.

Although we don’t provide quarterly guidance, it’s important to remind you that we had very high periodic revenue in last year’s Q2, which will create a difficult compare this year. As such, we anticipate the second quarter will be the low watermark for both internal revenue and adjusted EPS growth with strong acceleration into the back half of the year

Morning News: April 30, 2019
Posted by Eddy Elfenbein on April 30th, 2019 at 7:08 am

Boxed In: $1 Billion of Iranian Crude Sits at China’s Dalian Port

The Fed Has a Problem at the Heart of Its Battle to Spark Inflation

Labor Dept. Says Workers at a Gig Company Are Contractors

Goldman Sachs CEO Warns `Evolutionary’ Change in Tech Transformation Will Take Longer Than Many Think

GE Swings to Quarterly Profit as It Shrinks

Marriott to Take On Airbnb in Booming Home-Rental Market

Vegan Burger Maker Beyond Meat Raises Price Range in Upsized IPO

Chevron May Have to Up the Ante to Beat Occidental in the Fight for Anadarko Petroleum

Tesla Looks to Regain Its Luster in Solar Energy by Slashing Prices

Another Setback for Samsung as Profit Misses Estimates

Vodaphone Found Hidden Back Doors in Huawei Equipment

Chase Bank Tried to Be Relatable on Twitter and Got Absolutely Dunked On

Cullen Roche: How Will The Fee Structure of Financial Advisory Change in the Future?

Roger Nusbaum: It Turns Out Retirement Planning Is Complicated

Jeff Carter: Simplicity

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Disney’s Best Month in 32 Years
Posted by Eddy Elfenbein on April 29th, 2019 at 7:41 pm

I had been expecting a modest pop from shares of Disney (DIS) this morning thanks to the release of the Avengers movie which, I take it, has been somewhat popular this weekend.

The movie smashed all box office records. For the weekend, the Avengers brought in $350 million domestically and $1.2 billion worldwide. That’s about one-quarter of what Disney paid for Marvel ten years ago. Disney now has nine of the ten largest opening weekends in movie history.

The shares did gap up to a high of $142.37 shortly after the open. Later in the day, however, DIS retreated and closed just below $140 per share. The stock is headed for its best month in 32 years.

Earnings are due out on May 8.

Morning News: April 29, 2019
Posted by Eddy Elfenbein on April 29th, 2019 at 7:16 am

What Oil at $100 a Barrel Would Mean for the World Economy

Canadian Farm Exports Run Into Chinese Wall Amid Diplomatic Dispute

U.S.-China Talks to Resume With Significant Issues Unresolved

Mnuchin Says Trade Negotiations With China Are in ‘the Final Laps’

‘Avengers: Endgame’ Shows Movie Theaters Can Still Be on Top of the World

Spotify Tops Estimates With 100 Million Paid Users

Apple Cracks Down on Apps That Fight iPhone Addiction

One in Seven Homes in Japan Is Empty

Boeing CEO Faces Shareholders for First Time Since 737 MAX Crashes

Anadarko to Pursue Deal Talks with Occidental Petroleum

This Elon Musk Comment Should Terrify Tesla Investors

In Washington, Juul Vows to Curb Youth Vaping. Its Lobbying in States Runs Counter to That Pledge.

Jeff Miller: Weighing the Week Ahead: How to Watch the Information Avalanche

Michael Batnick: These Rallies Aren’t Holding & Are Annuities So Terrible?

Howard Lindzon: Momentum Monday – Software, Software, Software!

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New All-Time High
Posted by Eddy Elfenbein on April 28th, 2019 at 7:59 pm

On Friday, the S&P 500 closed at its high for the day which was also its all-time high close. The index was just shy of the intra-day high from last September. Since the all-time high from September, the S&P 500 has gained 0.31%.

Here’s the chart:

It took more than seven months but we made back everything we lost.

Q1 GDP Grew by 3.2%
Posted by Eddy Elfenbein on April 26th, 2019 at 8:47 am

The initial report on Q1 GDP showed that the U.S. economy grew by 3.2% in real terms during the first quarter.

From MarketWatch:

The U.S. economy expanded at a 3.2% annual pace in the first three months of 2019, the government said Friday.

The gain was well above forecasts. Economists polled by MarketWatch had forecast a 2.3% increase in gross domestic product. The economy grew at a 2.2% rate in the final three months of 2018.

Inflation moderated a bit in the first quarter.

What happened: One unexpected factor behind the acceleration in GDP growth in the first quarter was a sharp upturn in state and local government spending.

Spending at this level jumped 3.9% after a 1.3% drop in the prior three months. This was the fastest gain in three years. Spending by local governments likely picked up due to the partial federal government shutdown.

Also fueling the stronger GDP growth were stronger inventory building and trade. These factors are volatile and could reverse this quarter.

Final sales to domestic purchasers, which excludes trade and inventory behavior, rose 2.3% in the first quarter, the smallest gain in three years, but still well above what economists were expecting.

The value of inventories, which adds to GDP, increased to $128.4 billion from $96.8 billion.

The trade sector added a little more than 1% to growth in the first quarter. Exports rose 3.7%, while imports dropped by the same amount, leading to a smaller trade deficit.

Offsetting these gains, Consumer spending decelerated to a 1.2% gain, the slowest increase in a year.

Business fixed investment decelerated to a relatively slow 2.7% gain, down from a 5.4% gain in the prior quarter. Investment in structures fell 0.8%, the third straight decline.

Investment in new housing was another weak spot. Residential investment dropped 2.8%, the fifth straight quarterly decline.

Headline inflation, as measured by the personal consumption expenditure price index, fell to a 1.4% annual rate in the first quarter from 1.9% in the prior three-month period. The decline in core PCE inflation was less pronounced, slipping to 1.7% from 1.9%. The monthly inflation numbers will be released on Monday.

Big picture: The acceleration in growth in the first quarter is all the more remarkable considering the doom and gloom that surrounded the first quarter outlook in December. Before the new year began, the Atlanta Fed’s “nowcast” model projected 0.5% growth and the flattening of the yield curve was fueling talk of recession. The partial government shutdown, which limited economic data, added to unease.

Instead, the economic data improved steadily as the quarter progressed. Economists think the strong gain in retail sales in March bodes well for second-quarter growth.

The Federal Reserve is not expected to change its patient approach to interest-rate policy despite the strong report. Officials are expected to wait to see how the economy fares in the second quarter before making any decisions. The solid performance in the first quarter may quell some of the chatter that the next Fed move will be a rate cut.

U.S. central bank officials will meet next week to discuss the outlook. Reporters will get a chance to ask Fed Chairman Jerome Powell about the GDP data at his press conference on Wednesday.