Jobless Claims Fall to New Low
Posted by Eddy Elfenbein on April 11th, 2019 at 10:52 am

This morning’s jobless claims fell to 196,000. That’s the lowest number since October 4, 1969.

Initial claims for state unemployment benefits fell 8,000 to a seasonally adjusted 196,000 for the week ended April 6, the lowest level since early October 1969. Claims have now declined for four straight weeks. Data for the prior week was revised to show 2,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims would rise to 211,000 in the latest week. The Labor Department said no states were estimated last week.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 7,000 to 207,000 last week, the lowest level since early December 1969.

Morning News: April 11, 2019
Posted by Eddy Elfenbein on April 11th, 2019 at 7:07 am

U.S., China Agree to Establish Trade Deal Enforcement Offices

U.S. Core Inflation Cools Amid Shift in Data Methodology

Automakers Plan for Their Worst Nightmare: Regulatory Chaos After Trump’s Emissions Rollback

How to Say the ‘R-Word’: Bank Executives Grapple with Recession Talk

What Bank CEOs Said to Congress

Katie Porter Stumps JPMorgan Chase’s Jamie Dimon With Question About Employee’s Income

CEO of Tiny California Bank Makes Twice as Much as Jamie Dimon

Uber Filing Is Set to Cement 2019 as Year of the Unicorn IPO

Lyft’s stock slide casts long shadow on Uber’s IPO

Tesla and Panasonic Freeze Expansion of Gigafactory, Nikkei Says

Great Job Delta!

Bed Bath & Beyond Stock Is Sinking Because a Dividend Hike Doesn’t Beat an Earnings Miss

Jeff Miller: Is It Time To Lever Up On Market Momentum?

Ben Carlson: Money Makes Money

Jeff Carter: Communication

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Morning News: April 10, 2019
Posted by Eddy Elfenbein on April 10th, 2019 at 7:03 am

U.S. Readies $11 Billion in Tariffs on E.U.

Aramco Sells $12 Billion of Bonds in Unprecedented Debut

Yes, the Economy Is Slowing. But Don’t Hyperventilate.

For First Time In A Decade, U.S. Companies Could Report Lower Profits on Higher Revenue

U.S. Bank CEOs Face Off With Congress for the First Time Since Financial Crisis

Warren Buffett Just Gave Wells Fargo Some Valuable Advice

Uber Seeks About $10 Billion in Year’s Biggest IPO

Wynn Resorts Ends Talks With Crown Resorts After Premature Disclosure

Levi Strauss Swings to Profit, Maintains Outlook

Standard Chartered to Pay $1.1 Billion in Iran Sanctions Settlement

Are Plastic Bag Bans Garbage?

Prosecutors Say Drugmaker Indivior Lied About Popular Opioid Treatment

Nick Maggiulli: The Money We Don’t Talk About

Ben Carlson: Dividends Don’t Matter As Much As They Used To & The Stories We Tell Ourselves to Sell Ourselves

Michael Batnick: Smart People Saying Smart Things & Animal Spirits: Super Savers

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Shares of Cerner Soar
Posted by Eddy Elfenbein on April 9th, 2019 at 9:45 am

Shares of Cerner (CERN) are in a happy place this morning. The company said it’s increasing its share buyback program by $1.2 billion. The company has reached an agreement with Starboard Value, an activist shop. Cerner will add four new directors to the board.

Here’s the press release.

Update: Cerner closed higher 10.3% today.

Morning News: April 9, 2019
Posted by Eddy Elfenbein on April 9th, 2019 at 7:05 am

Emerging-Market Currencies Are Flashing a Warning

China Wants to Ban Bitcoin Mining, Traders Say Move Not a Surprise

Demand for Saudi Aramco Bonds Sails Past the Goal

Trump Threatens New EU Tariffs on Helicopters, Motorcycles, Cheese and Wine

The EU and China Rescue a Plan to Present United Front to Trump

Mnuchin Enters Hot Seat as Battle for Trump’s Tax Returns Escalates

How Wells Fargo’s Regulators and Employees Drove Out Its CEO

Big Wynn? Vegas giant makes $7.1 billion play for Australia’s Crown

Carlos Ghosn Accuses Nissan Officials of Mismanagement

Roundup, the World’s Best-Selling Weedkiller, Faces a Legal Reckoning

A Foolish Take: Uber and Lyft’s Ridesharing Duopoly

Hedge Fund Billionaire Ray Dalio Says the Crisis in Capitalism Is a ‘National Emergency’

Lawrence Hamtil: No Free Lunch Over the Last Ten Years

JC Parets: Is Earth Breaking Out?

Joshua Brown: Seize the Mills!, How a Financial Advisor Uses Technicals & Is Economic Inequality a “National Emergency”?

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Eddy on Bloomberg
Posted by Eddy Elfenbein on April 8th, 2019 at 9:29 pm

I was invited on Bloomberg’s market-wrap show this afternoon. I don’t think there’s a video clip, but I’ll look some more.

Here are the notes I wrote beforehand. Whenever I’m on TV, I try to have a list of things I want to say.

The dividend story has been a quiet but important one. Yes, dividends are boring they’ve been working lately.

Go back to the January 2018 peak, what’s the best performing sector? Not tech though it’s close. REIT and Utes have both done better even without adjusting for dividends. They’re both up about 13% while the S&P 500 is mostly flat. Interestingly, the S&P 500 High Beta Index is still below its January 2018 peak.

Some of this is certainly due to change of stance from the Fed. Powell’s “long way from neutral comment” was only in October (it seems like it was forever ago). Since November, the two-year yield is down 60 basis points. The three-year is down 75 basis points. The futures market currently sees a decent chance of a rate cut by the end of the year. I’m not so convinced, but if it’s correct, that makes dividend- paying stocks more attractive.

Last year, dividends for the S&P 500 were up 10% while the index fell 6.24%.

For Q1, dividends were up 9.3%. We’ll probably an increase of 8% to 10% this year. In index adjust numbers, that’s about $58 to $59. That’s almost exactly a 2% dividend yield. Except for the financial crisis, the S&P 500 has (mostly) tracked a 2% dividend yield for the last 15 years.

Even some blue chip stocks have some nice yields. Coke is about 3.5%. I doubt the dividend is in danger; they’ve raised it every year since JFK. Raytheon, a stock I own in my ETF, yields about 2%. They raised their dividend for the last 14 years.

Morning News: April 8, 2019
Posted by Eddy Elfenbein on April 8th, 2019 at 7:05 am

Norway Is Walking Away From Billions of Barrels of Oil

What the Rest of the World Can Learn From the Australian Economic Miracle

Carlos Ghosn Casts a Dark Shadow Over Corporate Japan

Aramco Debt Demand Reaches $30 Billion in Deal Pitched by JPMorgan CEO

Blamed for Climate Change, Oil Companies Invest in Carbon Removal

Dalio Says Capitalism’s Income Inequality Is National Emergency

Pinterest Set to Price I.P.O. Below Last Private Valuation

Boeing’s 737 Production Cut Hits Its Shares and Those of Suppliers

SoftBank-Backed Grab Seeks Another $2 Billion Funding in Expansion Drive

Sweet Seats and Candy Canes: Inside Fiat Chrysler’s Toledo Turnaround

Tesla Shares Gain After Multi-Million Dollar Emissions Deal with Fiat Chrysler

Amazon Wants You to Use Alexa to Track Health Care

Nick Maggiulli: Just One More

Michael Batnick: The Well Being of U.S. Households & These Are The Goods

Jeff Miller: Weighing the Week Ahead: Are We Near the End of the Economic Cycle?

Be sure to follow me on Twitter.

Understanding Trading Rules
Posted by Eddy Elfenbein on April 6th, 2019 at 12:45 pm

From Boris Schlossberg:

Now lest you think that these principles matter only to us lowly system traders and don’t apply to stock pickers, allow me to tell you about an exchange I had with the great Eddy Elfenbein this year. Eddy runs a great newsletter called Crossing Wall Street and you probably have seen him many times on CNBC’s Trading Nation. He is truly a great stock picker and his newsletter has beaten the S&P many years running. One time Eddy tweeted out about LUV (Southwest Airlines)

Here's a long-term chart of Southwest. Note the log y-axis to see how amazing the stock has been. Up 26,600% since 1980. RIP Herb Kelleher. pic.twitter.com/eCPL8L6Iyz

— Eddy Elfenbein (@EddyElfenbein) January 4, 2019

I took look at that chart more closely and realized something and responded back to him,

And yet Eddie it lost 75% of value between 01-10 – that required real belief to hold on

— Boris Schlossberg (@Fxflow) January 4, 2019

To his credit, Eddy fully acknowledged that point.

So the point is — if you trade you always have to Pay the Pip Piper — even if you don’t trade FX.

Check out the whole thing.

“…according to Eddy Elfenbein”
Posted by Eddy Elfenbein on April 5th, 2019 at 4:01 pm

From Bloomberg:

Despite the S&P 500 Index having soared 13.1 percent in the first three months of 2018, its best quarterly performance since 2009, those who are paid large sums to figure out where stocks go next are hesitant to get all bulled up. The median estimate of 24 strategists surveyed by Bloomberg is for the S&P 500 to gain only an additional 4 percent by the end of the year, rising to 2,950 from about 2,834 on Friday. That price target isn’t much different from the 2,913 median estimate back in early January. Count BlackRock as one firm that feels the easy money has been made in risk assets such as equities. “We see a repeat as unlikely and a narrower path for a grind higher,” Richard Turnhill, the firm’s global chief investment strategist, wrote in a research report. “The global economy must remain strong enough to quell recession fears but weak enough to keep policy makers on hold” to keep the rally in risk assets going. That’s a tough needle to thread. In reality, it’s been a relatively tough market for stocks the last 15 months. Consider that even with the big gains last quarter, at 2,867.24 on Tuesday the S&P 500 is still below its closing high of 2,872.87 in January 2018, let alone the record of 2,930.75 in September. And the only reason stocks are as high as they are is because of the tech sector, according to Eddy Elfenbein, a money manager who writes the Crossing Wall Street blog. “Many sectors and individual stocks never made new highs, and they’re still well below their January 2018 peak,” Elfenbein wrote. “For example, the S&P 500 Value Index never made a new high. It’s currently 6 percent below its peak from 14 months ago. The S&P 500 High Beta Index also never made a new high. The Consumer Staples sector is way down from its peak. The S&P 500 Industrials also never made a new high.”

March NFP = +196K Jobs
Posted by Eddy Elfenbein on April 5th, 2019 at 8:45 am

The March jobs report is out. The U.S. economy created 196,000 net new jobs last month. The unemployment rate held steady at 3.8%. In the last year, average hourly earnings are up 3.2%.

From the WSJ:

Economists surveyed by The Wall Street Journal had expected 175,000 new jobs in March and a 3.8% unemployment rate.

Revised figures show employers added 312,000 jobs in January and 33,000 jobs in February, a net upward revision of 14,000.

January’s hiring was well above expectations and February’s payroll growth was surprisingly weak. The March data relieves fears about hiring significantly downshifting to start the year.

(…)

U.S. employers have added jobs for 102 straight months, by far the longest stretch on record. Heading into the year, economists expected the hiring streak to continue, but for the pace to slow. A tighter labor market makes it more difficult for employers to find available workers. Meanwhile, the stimulative effects of tax cuts approved in late 2017 appear to be fading.

Through the first three months of the year, employers added an average of 180,000 jobs to payrolls each month. That’s a slowdown from the robust 223,000 jobs added each month, on average, last year, and roughly in line with the 179,000 averaged in 2017.

That’s a pretty good number and the market is reacting well.