Jump in the VIX
Posted by Eddy Elfenbein on June 29th, 2017 at 1:38 pm

Today looks to be one of the largest VIX increases on record.

Q1 GDP Revised to 1.4%
Posted by Eddy Elfenbein on June 29th, 2017 at 8:59 am

This morning, the government revised first-quarter real GDP growth up to 1.4%. Last month, they revised it from 0.7% to 1.2%. The economy didn’t do well during Q1, but at least it’s not quite as bad as initially thought.

Here’s a look at quarterly GDP growth going back a few years:

I’m struck by how rapidly GDP growth has decelerated, meaning the rate of growth has slowed down. Beginning at the turn of the century, the rate of growth has been markedly slower. The Atlanta Fed now sees GDP growth coming in at 2.9%.

Morning News: June 29, 2017
Posted by Eddy Elfenbein on June 29th, 2017 at 7:10 am

The Pound and the Euro Jump as Carney and Draghi Appear Hawkish

Robocalypse Now? Central Bankers Argue Whether Automation Will Kill Jobs

OPEC, Oil Prices and Disruptive Innovation

‘Hammer, Hammer, Hammer’: Canada Lobbies U.S. Before NAFTA Talks

Banks Unleash Surprisingly Big Payouts After Fed’s Stress Tests

Trump Attacks the ‘AmazonWashingtonPost’ Over Taxes

Amazon Is Bringing Back `Prime Day’ on July 11

Samsung Invests $1.9 Billion in U.S. Ahead of Trump-Moon Summit

Blue Apron Slashes Share Price For Its I.P.O.

Staples to Sell for $6.9 Billion, and Its New Owner Has an Uphill Battle

Buffett’s Berkshire on Verge of Becoming BofA’s Top Shareholder

China Is About to Bury Elon Musk in Batteries

Shkreli’s Lawyer Calls Him `Strange’ But Berates Fraud Case Against Him

Jeff Miller: What Are The Limits of Technical Analysis?

Josh Brown: Be Good…Just Not Too Good

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Atrion Update
Posted by Eddy Elfenbein on June 28th, 2017 at 3:23 pm

In January, I highlighted the stock of Atrion (ATRI). I said that it’s been a spectacular performer and that no one on Wall Street follows the stock.

They describe themselves as follows:

Atrion Corporation is a leading supplier of medical devices and components to niche markets in the health care and medical industry. Atrion’s proprietary products, ranging from cardiovascular and ophthalmology products to fluid delivery devices, are sold to end-users, distributors and other manufacturers worldwide. As a developer and manufacturer of a diverse range of products, Atrion stays on the forefront of technology and manufacturing with products that meet the needs of its targeted markets.

ATRI went from $4 per share in 1989 to $459 when I wrote about it in January.

Well…it’s up another 43% since then.

Morning News: June 28, 2017
Posted by Eddy Elfenbein on June 28th, 2017 at 7:01 am

Ransomware Cyberattack Goes Global

Maersk Shuts Down Some Systems to Help Contain Cyber Attack

Greece on Target to Return to Markets, Exit Bailout

Google Faces Years of EU Oversight on Top of Record Antitrust Fine

The June Curse Strikes Again

Toshiba Slaps A Billion Dollar Lawsuit On Western Digital

Nvidia’s Automotive Domino Effect

Sprint’s Desperate Ways

Philips to Buy Cardiac Firm Spectranetics for $1.7 Billion

Nestle, Under Pressure, Plans Buyback and Perhaps Acquisitions

Turmoil Continues at Pandora Media as Chief Executive Resigns

Madoff Settlements Reach $12 Billion With New Accords

Millennials Like to Eat Out

Cullen Roche: The Right Way to Use Economics as an Investing Tool

Howard Lindzon: Price, People, Patterns…Repeat!

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WaPo: Claire’s is ‘a complete train wreck’
Posted by Eddy Elfenbein on June 27th, 2017 at 11:56 am

At the Washington Post, Abha Bhattarai writes on the trouble at Claire’s. The retailer has reported 11 consecutive quarters of declining sales and racked up more than $2 billion in debt

So far this year, more than 300 retailers have filed for bankruptcy, including mall staples BCBG Max Azria, Rue21, Wet Seal and the Limited. Others, including Macy’s, Sears and Bebe have closed hundreds of stores.

“It’s mass destruction at American malls, and Claire’s is right in the middle of it,” said Howard Davidowitz, chairman of retail consulting and investment banking firm Davidowitz & Associates. “Claire’s, which at one time was the most profitable chain in the business, has become a complete train wreck.”

It’s been a confluence of bad news for the Chicago-based chain, which has long relied on groups of girls coming into its stores with their weekly allowances or birthday money. Fewer Americans are going to malls these days, and those who do increasingly are shopping at fast-fashion chains like H&M, Forever 21 and Zara, all of which have boosted their accessories sections in recent years.

And although Claire’s, which also owns the accessories brand Icing, has built up its website in recent years, analysts say online shopping is a tricky proposition for the company’s young shoppers, many of whom don’t have access to a credit card.

Buying Apple for Dividends
Posted by Eddy Elfenbein on June 27th, 2017 at 11:28 am

From Jeff Reeves at US News and World Report:

Eddy Elfenbein, portfolio manager of the AdvisorShares Focused Equity ETF (CWS), says Apple can be a dividend play and that income investors don’t have to look solely for “old granny stocks” that offer income but little in the way of growth.

AAPL is a great alternative to traditional stocks that income-oriented investors buy, Elfenbein says, because it pairs dividends and growth – which means modest dividends now could become significantly larger over time.

“Too many investors ignore dividends, but they’re very important” in any investment, he says.

Price in blue, dividends in black.

Bed Bath & Beyond Plunges
Posted by Eddy Elfenbein on June 27th, 2017 at 10:13 am

Last Friday, shares of Bed Bath & Beyond (BBBY) dropped 12%. They missed earnings by a mile and same-store-sales growth was terrible. This is difficult for me to see. I try not to let my feelings get in the way of investing, but it’s hard to see a company I liked for such a long time fail so badly.

Bed Bath & Beyond was on our Buy List every year until I decided to drop it from this year’s list. It certainly looks like I made the right call. In fact, I probably held on too long.

This is especially hard for me because BBBY used to exhibit all the signs of the stocks I like. It was an Eddy stock if there ever were one. They had strong cash flow, low debt, solid margins and a consistent operating history.

The stock was actually a big winner for us for a few years. Starting in 2012, BBBY began lagging the market. At first, I dismissed the slide as a short-term move. I gave BBBY the benefit of the doubt. Then I saw that the problems were severe and eventually let it go.

The lesson for investors, especially me, is that good stocks can turn into bad ones very quickly. Selling a position should be completely unemotional.

Morning News: June 27, 2017
Posted by Eddy Elfenbein on June 27th, 2017 at 7:12 am

China’s Premier, Li Keqiang, Praises Free Trade, in Contrast to Trump

Hollywood is Auditing China’s Box Office for the First Time

Indian Technology Workers Worry About a Job Threat: Technology

Google Fined $2.7 Billion in E.U. Antitrust Ruling

Draghi Says Stimulus Still Needed Even as Euro Area Reflates

No, Fed Didn’t Make a Mistake by Hiking Rates

The Top Five Tech Rivals Join Forces to Shape Policy—and Fight the Government

Buffett Wants a Big Deal. Lately, He’s Settled for Small Ones

With Crowding in U.S. Market, Activist Investors Look to Europe

California Is Listing a Key Ingredient in Monsanto’s Roundup Weed Killer as Cancer-Causing

Sprint Enters Into Exclusive Talks With Charter, Comcast On Wireless Deal

Effects of Takata Bankruptcy to Extend Far and Wide

World’s First ATM Machine Turns to Gold on 50th Birthday

Ben Carlson: Playing All The Hands You’re Dealt

Roger Nusbaum: Central Bank Hedge Funds?

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Checking In On The 2/10 Spread
Posted by Eddy Elfenbein on June 26th, 2017 at 12:43 pm

I like to take an occasional look at the spread between the two- and ten-year Treasuries. Over the last 35 years, negative 2/10 spreads have often preceded recessions. It’s not perfect, but the spread’s track record is better than a lot of economists’ track records.

Thanks to the Fed’s latest rate hike, the spread is down to about 80 points. It’s very close to a 10-year low.

We’re not in the danger zone just yet, but we’re getting closer. The futures market thinks the Fed will hold off doing anything for a few months. They currently see a 50-50 chance of another rate hike in December.