Morning News: March 24, 2017
Posted by Eddy Elfenbein on March 24th, 2017 at 4:39 am

China Bets on Sensitive U.S. Start-Ups, Worrying the Pentagon

Venezuela’s Fuel Shortage Is Getting Worse

Oil Set for Weekly Drop on U.S. Supply Before OPEC Meet on Cuts

Scrapping TPP a Mistake as China Fills Void, Ex-USTR Froman Says

Planning for a Low-Tax, High-Deficit World

Senate Panel Presses SEC Nominee on Conflicts

The Senate Just Voted To Undo Landmark Rules Covering Your Internet Privacy

YouTube Advertiser Exodus Highlights Perils of Online Ads

Lessons From Richard Branson’s Goodbye Letter to Virgin America

Why Morgan Stanley Is So Bullish on Tesla and the Model 3

Micron’s Earnings Reveal Cloud and SSD Demand Have Joined Rising Prices as Growth Engines

Samsung Elec Rejects Calls For Holding Company Structure, For Now

Credit Bureau Experian Fined $3 Million Over Misleading Credit Scores

Jeff Miller: Stock Exchange: Trading in a Time of High, News-Driven Risk

Cullen Roche: The Biggest Myths in Investing, Part 9 – Risk Is Something We Can Quantify

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Morning News: March 23, 2017
Posted by Eddy Elfenbein on March 23rd, 2017 at 6:45 am

World’s Biggest Meat Producer Struggles With Bad Beef Allegations

North Korea Said to Be Target of Inquiry Over $81 Million Cyberheist

Big Oil Replaces Rigs With Wind Turbines

China Bets on Sensitive U.S. Start-Ups, Worrying the Pentagon

Virgin America Will Disappear Into Alaska Airlines in 2019

Nike Suffering Its Own Brand of March Madness

Tencent-led Funding Said to Value Video App at $3 Billion

Wells Fargo Banks on New Ad Campaign to Regain Customer Trust

Why Airbnb’s New China Push Could Actually Work

AT&T and Johnson and Johnson Pull Ads From YouTube

With Sears’ Future In Doubt, Vendors Begin Pulling Back

Where De Beers Hid Its $5 Billion Diamond Stash

Bebe Plans to Shut Its Stores and Focus on Web Sales

Jeff Carter: The Blockchain, Cryptocurrency and Trust

Joshua Brown: QOTD: The WSJ Unloads on “Fake President”

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Morning News: March 22, 2017
Posted by Eddy Elfenbein on March 22nd, 2017 at 7:08 am

Dublin Is Best EU City for Bankers Fleeing Brexit, Study Says

Chinese Supermarkets Pull Brazil Meat From Shelves As Food Safety Fears Grow

Devices Banned on Flights From 10 Countries Over ISIS Fears

Stocks Retreat, Havens Gain as Trump Trade Wobbles

What to Expect When You’re Expecting Acosta as Labor Secretary

Airbnb Adopts New Name, Doubles Investment to Woo China

Li Ka-Shing’s Main Companies to Increase Dividend Payments

Amazon Has a New Tactic to Fight Counterfeits

FedEx Earnings Are Worth a Second Look

Akzo Nobel, Maker of Dulux Paint, Rejects 2nd Offer From American Rival

Parent of Sears and Kmart Issues Warning as Its Losses Mount

Acushnet: Looks Like An Amazing Short At $18

A.I. Expert at Baidu, Andrew Ng, Resigns From Chinese Search Giant

Josh Brown: Dun Dun Dun…

Howard Lindzon: Pepsi Can Buy Russia and Make America Smoke Again

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The 1% Streak Comes to an End
Posted by Eddy Elfenbein on March 22nd, 2017 at 12:55 am

The S&P 500 fell over 1% today for the first time since October 11. The index amassed an impressive run of 110-straight days without a 1% loss. In fact, there were only two losses that exceeded 0.7%. This is the longest such streak since 1993.

Today, however, the index dropped 1.24%. From a larger context, that’s hardly a terrible loss. Not that long ago, losses like that happened all the time. But in our placid market of recent months, it’s an outlier.

The losses were not evenly spread out. The banks, for example, took it hard. Bank of America was down 5.8%. Morgan Stanley dropped 4.3%. Our own Signature Bank lost 4.2%. BAC usually has the highest volume of any stock but today it had its highest volume in four months. Interestingly, there was no news today specific to BAC.

Outside the banks, it really wasn’t that bad a day. The staples were down slightly and the utes were up. Whenever you see the financials and utes move in opposite directions like that, you know the market is debating short-term rates. Today was a strong move in favor of those thinking short-term rates will stay low for longer. I don’t know if they’re right, but they had control of the markets today.

In the futures market, the odds of a June rate hike declined from 58.3% to 54.0%.

I saw plenty of commentary saying the market fell for this or that reason (Trump, taxes, healthcare, North Korea). Call me skeptical. The healthcare stocks didn’t move that much.

RIP: David Rockefeller
Posted by Eddy Elfenbein on March 21st, 2017 at 5:36 pm

Here’s my piece in The Observer.

Here’s Where Rockefeller Was Different

We’ve lost something larger than a man.

David Rockefeller passed away Monday, aged 101. He was the last surviving grandchild of the great oil tycoon, John D. Rockefeller, Sr. Born into great wealth and opulence—he grew up in the largest private residence in New York City—Rockefeller also inherited his famous family’s sense of noblesse oblige. The New York Times estimates that, over the course of his life, he donated $900 million to charity.

Rockefeller was part of a vanishing and perhaps extinct breed of men—the Establishment Men. Serious and sober-minded gentlemen, well-born and from the East Coast elite, who left the Ivy League to serve their fellow men. They started foundations, served on boards, built skyscrapers, collected art, preserved nature and promoted high culture.

Yet it was all done with an air of calm reserve. Rockefeller was a gentleman who embodied the great Yankee virtues of thrift and hard work. Well into his nineties, he would work from his office in, naturally, Rockefeller Center, the complex built by his father during the Depression.

David Rockefeller was also a visionary who refused to accept the staid conventions of banking. In the 1970s, as chairman of Chase Manhattan, Rockefeller led a bold strategy of international expansion. He traveled the world and became a de facto global ambassador for American-style capitalism. In 1973, he even managed to open a branch office in the Soviet Union.

Read the rest at The Observer…

Keep Your Eye on Real Rates
Posted by Eddy Elfenbein on March 21st, 2017 at 12:28 pm

From John Melloy at CNBC:

The bears believe that low interest rates have been the primary driver of this bull, allowing companies to borrow cheaply to buy back their own stock and making ballooning multiples acceptable on a relative basis. Now that the Fed is in an interest rate hiking cycle, with moves to shrink its balance sheet likely on the horizon, the bears believe the run fueled by cheap money is over.

But Eddy Elfenbein, manager of the AdvisorShares Focused Equity ETF, points out that real rates (interest rates minus inflation) are still low.

The “median Fed member sees the range for fed funds rates to be 2 percent to 2.25 percent by the end of 2018,” said Elfenbein citing the latest Fed “dot plot” data. “They also see inflation at 2 percent. That means real rates will remain negative (and next to negative) for nearly two more years.”

“That’s the strongest point in the bulls favor,” he said.

Morning News: March 21, 2017
Posted by Eddy Elfenbein on March 21st, 2017 at 7:09 am

French Presidential Debate Lifts Euro To Six-Week Highs

How the U.K. Beat Predictions of a Brexit Crunch So Far

The Fed Goes High

Rookie Currency Traders Are Causing Trouble at Crucial Moments

Fed’s Dudley Says Wells Fargo Shows Bank Culture Needs Improving

In Battle for Digital India, Vodafone Teams Up With Idea Cellular

Google Announces ‘Tougher’ Policies and Hiring Spree to Prevent Brand Ads Appearing Next to Extremist Content

Snap’s First Buy Rating Is Bizarre

Hyundai Motor Shares Rally on Restructuring Speculation

Wal-Mart Unveils ‘Store No. 8’ Tech Incubator in Silicon Valley

Albertsons Gazes Into the Future and Envisions Organic Bananas

David Rockefeller, Philanthropist and Head of Chase Manhattan, Dies at 101

Man Draws $4.3M IRS Penalty For Lending $100K To Struggling Business

Roger Nusbaum: Hawkishly Dovish?

Jeff Carter: The Big Data Blind Alley

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Twilight of Hedge Funds?
Posted by Eddy Elfenbein on March 20th, 2017 at 10:14 am

In the New York Post, Carleton English notes that more hedge funds shut down last year than in any year since 2008. Not only that but hedge fund openings dropped 25% to 729.

Might this represent the peak of the hedge fund industry? After all, there are more hedge funds than there are Taco Bells. I suspect the industry has reached a tipping point where investors are no longer willing to pay high fees for low returns.

As with most any field, it helps to be the biggest player. Outside those lucky few, it will be a tough road for marginal players.

Don’t feel too bad for hedge funds. They still run about $3 trillion.

HEICO Announces 5-for-4 Stock Split
Posted by Eddy Elfenbein on March 20th, 2017 at 9:05 am

They told us a split was coming and here it is. This morning, HEICO (HEI) announced a 5-for-4 stock split. This means that shareholders will get 25% more shares while the stock price will drop by 20%.

Considering the reinvestment of cash dividends, and the impact of prior stock splits and stock dividends, a $100,000 investment in HEICO shares in 1990 has become worth approximately $18.7 million today, representing a compound annual growth rate of 22%. Additionally, in December 2016, we increased our semi-annual cash dividend by 13%, which was paid on January 18, 2017 and was HEICO’s 77th consecutive semi-annual cash dividend since 1979.”

I’m not sure why companies do small stock splits like 5-for-4 or 3-for-2. I suppose it makes for a good press release. I’d rather see them only do 2-for-1 or 3-for-1 splits. Ideally, splits should be for stock over $100 per share.

This will be HEICO’s 15th stock split since 1995. The split is payable on April 18 to shareholders of record as of April 7. Cash will be paid in lieu of fractional shares.

Morning News: March 20, 2017
Posted by Eddy Elfenbein on March 20th, 2017 at 7:11 am

Oil Drops as U.S. Drilling Growth Threatens to Counter OPEC Cuts

Saudi King’s Asia Tour Trumpets Aramco’s Moves Downstream

First Skirmish of G-20 Sets Scene for Battle of Trade Ideas

G20 Ministers Give Mnuchin Space To Define Trump Trade Agenda

Choice of I.M.F. Critic Highlights Trump’s Reversal of Global Policy

Vodafone, Idea in $23 Billion Deal To Create New Indian Telecom Leader

IBM Launches Enterprise-Ready Blockchain Service

IBM’s Watson Is Tackling Healthcare With Artificial Intelligence

N.C.A.A. Tournament Ads Work Around Glaring Absence: Players

Two Executives to Leave Uber, Adding to Departures

Tesla Bankruptcy Chances Increased Exponentially With The Capital Raise

French Watchdog Clears GM’s Opel of Cheating On Diesel Emissions

Hedge Fund Titan’s Surefire Bet Turns Into a $4 Billion Loss

Josh Brown: What If He Blows It On Healthcare?

Howard Lindzon: Weed Prices Up and Apple Prices Down

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