Morning News: September 1, 2017
Posted by Eddy Elfenbein on September 1st, 2017 at 7:05 am

Greek Economy Expands for Second Straight Quarter

U.K. Manufacturing Unexpectedly Accelerates to Four-Month High

Mnuchin Says Trump Administration, Congress to Release Tax Plan Details in Coming Weeks

Spaghetti-Like Pipeline System Falls Short as Gulf Supplies Slow

Uber Needs a Tim Cook. Can Its New CEO Deliver?

Wells Fargo’s Testimony Left Some Feeling Shortchanged

Amazon Puts Bond Traders on Edge in Once-Quiet Corner of Market

Campbell Plunges as Bleak Outlook Follows Blow From Buffett

Check Out This $1 Million Bet Warren Buffett Looks About to Win

Just Smile: In KFC China Store, Diners Have New Way To Pay

Car Makers Offer Scrappage Deals For New Customers

Why the Dismissed Uber ‘Hell’ Program Lawsuit Could Come Back

Michael Batnick: Today in Market History, The First Index Fund

Howard Lindzon: Mein Volatility…Is Germany in Trouble? and Should You Care?

Joshua Brown: An Amazing Lesson From Warren Buffett On His Cake Day

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Morning News: August 31, 2017
Posted by Eddy Elfenbein on August 31st, 2017 at 7:05 am

U.S. Economy Grew 3% in 2nd Quarter, Fastest Pace in 2 Years

Rules Relax, Rates Rise and Some New Banks Start Up in the U.S.

Trump’s Tax-Cut Bid Hits New Obstacle: Hurricane Harvey’s Costs

Love of Coastal Living Is Draining U.S. Disaster Funds

Colonial Pipeline to Shut U.S. Northeast Fuel Lines Due to Harvey

Uber’s New CEO Plans To Take The Company Public in 18-36 Months

Expedia Names Okerstrom CEO as Khosrowshahi Quits for Uber

The Man Who Sold His Supermarket to Whole Foods Talks About The Future Of Grocery Stores

Google Critic Ousted From Think Tank Funded by the Tech Giant

Toshiba Should Just Keep The Chip Unit

Buffett Faces Shareholder, ISS Resistance to Home Capital Deal

The Smartphone’s Future: It’s All About The Camera

Roger Nusbaum: Lower Returns For Longer?

Jeff Miller: A Few Questions For Dr. George Friedman

Cullen Roche: Three Things I Think I Think – Disaster Edition

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Warren Buffett On Hurricane Harvey, Etc.
Posted by Eddy Elfenbein on August 30th, 2017 at 3:55 pm

Today is Warren Buffett’s 87th birthday. Here he was on CNBC today.

Q2 GDP Revised to 3.0%
Posted by Eddy Elfenbein on August 30th, 2017 at 11:33 am

This morning, the government revised their Q2 GDP report to growth of 3.0%. The initial report was for 2.6%. As it turns out, last quarter was the best quarter for GDP growth of the last nine quarters.

It’s interesting that last quarter came in at 3% because that used to be the average. But since the financial crisis, 3% is pretty good. Of the last ten years, or 40 quarters, Q2 2017 was the ninth best quarter for GDP. But in the ten years prior to that, last quarter would have been 23rd.

Morning News: August 30, 2017
Posted by Eddy Elfenbein on August 30th, 2017 at 7:03 am

Expedia Chief Dara Khosrowshahi Accepts Job as Uber’s New CEO

Uber Announces Plan To Quit Tracking Riders After Drop-Off

Fox News Pulled Off The Air In Britain

Lean Inventory Drives Home-Price Gain in 20 U.S. Cities

No, Sept. 1 Isn’t Deadline for Hurricane-Damage Claims Under New Texas Law

Gasoline Hits 2-Year High as Harvey Shuts Biggest U.S. Refinery

87 Reasons We Love Warren Buffett

When The Crypto Bubble Pops, Remember the Day Burger King Launched WhopperCoin

Billion-Dollar Kik Taps $125 Million Token Offering To Energize User Base

`Cortana, Open Alexa,’ Amazon Says. And Microsoft Agrees.

Bain-Led Consortium in Last-Minute $18 Billion Bid for Toshiba Chip Unit

Carl Icahn Unloads Unfinished Las Vegas Casino For $600 Million–More Than Four Times What He Paid

Howard Lindzon: Premium Mediocre

Ben Carlson: Decisions, Decisions

Jeff Carter: The Investor Can’t Execute

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Hilliard Lyons on Smucker
Posted by Eddy Elfenbein on August 29th, 2017 at 2:36 pm

From Barron’s, here’s Hilliard Lyons on Smucker (SJM):

Our two-year price target on Smucker is lowered by $10 to $130 per share.

Smucker (ticker: SJM) shares are trading at 13.8 times our fiscal 2018 earnings-per-share estimate (excluding amortization and nonrecurring items). This is below an 18.5 times figure one year ago and a 10-year average forward multiple of 16.4 times. Our outlook assumes negligible EPS growth this year, improving to upper single-digit growth in subsequent years. We assume some valuation expansion from the current level.

We rate Smucker shares at Long-term Buy. We consider the company a high achiever, with notable histories of both organic and external growth. Given some expected near-term earnings pressure, but a more favorable outlook over the next few years, we believe our Long-term Buy rating is most appropriate. Our new two-year price target of $130 is based on a slightly lower future EPS assumption. We still assume negligible EPS growth in fiscal 2018 and mid- to upper-single-digit growth in fiscal 2019 and fiscal 2020. Our target is based on a price/earnings multiple of 14.3 times applied to a fiscal 2020 EPS estimate of $9.10; both of these figures are below our previous assumptions. The assumed 14.3 times multiple is above the current depressed multiple of 13.8 times, based on our fiscal 2018 EPS estimate, but is still well below the historical average.

Morning News: August 29, 2017
Posted by Eddy Elfenbein on August 29th, 2017 at 7:06 am

Draghi’s Jackson Hole Joy Eclipsed By Europe’s Exigent Banks

EU’s Juncker Slams U.K.’s Brexit Position Papers as Talks Resume

Denmark Decides to Make It ‘More Attractive to Work’

Offshore Wind Giant Waves Oil Industry Goodbye

Two Bankers Are Selling Trump’s Tax Plan. Is Congress Buying?

Uber’s C.E.O. Pick, Dara Khosrowshahi, Steps Into Brighter Spotlight

Tim Cook Reaps $89.2 Million Stock Award as Apple Outshines S&P

Gilead Overspends to Quiet Deal Clamor and Gilead Did Not Pay Too Much For Kite

German Students Hit 201 MPH in SpaceX Hyperloop Contest

Ford and Domino’s to Test Appetite for Driverless Pizza

Freeport-McMoRan to Sell 51% Stake in Grasberg, Wins Permit Extension

Renault-Nissan Expands Electric Push in China With Dongfeng Pact

Joshua Brown: You Know Nothing, Jon Snow

Michael Batnick: I’m Buying Gold

Roger Nusbaum: Unlucky 7’s

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Standing up to Amazon
Posted by Eddy Elfenbein on August 28th, 2017 at 3:02 pm

Reuters Breakingviews talks about retailers that can withstand the Amazon juggernaut. Ross Stores gets a mention.

The Amazon vortex won’t suck in everyone. That’s the verdict of investors in the retail sector.

Among potential competitors to the e-commerce juggernaut founded by Jeff Bezos, some – including Ross Stores, Home Depot and AutoZone – may have the wherewithal to withstand Amazon. The market is conferring on them valuations commensurate with, or better than, the one accorded to Amazon.

Amazon is already wreaking damage on the shopping landscape. And that will intensify with the completion of its $13.4 billion purchase of Whole Foods this week. Amazon pledged to lower prices and put an end to its reputation as “Whole Paycheck,” crushing shares in competing grocers last week.

(…)

Even in apparel, there are bright spots. At 1.4 times projected 2020 sales, Ross Stores, which sells reasonably priced clothing through more than 1,500 outlets, fetches an enterprise valuation close to Amazon’s. TJX Companies, operator of TJ Maxx and Marshalls, lingers at 1.1 times sales. That’s below Amazon but well above peers like Macy’s and Kohl’s. Bargain hunting may offer some respite from online price choppers.

Once he is done crushing the grocery business, Mr. Bezos may seriously set Amazon’s sights on car parts, cheap clothes and home-improvement accessories. For now, though, the market is betting on a few pockets of calm.

The Harvey Effect
Posted by Eddy Elfenbein on August 28th, 2017 at 12:28 pm

I’m always hesitant to write about the effects of a disaster, natural or manmade, on the financial markets. While it seems improper, we’re in the business of investing, and what these devastated areas often need is more investment.

Obviously, Harvey has wrecked much of the Houston area and I hope people there are managing the best they can. We often forget how small we are, even in our largest cities, compared to the power of nature.

Fortunately, the overall market is holding up well. As I write this, the broad market indexes are mostly unchanged. Some home improvement stocks like Lowe’s and Home Depot had decent opens this morning. Many insurance stocks were among the biggest losers today. Still, those moves weren’t that bad (about 2% to 4%). Travelers, which is a Dow component, is currently down about 2.8%.

On our Buy List, shares of AFLAC (AFL) are actually up a little. If you remember, they handled the Fukushima disaster easily. Continental Building (CBPX) is up 4.5% today.

Several oil refineries have been shut down so there’s no place for the oil to go besides storage. Crude oil futures are currently down about 3.3% while the “crack spread” has widened to a two-year high. That’s the difference between crude and its refined products.

Morning News: August 28, 2017
Posted by Eddy Elfenbein on August 28th, 2017 at 7:05 am

Central Bankers Shun Policy Clues as Trade Pervades Jackson Hole

China Is Creating the World’s Largest Power Company/a>

What Markets Think About the Looming Debt Ceiling Showdown

Gasoline Soars and Dollar Dented as Tropical Storm Harvey Rages

Harvey’s Cost Reaches Catastrophe as Modelers See Many Uninsured

Meet Uber’s New Chief

GE Shifts Strategy, Financial Targets for Digital Business After Missteps

Wanda Drops on Reports Wang Jianlin Stopped at Airport

CBS to Buy Troubled Australian Broadcaster Ten Network

Danone Sends 5,000 Cows to Siberia in Quest for Cheaper Milk

Western Digital Group Finalizing $17 Billion Deal for Toshiba Chip Unit

Bitcoin Investors, Beware: The IRS Is Coming for Your Vast Riches

Samsung’s Size Could Make It Tough To Keep Its Leader in Prison

Howard Lindzon: Uber the IPO

Jeff Miller: What Can be Done to Create More Jobs at Better Pay?

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