Cerner Earns 59 Cents per Share
Posted by Eddy Elfenbein on November 1st, 2016 at 8:18 pm

Earnings season is coming to a close for us. After the closing bell, Cerner (CERN) reported Q3 earnings of 59 cents per share. That was one penny below Wall Street’s consensus. Previously, Cerner said it was expecting 59 to 61 cents per share.

“While Cerner’s third quarter results were slightly below our expectations, they were still solid and included the second highest level of bookings in our history,” said Zane Burke, Cerner President. “Our competitiveness remains strong and has been bolstered by over $2 billion of investments in research and development over the past four years. We believe these investments have strengthened our clinical, revenue cycle and population health solutions and position us for strong growth going forward.”

For Q4, Cerner expects 60 to 62 cents per share, and revenue between $1.225 billion and $1.300 billion. They also gave preliminary guidance for next year of $2.50 to $2.70 per share. Wall Street had been expecting $2.69 per share.

The stock was down 6% after hours.

October ISM = 51.9
Posted by Eddy Elfenbein on November 1st, 2016 at 11:05 am

The ISM number comes out on the first business day of each month. It usually is a pretty good read of the manufacturing sector.

For October, the ISM was 51.9. Any number above 50 means the factory sector of the economy is growing.

U.S. manufacturing met economist forecasts of 51.9 for the month of October, according to The Institute for Supply Management, an increase of 0.4 percentage point from the September reading.

The report said respondents had mostly positive comments and cited a “favorable economy and steady sales, with some exceptions.”

These numbers come as economic activity in the manufacturing sector expanded in October. The overall economy grew for the 89th consecutive month, according to the report.

This meshes with our overall theme — the economy is growing, but quite modestly.

Emerson Electric Raises Its Dividend
Posted by Eddy Elfenbein on November 1st, 2016 at 10:55 am

Emerson Electric (EMR) just announced a very small dividend increase. The payout will rise from 47.5 cents to 48 cents per share. That’s usually not a big deal, but this will be (I believe), the company’s 60th annual dividend increase in a row.

Here’s a chart of dividend increase (from Yahoo Finance) going back to 1972:

I think they announced the tiny increase just to keep the streak alive. Still, it’s an impressive achievement.

Morning News: November 1, 2016
Posted by Eddy Elfenbein on November 1st, 2016 at 7:07 am

Bets Are Off for Future RBA Rate Cuts, But Keep One Eye on China

Japanese Shares Edge Higher After BOJ Maintains Monetary Policy

Bank of England’s Mark Carney Extends Term to Stay On Through Brexit Talks

Is The Economy Growing Too Fast: Interest Rates And The Fed

Miami Trade Surplus Runs Counter to Trump’s View of U.S. Failure

BP Posts Sharp Rise in Profit as Cost Cuts Offset Weak Oil Prices

Shell’s Earnings Beat Exxon as Oil Majors Adapt to Low Prices

Why Electric Cars Excite the World’s Biggest Mining Company

Pfizer Quarterly Profit Falls 38%

Ford Reaches Tentative Deal With Union in Canada

Viacom Names Its Second Acting C.E.O. as Tumult Continues

Valeant Ex-CEO, Ex-CFO Are a Focus of U.S. Criminal Probe

Victims Seek Mercy for a Wall St. Scion Who Defrauded Them

Josh Brown: Watch What They Do, Not What They Say

Roger Nusbaum: Scandals Still Moving Markets

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Stock-Picking Strikes Back!
Posted by Eddy Elfenbein on October 31st, 2016 at 3:16 pm

I wanted to highlight a few bits from this Bloomberg piece. Correlations within the S&P 500 have fallen from very high levels. At the same time, active managers have rebounded relative to their benchmarks.

But while the benchmark gauge churns, stocks within it have gotten more lively. A measure of 30-day realized correlation among S&P 500 constituents has eased 34 percent since reaching a four-year high in October 2015, according to data compiled by Bloomberg.

Active managers have reaped benefits. According to Bank of America Corp., the proportion of large-cap funds beating their benchmarks reached 58 percent in the third quarter, compared with 18 percent in first six months. That marked the best period since the second quarter of 2015, and the second-best since the start of 2009.

Among growth funds, 71 percent exceeded returns on the Russell 1000 Growth Index, while 63 percent of value investors beat their benchmark. It was the most since 2013 for both groups.

(…)

Fund managers are currently holding 5.8 percent of their portfolios in cash, the most since the period after the Sept. 11, 2001, terrorist attacks, according to a survey conducted by Bank of America Corp. The level was matched in July after the U.K. voted to leave the European Union.

P/E Ratio of Healthcare Stocks
Posted by Eddy Elfenbein on October 31st, 2016 at 11:31 am

I thought this was a fascinating chart. It shows the P/E Ratio of Healthcare stocks (blue) compared with the P/E Ratio of the S&P 500 (red).

Personal Spending Rose 0.5% in September
Posted by Eddy Elfenbein on October 31st, 2016 at 11:19 am

This morning, the government reported that personal spending rose 0.5% in September. That’s a pretty good number. Personal income rose by 0.3%. Economists had been expecting increases of 0.4% for both.

Consumer spending accounts for about two-thirds of total output in the U.S. and household outlays have been the main driver of economic growth throughout most of the expansion. But Americans had appeared more cautious in recent months amid declining confidence in the economy.

In the third quarter of the year, personal-consumption expenditures rose at a 2.1% pace, down from 4.3% during the prior period, according to separate data released last week. The University of Michigan’s consumer sentiment index, meanwhile, matched a two-year low in October.

Here’s personal spending (PCE) going back a few years:

Morning News: October 31, 2016
Posted by Eddy Elfenbein on October 31st, 2016 at 6:25 am

World Shares Mostly Lower as FBI Probe Raises US Uncertainty

EU, Canada Finally Sign Groundbreaking Trade Deal

Bob Doll Says October’s Bond Rout Means U.S. Economy Improving

GE Nears Deal to Combine Oil-and-Gas Business With Baker Hughes

Legoland Becomes First Brick in Dubai’s Southern Expansion

Coke Ginger Designed To Tempt Health-Conscious Australians With New Infusion

Japan’s Largest Shipping Firms to Merge Container Operations

Honda Net Profit Jumps as Company Shows Signs of Rebound

Sony Cuts Forecast on Impairment for Sale of Battery Unit

No One Saw Tesla’s Solar Roof Coming

Qualcomm Appears To Have Overpaid For NXP

Chevron’s Financials Signal A Turning Point

Media’s Odd Couple: Proudly Freewheeling HBO and Buttoned-Up AT&T

Howard Lindzon: Twenty Minute VC Interview

Cullen Roche: Obama’s Great Economic Blunder

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The FBI News….
Posted by Eddy Elfenbein on October 28th, 2016 at 3:02 pm

You can always tell by looking at traders. The news of the FBI investigation broke at 1 pm here in the east.

Q3 GDP Grew by 2.9%
Posted by Eddy Elfenbein on October 28th, 2016 at 9:00 am

Today we got our first look at Q3 GDP. The government said the economy grew in real terms by 2.9% during the third three months of the year. That’s the best growth rate in two years.

Still, this has been a very weak recovery in historical terms.

Here’s a look at quarterly growth rates.