Morning News: October 20, 2016
Posted by Eddy Elfenbein on October 20th, 2016 at 7:16 am

China PPI To Stay Positive In Coming Months: Statistics Bureau

EU Court Adviser Backs Intel Appeal Over $1.17 Billion Fine

World Wine Production Slips Amid Rough Weather; Italy On Top

One of the Fed’s Most Influential Officials Expects a Fed Rate Hike This Year

How Silicon Valley Treats a Trump Backer: Peter Thiel

Catwalks and Katy Perry: Alibaba Starts Countdown to Singles’ Day

Vanguard Sways Financial Advisers to Bring $1 Trillion on Board

Nestle Is the Latest Food Manufacturer to Be Hit By a Global Slowdown

Glencore Sells Coal Rail Unit for $873 Million to Cut Debt

Roche Sales Lifted by Cancer Drugs

Nissan-Renault CEO Ghosn to Chair Troubled Mitsubishi Motors

Dunkin’ Brands Revenue Misses On Fewer Restaurant Openings

Tesla Will Make Its Cars Fully Self-Driving, But Not Turn the System On Yet

Josh Brown: RIAs Smile More Than Brokers

Jeff Miller: What is Your Confirmation Bias Quotient?

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Focus on the Long-Term
Posted by Eddy Elfenbein on October 19th, 2016 at 3:21 pm

I’m sure glad I didn’t own Colgate-Palmolive 29 years ago!

Wait. Maybe I’m not glad.

The Market Crash 29 Years On
Posted by Eddy Elfenbein on October 19th, 2016 at 9:39 am

"I'm predicting another 1987-style market!!!"
"So you mean the market will rise 14-fold in the next 29 years?"

— Eddy Elfenbein (@EddyElfenbein) October 12, 2016

I tweeted that out the other day. I was guessing at the 14-fold, but I was pretty close. I don’t have the daily return data for the S&P 500 going back that far, so I’m going to use the Vanguard S&P 500 Index Fund (VFINX) as a proxy (chart below).

If you had been unlucky enough to buy at the exact market peak in 1987, you’d be up 11.5 fold now. That’s an annualized gain of 8.8%.

In retrospect, the greatest one-day crash in Wall Street history looks to be a mere speck.

Morning News: October 19, 2016
Posted by Eddy Elfenbein on October 19th, 2016 at 7:07 am

Positive China Data Leaves Uneven Impact on Asian Markets

Saudi Arabia Says Many Nations Will Join OPEC Output Cuts

Social Security Taxes to Rise for Higher-Income Americans

Yahoo Looks to Bright Side After Breach

Starbucks Names Its First China CEO

Family Behind Korean Conglomerate Lotte is Indicted in Corruption Case

BHP Just Gave Its Most Positive Assessment in 5 Years

Wells Fargo Faces Angry Questions About Profiling Latinos

Yahoo Says Traffic Rose Despite Hacking That Could Alter Verizon Deal

Morgan Stanley Profit Jumps 61.7% on Trading Comeback

Netflix Is Taking Over Hollywood, and Hollywood Isn’t Thrilled

New Rules Would Require Airlines To Refund Baggage Fees For Delayed Luggage

This Tool Tells You if You’re Making What You’re Worth

Jeff Carter: The Backbone of Finance is Going To Change

Roger Nusbaum: Hang In There, The Election Will Be Over Soon

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Consumers Are Rebounding
Posted by Eddy Elfenbein on October 18th, 2016 at 12:45 pm

In US News and World Report, Simon Constable lists five reasons to bet on a consumer rebound: tepid spending (so far), improving consumer confidence, improving consumer confidence, warmer housing market and the wealth effect.

Warmer housing market. The other thing associated with rising consumer spending is home prices, says Eddy Elfenbein, author of the Crossing Wall Street blog.

That too has been doing well. The S&P CoreLogic Case-Shiller 20-City Composite Home Price index has been steadily rising since March 2012. It measures prices changes for residential real estate across major U.S. cities.

I’d also add the decent retail sales report from last week.

How a Blogger Built a Fund
Posted by Eddy Elfenbein on October 18th, 2016 at 11:38 am

I was on Canada’s BNN earlier today. (Monsieur Édouard appreance et Québec’s BNN plus tôt aujourd’hui.)

Here’s the video.

CPI +0.3% in September
Posted by Eddy Elfenbein on October 18th, 2016 at 8:49 am

This morning, the government said that inflation rose 0.3% last month. A lot of that was due to a rise in energy prices. If we look at the “core rate,” which excludes food and energy prices, then inflation rose by just 0.1%. This report is probably more ammo for the monetary hawks to raise rates in December.

Here’s the 12-month change in core CPI.

One correction: In the last CWS Market Review, I said that Signature Bank (SBNY) will report earnings today. That’s not right. They’ll be reporting on Thursday.

Morning News: October 18, 2016
Posted by Eddy Elfenbein on October 18th, 2016 at 7:13 am

U.K. Consumer Prices Rise At Fastest Annual Pace in Nearly Two Years

Calling Tehran: Vodafone Leaps Into Iran With Internet-Service Deal

Saudi Arabia: Give Us Your Money and Stop Asking About Oil

Americans Work 25% More Than Europeans, Study Finds

Johnson & Johnson Earnings Top Estimates on Solid Pharmaceutical Sales

Netflix Shares Just Soared 20%

Why Twitter Is Actually a Media Company

IBM Shares Fall Despite Higher-Than-Expected Sales

UnitedHealth Raises 2016 Forecast, Trumps 3Q Expectations

Burberry Falls Most in a Year as Asian Woes Erode Brexit Gain

Ryanair Cuts Forecast Over a Fall in the British Pound

Remy Cointreau Q2 Sales Accelerate With China, U.S.

Bagel-Coffee Mashups Give Glimpse at JAB’s Caffeine Strategy

Cullen Roche: How Do Indexers Do Better Than Average?

Howard Lindzon: The New Stocktwits Website and Homepage – The Front Page of Finance

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Avoid Stockpickers’ Favorites
Posted by Eddy Elfenbein on October 17th, 2016 at 11:53 am

Research shows that the stocks managers love the most don’t do terribly well.

S&P 500 stocks owned in outsize chunks by mutual fund managers have consistently trailed behind the performance of S&P 500 stocks that are least favored, according to research from Bank of America Merrill Lynch. The pattern has been true since 2008 and has become more pronounced over the past three years, as the pace of redemptions has accelerated, said Savita Subramanian, an equity and quant strategist at Bank of America Merrill Lynch.

“The neglected stocks win by default while the over-owned ones get hammered by outflows,” Ms. Subramanian said.

(…)

Performance of the 10 S&P 500 stocks that active managers own most of, relative to their weight in the index, had trailed the 10 stocks that are least owned by a full 13.4 percentage points in 2016, through September 26. In 2015 and 2014, active managers’ favorite stocks lagged the least-owned ones by 12.6 percentage points and 17.8 percentage points, respectively. The most heavily owned stocks by active managers also trailed the S&P 500 in 2015 and 2014 as least-owned stocks bested the broader market.

September Industrial Production Rose 0.1%
Posted by Eddy Elfenbein on October 17th, 2016 at 9:36 am

The Federal Reserve said that industrial production rose 0.1% last month. Wall Street had been expecting an increase of 0.2%.

Overall manufacturing output, which accounts for more than three-quarters of all industrial production, rose 0.2% last month. Total factory production has increased in three of the past four months, but was flat in September from a year earlier.

Mining production rose 0.4%, its fourth rise in the past five months. The segment, which includes oil drilling, had been battered by a sustained drop in commodity prices. The latest figures suggest the energy sector has stabilized. Still, overall mining output remains 9.4% below its level from a year earlier.

Utilities output was down 1% from the prior month.

IP fell from November 2014 to March 2016. The scale of the graph makes the decline seem greater than it truly was.