• Fascinating Cerner Article
    Posted by on February 16th, 2017 at 12:08 pm

    Elise Reuter at the Kansas City Business Journal takes a look at Cerner (CERN). Here’s a sample:

    As Cerner Corp. grows its data footprint, it also bolsters its defenses. The North Kansas City-based health IT company manages about 200 petabytes of data — about 100 times the combined data of all U.S. academic research libraries.

    Of course, all of this data has to be stored somewhere secure. Cerner operates three data centers throughout the U.S., each with large server rooms. Two are in the Kansas City area, encapsulated within thick concrete walls and numerous security checkpoints

    A cabled fence capable of stopping a 15,000-pound truck surrounds the perimeter. Cars and employees must enter one at a time, allowing the company to keep a close watch on who comes and goes.

    Chief Information Officer Bill Graff described the server room itself as a “building in a building,” with 16 to 24 inches of concrete protecting it from tornadoes and other natural disasters.

    “Hopefully, it can withstand any sort of tornado that may pop up over the hill here,” he added.

    Within this concrete shell, a team of Cerner’s most tenured associates runs its 24/7 immediate response center. Next to posters for the Kansas City Royals, a host of monitors lets them track Cerner’s global network infrastructure.

  • Sherwin-Williams Raises Dividend by a Penny
    Posted by on February 16th, 2017 at 12:05 pm

    Yesterday, Sherwin-Williams (SHW) announced a one-penny per share dividend increase. The quarterly payout will rise from 84 to 85 cents per share.

    The Board of Directors of The Sherwin-Williams Company (SHW) today announced a regular quarterly dividend of $0.85 per common share payable on March 10, 2017, to shareholders of record on February 27, 2017. This increase follows 38 consecutive years of dividend increases.

    No, it’s not much of an increase, but 38 straight years ain’t bad.

  • Morning News: February 16, 2017
    Posted by on February 16th, 2017 at 7:09 am

    Europe’s Tech Sector Shrugs Off Regional Uncertainty

    E.U. Parliament Votes to Ratify Canada Trade Deal and Send Trump a Message

    Janet Yellen and House Republicans Clash Over Fed’s Performance

    Trump Tax Cuts Could Boost Profit $12 Billion at Big U.S. Banks

    Building a Cashless Economy While Even Officials Shun Banks

    Snap Said to Set IPO Valuation at as Much as $22.2 Billion

    Twitter’s CEO Says It’s Having an ‘Arab Spring’ Moment in the U.S.

    Apple Vowed To Revolutionize Television. An Inside Look at Why It Hasn’t

    Nestle’s New CEO Just Ditched Its Long-Running Sales Target

    Kinder Morgan: Warren Buffett Just Liquidated His Entire Position… What Gives?

    How German Grocer Lidl Plans to Conquer the U.S. Market

    Cisco Systems: Sometimes Investment Ideas Are Right Under Your Nose

    Verizon Close to Yahoo Deal, Price Cut of $250-350 Million

    Josh Brown: CPI Busts Out

    Jeff Miller: The Fastest Way to Improve Your Investment Results

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  • Economic News Today
    Posted by on February 15th, 2017 at 1:13 pm

    This morning, the Federal Reserve said that industrial production fell 0.3% last month. Also, the gain for December was revised to 0.6% from 0.8%. Most of the decline for January came pinned on lower output from utilities because of unseasonably warm weather.

    The best news this morning is that retail sales grew by a healthy 0.4% in January. This comes on top of a 1% rise in December. Actually, I would say the December figure could be the most impressive news item of the day. I don’t know how long it will last, but consumers have been in a good mood.

    The inflation report was a big surprise. Consumer prices rose 0.6% last month. Annualized, the increase was 6.81%. That’s the biggest increase in four years. It’s not all about gasoline prices, because the core rate was also elevated. For January, the core rate rose by 0.3%. Annualized, that comes to 3.76%. That’s the highest rate in 11 years.

  • Morning News: February 15, 2017
    Posted by on February 15th, 2017 at 7:06 am

    Adios America, Hola World? Mexico Pivots Away From U.S.

    Trump Admin’s Ted Malloch Has Ludicrous Idea That Greece Will Dump Euro For Dollar

    Dollar Is Now Caught In a Tug-of-War Between The Fed and Trump

    The Market May Be Guilty of Gambler’s Fallacy on Fed Hikes

    Trump Repeal of Obama SEC Regulation Signals More to Come

    Is the Chicken Industry Rigged?

    SoftBank of Japan Will Buy U.S. Private Equity Giant Fortress

    GM CEO Meets With Opel Managers as Germany Vows to Protect Jobs

    Dubai Plans a Taxi That Skips the Driver, and the Roads

    Trian Takes $3.5 Billion Stake in Procter & Gamble

    PepsiCo Profit Beats on Demand for Healthy Snacks, Drinks

    How Aetna Frittered Away $1.8 Billion on a Merger Destined to Fail

    Intel Drops Its Sponsorship of Science Fairs, Prompting an Identity Crisis

    Howard Lindzon: Happy Apple Day

    Roger Nusbaum: Political Volatility? Equities Still Don’t Care

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  • Express Scripts Earns $1.88 per Share
    Posted by on February 14th, 2017 at 6:30 pm

    After the bell on Tuesday, Express Scripts (ESRX) reported Q4 earnings of $1.88 per share. That beat estimates by one penny per share. For the year, Express earned $6.39 per share, which is a nice 16% increase over 2015. Earlier, Express had said that its full-year total would range between $6.36 and $6.42 per share. Overall, this was a solid year for the company.

    “We delivered another year of successful performance, not only through financial results, but by providing innovative solutions to help our patients and clients drive healthier outcomes and lower drug trends,” said Tim Wentworth, CEO and President. “In a year when the focus on drug pricing has never been greater, Express Scripts has held the 2016 growth rate in drug unit costs to 2.5% and lowered the patients’ share of total drug costs per prescription. The fundamentals of our business remain strong as our clinical focus and unwavering alignment with clients enables us to lead the industry in developing innovative value-based solutions that our country needs.”

    Quarterly revenue came in at $24.86 billion, which was below estimates. For Q1, Express said it expects earnings between $1.30 and $1.34 per share. The Street had been expecting $1.35 per share. For the whole year, they see EPS ranging between $6.82 and $7.02 per share. That means the stock is going for about 10 times this year’s earnings. The shares are down about 1% in the after-hours market.

  • Cerner Makes Back What It Lost
    Posted by on February 14th, 2017 at 2:29 pm

    Here’s a classic Wall Street move. Last week, Cerner (CERN) dropped after its earnings report which met expectations. Just wait a few days, and we see that it made back everything it lost.

    Investing is one of the few activities where paying too much attention is actively harmful.

  • Yellen’s Testimony for Today
    Posted by on February 14th, 2017 at 10:56 am

    Here’s a transcript of Janet Yellen’s testimony, and here’s today’s 55-page Monetary Policy Report.

    Chairman Crapo, Ranking Member Brown, and other members of the Committee, I am pleased to present the Federal Reserve’s semiannual Monetary Policy Report to the Congress. In my remarks today I will briefly discuss the current economic situation and outlook before turning to monetary policy.

    Current Economic Situation and Outlook

    Since my appearance before this Committee last June, the economy has continued to make progress toward our dual-mandate objectives of maximum employment and price stability. In the labor market, job gains averaged 190,000 per month over the second half of 2016, and the number of jobs rose an additional 227,000 in January. Those gains bring the total increase in employment since its trough in early 2010 to nearly 16 million. In addition, the unemployment rate, which stood at 4.8 percent in January, is more than 5 percentage points lower than where it stood at its peak in 2010 and is now in line with the median of the Federal Open Market Committee (FOMC) participants’ estimates of its longer-run normal level. A broader measure of labor underutilization, which includes those marginally attached to the labor force and people who are working part time but would like a full-time job, has also continued to improve over the past year. In addition, the pace of wage growth has picked up relative to its pace of a few years ago, a further indication that the job market is tightening. Importantly, improvements in the labor market in recent years have been widespread, with large declines in the unemployment rates for all major demographic groups, including African Americans and Hispanics. Even so, it is discouraging that jobless rates for those minorities remain significantly higher than the rate for the nation overall.

    Ongoing gains in the labor market have been accompanied by a further moderate expansion in economic activity. U.S. real gross domestic product is estimated to have risen 1.9 percent last year, the same as in 2015. Consumer spending has continued to rise at a healthy pace, supported by steady income gains, increases in the value of households’ financial assets and homes, favorable levels of consumer sentiment, and low interest rates. Last year’s sales of automobiles and light trucks were the highest annual total on record. In contrast, business investment was relatively soft for much of last year, though it posted some larger gains toward the end of the year in part reflecting an apparent end to the sharp declines in spending on drilling and mining structures; moreover, business sentiment has noticeably improved in the past few months. In addition, weak foreign growth and the appreciation of the dollar over the past two years have restrained manufacturing output. Meanwhile, housing construction has continued to trend up at only a modest pace in recent quarters. And, while the lean stock of homes for sale and ongoing labor market gains should provide some support to housing construction going forward, the recent increases in mortgage rates may impart some restraint.

    Inflation moved up over the past year, mainly because of the diminishing effects of the earlier declines in energy prices and import prices. Total consumer prices as measured by the personal consumption expenditures (PCE) index rose 1.6 percent in the 12 months ending in December, still below the FOMC’s 2 percent objective but up 1 percentage point from its pace in 2015. Core PCE inflation, which excludes the volatile energy and food prices, moved up to about 1-3/4 percent.

    My colleagues on the FOMC and I expect the economy to continue to expand at a moderate pace, with the job market strengthening somewhat further and inflation gradually rising to 2 percent. This judgment reflects our view that U.S. monetary policy remains accommodative, and that the pace of global economic activity should pick up over time, supported by accommodative monetary policies abroad. Of course, our inflation outlook also depends importantly on our assessment that longer-run inflation expectations will remain reasonably well anchored. It is reassuring that while market-based measures of inflation compensation remain low, they have risen from the very low levels they reached during the latter part of 2015 and first half of 2016. Meanwhile, most survey measures of longer-term inflation expectations have changed little, on balance, in recent months.

    As always, considerable uncertainty attends the economic outlook. Among the sources of uncertainty are possible changes in U.S. fiscal and other policies, the future path of productivity growth, and developments abroad.

    Monetary Policy

    Turning to monetary policy, the FOMC is committed to promoting maximum employment and price stability, as mandated by the Congress. Against the backdrop of headwinds weighing on the economy over the past year, including financial market stresses that emanated from developments abroad, the Committee maintained an unchanged target range for the federal funds rate for most of the year in order to support improvement in the labor market and an increase in inflation toward 2 percent. At its December meeting, the Committee raised the target range for the federal funds rate by 1/4 percentage point, to 1/2 to 3/4 percent. In doing so, the Committee recognized the considerable progress the economy had made toward the FOMC’s dual objectives. The Committee judged that even after this increase in the federal funds rate target, monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to 2 percent inflation.

    At its meeting that concluded early this month, the Committee left the target range for the federal funds rate unchanged but reiterated that it expects the evolution of the economy to warrant further gradual increases in the federal funds rate to achieve and maintain its employment and inflation objectives. As I noted on previous occasions, waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession. Incoming data suggest that labor market conditions continue to strengthen and inflation is moving up to 2 percent, consistent with the Committee’s expectations. At our upcoming meetings, the Committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.

    The Committee’s view that gradual increases in the federal funds rate will likely be appropriate reflects the expectation that the neutral federal funds rate–that is, the interest rate that is neither expansionary nor contractionary and that keeps the economy operating on an even keel–will rise somewhat over time. Current estimates of the neutral rate are well below pre-crisis levels–a phenomenon that may reflect slow productivity growth, subdued economic growth abroad, strong demand for safe longer-term assets, and other factors. The Committee anticipates that the depressing effect of these factors will diminish somewhat over time, raising the neutral funds rate, albeit to levels that are still low by historical standards.

    That said, the economic outlook is uncertain, and monetary policy is not on a preset course. FOMC participants will adjust their assessments of the appropriate path for the federal funds rate in response to changes to the economic outlook and associated risks as informed by incoming data. Also, changes in fiscal policy or other economic policies could potentially affect the economic outlook. Of course, it is too early to know what policy changes will be put in place or how their economic effects will unfold. While it is not my intention to opine on specific tax or spending proposals, I would point to the importance of improving the pace of longer-run economic growth and raising American living standards with policies aimed at improving productivity. I would also hope that fiscal policy changes will be consistent with putting U.S. fiscal accounts on a sustainable trajectory. In any event, it is important to remember that fiscal policy is only one of the many factors that can influence the economic outlook and the appropriate course of monetary policy. Overall, the FOMC’s monetary policy decisions will be directed to the attainment of its congressionally mandated objectives of maximum employment and price stability.

    Finally, the Committee has continued its policy of reinvesting proceeds from maturing Treasury securities and principal payments from agency debt and mortgage-backed securities. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, has helped maintain accommodative financial conditions.

    Thank you. I would be pleased to take your questions.

  • Morning News: February 14, 2017
    Posted by on February 14th, 2017 at 7:07 am

    Up, Up and Away: Passenger-Carrying Drone to Fly in Dubai

    U.K. Inflation Rate Rises Less Than Expected, Stays Below 2%

    Germany, Italy Grow Less Than Forecast Amid Global Uncertainties

    Mexico Could Soon Be Debating a Bill That Would Hit U.S. Farmers Hard

    Oil Slips Most in 3 Weeks as OPEC Cuts Face Rising U.S. Output

    The Shifting Case for a Fed Rate Increase in March

    Steven Mnuchin Is Confirmed as Treasury Secretary

    Profitable Pickups May Be in Cross Hairs of Trump Border Tax

    Toshiba’s Chaotic Earnings Raises Doubts Over Grip on Business

    Apple CEO Tim Cook Says Augmented Reality Will Be As Big As the iPhone

    Credit Suisse Plans to Cut Up to 6,500 Jobs This Year After Loss

    Rolls-Royce Mulls Future of Weaker Operations as Profit Down 49%

    The Woman Behind the Boycott That Is Pressuring Retailers to Dump the Trumps

    Josh Brown: The Riskalyze Report: Advisors Kick Individual Stocks

    Jeff Carter: Clearing is Centralized, and Concentrates Risk

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  • The S&P 500 Breaks 2,325
    Posted by on February 13th, 2017 at 10:09 am

    The stock market is up again today. The S&P 500 dipped its head above 2,323 this morning.

    Our Buy List is mostly doing well today. On Friday, shares of Cerner dropped more than 4.4% after its earnings report. The stock appears to have stabilized this morning.

    Janet Yellen will be testifying before Capitol Hill today as part of her semi-annual Humphrey-Hawkins testimony. She goes before the Senate on Tuesday, then the House on Wednesday. Long-time readers may remember when I saw Bernanke testify. (I got the seat right behind him.)

    I want to pass along a few links. I highlighted this before, but here’s Morningstar on Ingredion. Here’s Graham and Doddsville on Axalta (see pages 40-41).