Morning News: September 29, 2016
Posted by Eddy Elfenbein on September 29th, 2016 at 7:04 am

Here’s What Analysts Are Saying About the OPEC Deal

German Bonds Fall First Time in 4 Days After OPEC Oil Output Cut

Fed, BOJ Add Shine to Risk-Parity Strategy

How Goldman Sachs Lost $1.2 Billion of Libya’s Money

Lawmakers Won’t Let Wells Fargo Forget Its Scandal Anytime Soon

Commerzbank to Slash Jobs, Scrap Dividend in Broad Revamp

Car Makers Rev Up Push Into Electric Vehicles

PepsiCo Boosts Earnings Forecast as Results Top ViewsTakata’s Tricky Protection Racket

Why the $600 EpiPen Costs $69 in Britain

Donald Trump’s Fortune Falls $800 Million To $3.7 Billion

Amazon Will Deliver Their Own Packages – Revolution At The Delivery Door

CBS and Viacom, Long Split, Will Be Told to Consider Reuinting

Roger Nusbaum: No, You Shouldn’t Invest Like Yale

Josh Brown: Secular or Cyclical?

Be sure to follow me on Twitter.

The Harvard Crimson Speaks
Posted by Eddy Elfenbein on September 28th, 2016 at 7:54 pm

This is from an editorial at the Harvard Crimson:

Harvard faces numerous pressing issues: a suboptimal social scene, growing competition from other universities for talent, and critical challenges to diversity and inclusion. Unfortunately, last week brought another, this time in the form of a renewed challenge to the endowment’s stable growth. Specifically, Harvard Management Company announced a $2 billion loss for fiscal year 2016.

Let’s not mince words: this is unacceptable.

No comment.

Durable Goods Flat for August
Posted by Eddy Elfenbein on September 28th, 2016 at 11:39 am

The manufacturing recession isn’t quite over. Today, the Commerce Department said that orders for durable goods in August were the same as in July. At least that was better than expectations. Wall Street had been expecting a drop of 1.5%.

Durable goods are a key component for the U.S. economy. The problem recently for durable goods has been an energy sector that’s been squeezed by lower oil prices.

Looking at the details, we see that orders excluding transportation fell by 0.4%.

One bright spot is that orders for non-military capital goods excluding aircraft rose by 0.6% last month. That category is a decent proxy for business spending.

Morning News: September 28, 2016
Posted by Eddy Elfenbein on September 28th, 2016 at 7:16 am

Deutsche Bank Concerns Push Credit-Swap Trades to Six-Month High

U.K. Faces Reckoning Over RBS Bailout

Shafik Says BOE Could Ease Before Hammond Outlines Brexit Plan

China’s Ambitious Plan to Make the Yuan the World’s Go-To Currency

U.S. Accuses Tech Firm Palantir of Bias Against Asian Engineers

Wells Fargo Claws Back Millions From CEO After Scandal

Wells Fargo Isn’t the Only Bank That Draws Cross-Selling Complaints

Shareholders Approve SABMiller Takeover by Anheuser-Busch InBev

Rio Olympics Gives Nike a Sales Boost

Uber Launches Global Assault on Takeaway Meals Market

Honda Driver Death in Malaysia Adds to Takata Air Bag Fatalities

It’s Paul Singer Versus Citigroup in High-Stakes Bankruptcy Feud

World Bank Picks Jim Yong Kim for Second Term as President

Defending Against Hackers Took a Back Seat at Yahoo, Insiders Say

Jeff Carter: Key Question On The Blockchain

Be sure to follow me on Twitter.

The Growth/Value Cycle
Posted by Eddy Elfenbein on September 27th, 2016 at 11:43 am

Every so often, I like to see where we are in the Growth/Value Cycle. Here’s a look at the S&P 500 Growth Index divided by the S&P 500 Value Index. As you can see, Growth has been leading Value for over nine years.

I expect Value to have its day, but I’m not about to declare a turning point. In fact, it may have already happened. Value has outperformed Value since January.

One issue for Value is that it’s been weighed down by many bank stocks. Despite their depressed valuations, banks have not done well as a group.

Consumer Humility Plunges
Posted by Eddy Elfenbein on September 27th, 2016 at 10:10 am

The Conference Board just reported that Consumer Confidence jumped up to its highest level since the recession.

The latest reading on consumer confidence from the Conference Board came in a 104.1 for September, up from the prior month’s 101.8.

Meanwhile, economists had forecast that the index dropped to 99.0 this month, according to the Bloomberg consensus.

“Consumers’ assessment of present-day conditions improved, primarily the result of a more positive view of the labor market,”said Lynn Franco, Director of Economic Indicators at The Conference Board.

“Looking ahead, consumers are more upbeat about the short-term employment outlook, but somewhat neutral about business conditions and income prospects. Overall, consumers continue to rate current conditions favorably and foresee moderate economic expansion in the months ahead.”

Earlier today, the Case-Shiller report said that home prices continue to rise. Taken together, these reports suggest to me that we’re still not near a recession.

FactSet Down 6% this Morning
Posted by Eddy Elfenbein on September 27th, 2016 at 9:53 am

A former Buy List stock, FactSet Research Systems (FDS), is down about 6% this morning after their latest earnings report missed expectations by one penny per share. For their fiscal Q4, FactSet earned $1.69 per share.

The results missed Wall Street expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was for earnings of $1.70 per share.

The financial data firm posted revenue of $287.3 million in the period, which also missed Street forecasts. Six analysts surveyed by Zacks expected $290.9 million.

For the year, the company reported profit of $338.8 million, or $8.19 per share. Revenue was reported as $1.13 billion.

For the current quarter ending in December, FactSet expects its per-share earnings to range from $1.68 to $1.72.

Even with the reduced price, FDS is still going for 22 times next year’s estimate.

Morning News: September 27, 2016
Posted by Eddy Elfenbein on September 27th, 2016 at 7:12 am

WTO Says Global Trade In Its Worst Year Since Financial Crisis

Saudis, Iran Dash Hopes for OPEC Oil Deal in Algeria

China Industrial Profits Rise Most in Three Years as Economy Shows Signs of Stabilizing

Russia Revises Ban on Imports of Egyptian Plant Products

Trump Slams Yellen’s Fed Again, This Time on a Much Bigger Stage

When Is A $160 Profit Just A $100 Profit? When You Include Taxes That You Don’t Pay

Deutsche Bank Is Too Big To Fail – Too Big To Fail Means It Will Not Fail

Wells Fargo Workers Claim Retaliation for Playing By The Rules

Facebook Ordered to Stop Collecting Data on WhatsApp Users in Germany

Drugmaker Pfizer Decides Not to Break Up Business

How Twitter Could Change Under the Umbrellas of Disney, Salesforce, or Google

American Express Can Stop Merchants From Steering Clients to Other Cards

Eight-Cent Eggs: Grocery Prices Are Plunging

Roger Nusbaum: What Did the BOJ Actually Do?

Josh Brown: Chart o’ the Day: A Dead Heat

Be sure to follow me on Twitter.

Earnings Look to Fall Again
Posted by Eddy Elfenbein on September 26th, 2016 at 9:19 am

The Q3 earnings seasons will start in a few days. Not too long ago, it looked like the S&P 500’s profit drought was set to end in Q3. That may be in doubt now. This could for the sixth quarter in a row of declining earnings for the S&P 500.

Many of the factors pressuring U.S. corporate earnings in recent quarters—including a stronger dollar and falling oil prices—have abated in 2016. The WSJ Dollar Index, which measures the U.S. dollar against a basket of 16 currencies, is down 4% this year, versus up 8.6% for all of last year, and the price of U.S.-traded crude oil has risen 20% in 2016, rebounding from its extreme lows.

Still, those moves haven’t been enough to project an end to the earnings recession.

The battered energy sector of the S&P 500 had the largest downward earnings revision for the third quarter. Exxon Mobil Corp., for instance, was expected to report 80 cents a share of earnings for the third quarter as of the end of June, but as of Friday that expectation had worsened to 66 cents a share.

Analysts are currently forecasting a 2.3% drop in earnings compared with one year ago. The Energy sector is expecting to drop by 66%. This would be Energy’s eighth drop in a row. If you were to exclude Energy, then earnings growth for the S&P 500 would have been positive for four of the last five quarters.

Morning News: September 26, 2016
Posted by Eddy Elfenbein on September 26th, 2016 at 7:13 am

Bank of Japan’s Kuroda Sees No Big Rise or Fall in Bond Buying For Now

UK CEOs Consider Pulling Up Stakes Because of Brexit

German Business Morale Shrugs Off Brexit to Hit 28-Month High

Turkish Lira, Markets Slump After Moody’s Cuts Rating to Junk Status

Protesters in Spain Jeer Ex-IMF Boss as Bank Card Trial Starts

Treasury Market’s Biggest Buyers Are Selling as Never Before

Germany Sees ‘No Grounds’ for Speculation Over Deutsche Bank Aid

The Banking Sales Culture Is Behind the Wells Fargo Scandal

Wenner to Sell 49% of Rolling Stone to Singapore’s BandLab

Chemtura Rises in Premarket on $2.5 Billion Buyout

Salesforce Weighs Twitter Bid to Spur Growth

Instant Lending Made This College Dropout a Billionaire

The Retiree With Six Incomes

Howard Lindzon: Salesforce and Twitter?

Jeff Miller: Will Election News Change the Course of Markets?

Be sure to follow me on Twitter.