Morning News: April 8, 2016
Posted by Eddy Elfenbein on April 8th, 2016 at 7:01 am

U.S. Says China Internet Censorship a Burden for Businesses

Rising U.S. Labor Force Belies Republican Criticism of Obama

A Treasury Secretary at the Center of Obama’s Most Pressing Policies

Fed’s Yellen Joins With Predecessors to Calm Recession Fears

Mortgage Rates Plummet to Rates Not Seen in More Than a Year

Beware Collateral Damage Of New Tax Inversion Rules

Why Judge Removed MetLife’s ‘Too Big to Fail’ Label

Verizon Plans Bid to Buy Yahoo’s Web Business, Sources Say

NXP Said to Consider Sale of $2 Billion Standard Chips Business

Dominos, Please Stop Making Pizza So Easy to Order

Who’s Afraid Of Amazon’s Apparel Push? Not H&M, Whose Own Expansion Plans Will Be More Disruptive

Boeing Gets $1.5 Billion Surprise With New 747 Jumbo Jet Orders

Blackstone to Shut Mutual Fund After Fidelity Pulls Out

Jeff Carter: The Government is After Your Retirement

Roger Nusbaum: A Blogger Looks at 50

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BBBY’s 2016 Outlook
Posted by Eddy Elfenbein on April 7th, 2016 at 10:56 am

On the conference call, Bed Bath & Beyond (BBBY) gave its outlook for this year:

In addition to our newly authorized dividend program, we will continue to repurchase shares under our current $2.5 billion authorization. As a reminder, share repurchases may be influenced by several factors, including business and market conditions.

As Steve said earlier, our earnings per diluted share have been in the $4.50 to just over $5.00 range since we entered a heavy investment phase several years ago, and we believe we can again achieve earnings per diluted share at the high end of this range this year and, in the event our comp is higher than the 1% to 2% range we are modeling, exceed it.

The stock is having a good morning.

Morning News: April 7, 2016
Posted by Eddy Elfenbein on April 7th, 2016 at 7:03 am

Yen Trend Is Your Friend Until The BOJ Will End

Yuan Advances as PBOC’s Reserves Signal Capital Outflows Eased

Helicopter Money Not On The Table, Says ECB Economist

German Economy, Once Europe’s Leader, Now Looks Like Laggard

The ‘Panama Papers’ Expose the Secret World of the 1%

Austrian Bank CEO Resigns Over Offshore Leaks

ZTE Plunges as Continuing U.S. Investigation Sparks Uncertainties

U.S. Plans to Require Banks to Identify Owners of Shell Companies

Fed’s Cautious Approach on April Rate Hike Raises Stakes for June

The $15 Minimum Wage Will Kill Jobs. Should You Care?

Mega-Deal Collapse a Q2 Wake-up For Merger-Arb Hedge Funds

McDonald’s Chairman Andrew J. McKenna to Retire

Craft Brew Alliance Or Kona And Friends?

Josh Brown: Why Bull Markets Make Everyone Miserable

Cullen Roche: Three Things I Think I Think

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Bed Bath & Beyond Earns $1.85 per Share
Posted by Eddy Elfenbein on April 6th, 2016 at 4:30 pm

Bed Bath & Beyond (BBBY) just reported fiscal Q4 adjusted earnings of $1.85 per share (officially $1.91 but that included a six-cent benefit). That beat Wall Street’s estimate by four cents per share. Earlier, BBBY said they saw Q4 earnings ranging between $1.72 and $1.86 per share.

Quarterly net sales rose 2.4% to $3.4 billion. In constant currency, that’s an increase of 2.8%. Same-store sales rose by 1.7% which was 2.1% in constant currency.

For the year, Bed Bath made $5.04 per share in adjusted earnings. That’s down a tad from the $5.07 per share they made last year.

“We are pleased to have completed another successful year,” said Steven H. Temares, Chief Executive Officer and Member of the Board of Directors of Bed Bath & Beyond Inc. “Our fiscal 2015 financial performance reflects the benefit of the significant investments in our business, steady progress on our strategic initiatives, and the return of more than $1.1 billion to our shareholders through share repurchase.”

Temares added, “We reported fiscal 2015 net earnings per diluted share of $5.10 including a $.06 net benefit for certain non-recurring items. Excluding this net benefit, we were at $5.04, which marks the fourth year in a row that we have been in this four-and-a-half to just over five dollar range since we entered a heavy investment phase several years ago, and we believe we can again achieve earnings per share at the high end of this range this year and, in the event our comp is higher than the 1% to 2% range we’re modeling, exceed it.”

But here’s the big news. They’ve initiated a dividend. Just 12.5 cents per share to start.

Directors has authorized today a quarterly dividend program, and declared an initial quarterly dividend of $.125 per share, to be paid on July 19, 2016 to shareholders of record as of June 17, 2016.

The stock is up 4.5% after hours.

Here are some quarterly financial stats going back a few years.

The Fed’s Minutes
Posted by Eddy Elfenbein on April 6th, 2016 at 2:22 pm

The Federal Reserve just released the minutes from their meeting three weeks ago. The Fed passed on raising interest rates, but is considering it soon.

Here’s Jon Hilsenrath at the WSJ:

Federal Reserve officials were leaning against raising short-term interest rates at their April policy meeting when they last gathered to consider the outlook for monetary policy, minutes from the Fed’s March meeting show.

They expected headwinds to the economy to subside only slowly and didn’t want to appear to be in a rush to push U.S. interest rates higher.

“A number of participants judged that the headwinds restraining growth and holding down the neutral rate of interest were likely to subside only slowly,” the Fed said in the minutes. “In light of this expectation and their assessment of the risks to the economic outlook, several expressed the view that a cautious approach to raising rates would be prudent or noted their concern that raising the target range as soon as April would signal a sense of urgency they did not think appropriate.”

It wasn’t a unanimous view. Some officials said they might want to raise rates as soon as April “if the incoming economic data remained consistent with their expectations for moderate growth in output, further strengthening of the labor market, and inflation rising to 2% over the medium term.”

Here are the minutes.

The Fed minutes are an exercise in indefinite pronouns; some said this, many said that, a few believe x. In today’s Fed minutes, I counted the word “somewhat” 14 times.

The Fed meets again in three weeks. The futures market thinks there’s a 5% chance of a rate hike.

Morning News: April 6, 2016
Posted by Eddy Elfenbein on April 6th, 2016 at 7:03 am

IMF Warns of Rising ‘Systemic Risk’ From Insurers

Dollars and Shares Lick Wounds Ahead of Fed Minutes

April Could Be a Crucial Month for the Yen and Japanese Stocks

How Stricter Rules for Brokers Will Affect Retirement Savers

The Panama Papers’ Sprawling Web of Corruption

Pfizer Walks Away From Allergan Deal

Nokia to Cut as Much as 14% of Workforce After Alcatel Deal

Walmart Is the Latest Retailer to Make a Cage-Free Egg Vow

Elon Musk Tears A Page From Michael Dell’s Playbook

Glencore Agrees to Sell Minority Stake in Agriculture Business

EBay Will Sell Its Own Boxes to Kick Up Its Brand Awareness

Peugeot Citroën Plots Return to the U.S.

China’s Anbang Resumes Overseas Push with Deal to buy Allianz’s South Korean Business

Jeff Carter: Sales is Everything

Howard Lindzon: It’s the Returns Stupid…And Don’t Steal

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A Stock Picker’s Market
Posted by Eddy Elfenbein on April 5th, 2016 at 10:20 am

Some interesting numbers from Bloomberg:

An index maintained by Goldman Sachs Group Inc. of the 50 stocks in which mutual fund managers are the least invested has gained 5.3 percent this year, compared with a 3.1 percent decline in a gauge tracking the most popular ones. That’s near the biggest gap in three years, according to data compiled by Bloomberg.

Research from Bank of America Corp. research shows a starker picture: in the first quarter, just 19 percent of mutual funds beat the S&P 500, the fewest since at least 1998, strategists at the bank wrote in a note Monday. That happened even as one measure of variation among stock returns has increased this year.

A mathematical indicator known as dispersion, which measures how far individual equities swing relative to the market, has ticked up. According to data compiled by Bloomberg, the typical year-to-date stock return in the S&P 500 is 12 percentage points above or below the average, the most since 2012. In March, a measure of implied correlation among stocks plunged to the lowest level in a year.

Still, active managers are coming up short as their favorite trades lag behind. One strategy, chasing gains in the market’s biggest winners, backfired on mutual fund and hedge fund managers alike as the stocks in the S&P 500 that did the worst in 2015 added 8.2 percent in the first quarter of 2016, according to Bespoke Investment Group LLC.

(…)

Managers erred in avoiding utility and consumer staples companies, according to Goldman’s index data, which pulls from 489 mutual funds with $1.6 trillion under management. There wasn’t a single utility among managers’ top 50 overweight positions in the first quarter, when the group posted the quarter’s second-best return. At the same time, financials were the second-most represented industry. That group is down 5.3 percent in 2016, the worst return in the S&P 500.

The three most-favored stocks by managers invested in big companies were Alphabet Inc., Visa Inc. and JPMorgan Chase & Co, all of which have trailed the S&P 500.

The Surging Yen
Posted by Eddy Elfenbein on April 5th, 2016 at 10:14 am

After being weak for a long time, the Japanese yen is rallying. It just hit a 17-month high.

The yen is nearing 110. Earlier this year, AFLAC (AFL) said “Our objective is to produce stable operating earnings per diluted share of $6.17 to $6.41, assuming the average exchange rate in 2015 of 120.99.”

Very roughly speaking, for every one point the exchange rate goes below 121, that adds three cents per share to AFL’s annual EPS.

Morning News: April 5, 2016
Posted by Eddy Elfenbein on April 5th, 2016 at 7:05 am

IMF’s Lagarde Says Risks to Weak Global Recovery Are Increasing

Panama Papers Probes Opened, China Limits Access to News on Leaks

The President of Transparency International Chile Resigns After Being Named in the Panama Papers

With Repo Cut and MCLR, Money is Significantly Cheap Now: RBI Governor Raghuram Rajan

Don’t Cry for Argentina’s Investors

Gulf Spill Settlement Could Save BP Billions In Tax Breaks

New U.S. Inversion Rules Threaten Pfizer-Allergan Deal

Disney’s Not Alone in Successing Woes

Peugeot Tumbles as Expansion Spending Weighs on Profit Margins

Amazon Will Announce a New Kindle Next Week

Amazon Mulls Fintech Acquisitions as Valuations Fall

ValueAct Suit Reveals U.S.’s Dim View of Halliburton Deal

Siemens Said Among Parties Interested in Emerson Power Unit

Joshua Brown: Simple Vs. Complex

Roger Nusbaum: First Quarter Ends With a Meh!

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How Containerization Changed the World
Posted by Eddy Elfenbein on April 4th, 2016 at 10:28 pm

Here’s a fascinating video on containerization. It may be the most influential invention that you’ve never heard of.