• The One-Year Yield Creeps Higher
    Posted by on July 23rd, 2015 at 3:51 pm

    The yield on the one-year Treasury isn’t very high, about 0.34%. But that’s the highest it’s been in five years. Check out the one-year’s climb compared with the subdued six-month rate.

    In other words, the market sees interest rates going higher — not yet, but soon.

  • Earnings from Wabtec and Snap-on
    Posted by on July 23rd, 2015 at 10:42 am

    Today’s a big day for Buy List earnings; two before the bell and two more after.

    This morning, Wabtec (WAB) reported Q2 earnings of $1.04 per share. That was two cents better than estimates. That makes $2.03 per share for the first half. WAB reaffirmed guidance of “about $4.10” for the full-year.

    Raymond T. Betler, Wabtec’s president and chief executive officer, said: “We had another strong operating quarter, with record sales, earnings and margins, driven by the performance of our Freight Group. We continue to execute our growth strategies and internal improvement initiatives, and we’re optimistic about our future growth prospects, thanks to the diversity of our business model, continued global investment in transportation projects, and the power of our Wabtec Performance System.”

    Solid company and solid quarter. The shares are up close to 2% today.

    Snap-on (SNA) report Q2 earnings of $2.03 per share which was three cents better than estimates.

    “We’re encouraged by the ongoing progress reflected in our second quarter results, including 8.4% organic sales growth, a 17.7% operating margin before financial services, representing a 100 basis point improvement, and a 12.8% increase in diluted earnings per share,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “We believe these results once again validate Snap-on’s ability to build upon our unique combination of capabilities in serving serious professionals and to successfully navigate our runways for coherent growth and operating improvement in multiple industries across varied geographies. Finally, this continued progress is only possible as a result of the tremendous dedication, effort and skill across the Snap-on team. In that regard, I thank our franchisees and associates worldwide for their contributions, commitment and support.”

    SNA is up close to 1% today.

  • Jobless Claims Fall to 42-Year Low
    Posted by on July 23rd, 2015 at 10:20 am

    This morning’s jobless claims report came in at 255,000. That’s the lowest print since November 24, 1973.

    In honor of 1973:

  • Morning News: July 23, 2015
    Posted by on July 23rd, 2015 at 7:13 am

    Personalities Clashing Over How to Handle New Greek Bailout

    Distressed-Debt Market Upended Amid Deepening Commodities Rout

    Oil Warning: Crash Could Be Worst in More Than 45 Years

    Drug Companies Pushed From Far And Wide to Explain High Prices

    Tim Cook’s $181 Billion Headache: Apple’s Cash Held Overseas

    Ford Seeks to Shake Stigma of Detroit’s Most Generous Automaker

    Netmarble Takes Stake in SGN, Extending Asia’s Reach Into U.S. Mobile Games

    Comcast Results Buoyed by Strong Performance in Film Division

    GM Earnings More Than Double on U.S. Truck Demand, Shares Jump

    Dow Chemical Profit Beats Estimates as Margins Continue to Expand

    Financial Times Owner Pearson Nears Sale of Newspaper Group

    Ferrari Files for Share Listing on New York Stock Exchange

    6 Reasons Chipotle Bounced Back To A New All-Time High (With Carnitas)

    Roger Nusbaum: Jason Zweig Is Wrong About Gold

    Jeff Carter: The Transition

    Be sure to follow me on Twitter.

  • Qualcomm Earns 99 Cents per Share
    Posted by on July 22nd, 2015 at 4:31 pm

    It was an ugly quarter for Qualcomm (QCOM). Still, they made 99 cents per share which was four cents better than very low estimates. The company also announced major job cuts and the possibility of a break-up. It’s tough news but not unexpected.

    Qualcomm Corp. said Wednesday that it would consider changes to its corporate structure and cut $1.4 billion in spending, moving to appease investors amid problems that triggered a 47% drop in its fiscal third-quarter profit.

    The company said the review would include possibilities such as separating its businesses, capital return opportunities and other alternatives.

    Qualcomm has studied a breakup before and rejected the idea, but the possibility re-emerged after activist investor Jana Partners in April bought a major stake in the company.

    Qualcomm said it also has reached an agreement with Jana to add Mark McLaughlin, chief executive of Palo Alto Network, and Tony Vinciquerra, a senior adviser to TPG, to its board.

    For the current quarter, which is their fiscal Q4, QCOM sees earnings ranging between 75 and 95 cents per share. That comes to full-year earnings of $4.50 to $4.70 per share. Wall Street had been expecting $1.08 for the quarter and $4.79 for the year.

  • Morning News: July 22, 2015
    Posted by on July 22nd, 2015 at 7:13 am

    Greek Prime Minister Alexis Tsipras Remains Popular Despite Tough Bailout Deal

    Awkward Alliance Running Germany Exposed by Greek Crisis

    Russia Braces for Longest Recession in Decades With $50 Oil

    What’s Behind the Falling Prices of Oil, Gold and Copper

    Oil Futures Slip on Early U.S. Supply Data, as Rising Dollar Exerts Pressure

    Stocks Drop as Apple Drags Techs Lower, Commodities Resume Slide

    Apple Faces Old Question of What’s Next After Record Profit

    Yahoo Posts Loss, Despite Rise in Its Display Ad Business

    A $7 Billion Charge at Microsoft Leads to Its Largest Loss Ever

    Amazon’s Handyman Service Expands to New Cities

    Coke Profit Jumps, Helped By Price Increases

    Whirlpool Profit Lags on Weak Latin American Markets

    Chipotle: Still No Pork at 40 Percent of Restaurants

    Cullen Roche: Could We Still be In The Middle of the Business Cycle?

    Joshua Brown: Barry Ritholttz Interviews Howard Marks

    Be sure to follow me on Twitter.

  • Microsoft Earns 62 Cents per Share
    Posted by on July 21st, 2015 at 5:46 pm

    Technically, Microsoft (MSFT) posted a massive loss but that’s due to Nokia. Adjusting for that, MSFT earned 62 cents per share. That was six cents better than estimates.

    While revenue from Microsoft’s cloud-computing business rose on growth in the Azure and Office 365 programs, the gains were overshadowed by the writedown, an acknowledgment that the Nokia deal had lost almost all its value after a little more than a year. Chief Executive Officer Satya Nadella announced 7,800 job cuts and said he plans to narrow the focus of the mobile business to try to win customers in specific markets.

    “Phones continue to struggle and it was pretty much in line in the cloud initiatives,” said Dan Morgan, a senior portfolio manager at Synovus Securities Inc., which owns Microsoft shares. “They’re still progressing but people would like them to move faster.”

    The strength of the U.S. dollar hurt revenue and earnings in the recent quarter, Microsoft said. Excluding the effect of currency fluctuations, revenue would have declined 2 percent.

    For the year, the company made $2.63 per share. The stock is currently down 2.5% in the after-hours market. There’s nothing to worry about. This was a fine report.

  • Gold Drops to Five-Year Low
    Posted by on July 21st, 2015 at 1:11 pm

    The pain in the gold pits is something to behold. Every rally has failed. Gold recently broke down to a five-year low. Check out this chart:

    Four years ago, gold was over $1,900 per ounce. Monday’s low was $1,080.

  • Signature Banks Earns $1.77 per Share
    Posted by on July 21st, 2015 at 7:27 am

    Nice earnings beat from Signature Bank (SBNY) this morning. The bank earned $1.77 per share. That’s eight cents more than estimates.

    From briefing.com:

    Net interest margin for the 2015 second quarter was 3.27 percent versus 3.31 percent reported in the same period a year ago.

    On a linked quarter basis, net interest margin increased one basis point. Excluding loan prepayment penalties in both quarters, linked quarter core margin remained unchanged at 3.17 percent for both periods.

    Provision for Loan Losses – The Bank’s provision for loan losses for the second quarter of 2015 was $9.0 million, compared with $7.9 million for the 2015 first quarter and $7.6 million for the 2014 second quarter. The increase was largely due to an increase in net charge-offs.

    Net charge-offs for the 2015 second quarter were $2.6 million, or 0.05 percent of average loans on an annualized basis, versus $1.5 million, or 0.03 percent, for the 2015 first quarter and $718,000, or 0.02 percent, for the 2014 second quarter.

  • Qualcomm Is Considering a Breakup
    Posted by on July 21st, 2015 at 7:10 am

    Big news from Qualcomm (QCOM). The WSJ is reporting that the company is conducting a strategic review and is considering a breakup:

    Qualcomm Inc. is expected to conduct a sweeping strategic review that will look at the possibility of a breakup, among other options, after an activist investor pushed for change at the chip maker.

    Qualcomm, the world’s largest maker of chips used in mobile phones, may announce it is considering that and other options—including returning more cash to shareholders—when it reports fiscal third-quarter results Wednesday, according to people familiar with the matter. The company’s plans are in flux and there is no guarantee it will make any such announcement then, the people cautioned.

    The potential moves Qualcomm is expected to flag largely track suggestions the activist, Jana Partners LLC, has made since it revealed a stake of more than $2 billion in the San Diego company in April. Jana, an $11 billion New York hedge fund, has urged Qualcomm to explore a breakup, cut costs, repurchase shares faster and bring new blood to its board.

    (…)

    Any breakup of the company would likely separate Qualcomm’s chip-production business from its patent-licensing operation. The company, which has a market capitalization of $104 billion, gets about two-thirds of its roughly $26 billion in annual revenue from the chip business. But about two-thirds of its roughly $8 billion in yearly profit comes from royalties from the sale of smartphones that use technology it pioneered.

    (…)

    The company has forecast its per-share earnings for the quarter at 85 cents to $1, down from $1.44 a year earlier, and revenue between $5.4 billion and $6.2 billion, down from $6.8 billion—both below Wall Street expectations at the time.

    The move to explore a wide range of options will likely be viewed as another successful activist push for Jana. Just weeks ago, food company ConAgra Inc. agreed to exit its struggling private-brands business, a move the hedge fund had advocated.

    Qualcomm has seriously considered splitting into two for years, according to people familiar with the matter. About 15 years ago, the company announced a split and filed securities documents for the plan before scrapping it after signing several large licensing deals that eased concerns customers were growing wary of competing against both sides of Qualcomm.

    While defending its current corporate structure, Qualcomm executives have said they regularly evaluate whether it makes sense to keep the chip and patent-licensing businesses together.

    (…)

    Analysts at Arete Research Services LLP earlier this year said that a broken-up Qualcomm could enter the deal-making boom. The analysts estimated the chip-making business could have a market valuation of $74 billion, while the patent division could be valued at $87 billion and suggested an independent chip business could be attractive to suitors such as Intel.

    This is very good news. The shares are up 3% in the pre-market. However, if I were a cynical person, I’d say this is a pre-emptive strike against poor earnings news. Stay tuned!