Morning News: July 16, 2015
Posted by Eddy Elfenbein on July 16th, 2015 at 7:15 am

ECB Keeps Rates on Hold as Draghi Prepares for Greece Questions

Greece Licks Wounds After Bailout Vote, ECB Move Expected

E.C.B. Weighs Whether to Throw Greek Banks a Lifeline

Puerto Rico Missed a $93.7 Million Bond Payment

Janet Yellen is Telling Investors to Wake Up and Get With The Program

Goldman Sachs Second-Quarter Profit Drops on Higher Legal Costs

Why You Should Bet That Amazon Will Double By 2018

Dominos U.S. Same-Store Sales Beat Estimates on Higher Demand

UnitedHealth Profit Beats on Higher Enrollments, Optum

Philip Morris Tops Street 2Q Forecasts

Intel Forecast Shows Server Demands Makes Up For PC Market Woes

E.U. Opens Antitrust Investigations Into Qualcomm

The Disastrous Loan Deal That Shows Wall Street Still Has a Wild West

Joshua Brown: Bailouts Don’t Fix Bullet Holes

A Greek Farce, Then Gloom

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Random Notes
Posted by Eddy Elfenbein on July 15th, 2015 at 1:22 pm

Here are a few scattered points I wanted to pass along today.

The industrial production report for June wasn’t bad. It was up 0.3%. Consensus was for +0.2%. The last few reports have been pretty weak. IP is still lower than where it was seven months ago.

The stock market is holding on to gains at the moment. This could be our fifth up day in a row.

After the Wells Fargo (WFC) earnings report, the stock fell in the after-hours market. But since real world trading started, WFC has done quite well. It’s very close to a new 52-week high. In addition to Wells, BCR, EBAY, FISV, ROST, SBNY, SNA and SYK are at or very near new highs today.

While the S&P 500 is still below its all-time high, both the Consumer Discretionary and Healthcare sectors have made new highs. The Financials are very close as well.

Very Tight Trading Range
Posted by Eddy Elfenbein on July 15th, 2015 at 10:40 am

For the 112th day in a row, the S&P 500 has closed between 2,040.24 and 2,130.82. That’s from February 3rd until today.

I’ve looked at the data and that’s the tightest range for 112-days since 1950. The difference between the high and low is just 4.44%. On November 20, 2008, the equivalent number was over 80%.

The previous record period ended in February 1966. The trading range was 4.73%.

Investing Philosophy in 10 Words
Posted by Eddy Elfenbein on July 15th, 2015 at 9:32 am

Morgan Housel asked several financial bloggers to sum up their investing philosophy in ten words. Here’s my entry:

“Be patient and ignore fads. Focus on value. Never panic.”

Here are some other favorites:

Barry Ritholtz, Bloomberg: “Keep it simple, do less, and manage your stupidity.”

Michael Batnick, Ritholtz Wealth Management: “Avoiding catastrophic mistakes matters more than constructing the ‘perfect portfolio.'”

Ben Carlson, author of A Wealth of Common Sense: “Less is more. Process over outcomes. Behavior is the key.”

You can probably spot some commonalities. Check out the whole list.

Morning News: July 15, 2015
Posted by Eddy Elfenbein on July 15th, 2015 at 7:13 am

Tsipras Braves Parliament on Aid as Greek Outlook Worsens

China Growth Beats Forecasts But Stocks Dive Again

Soldier Turned Math Wonk Shaking Up World of Commodity Trading

Bank of America Profit More Than Doubles As Legal Costs Decline

U.S. Bancorp Reports Declines in Profit Revenue Despite Loan Growth

Amazon Prime Day Isn’t All About Wal-Mart

Wal-Mart Backed Yihaodian’s Founders Quit to Start New Business

A $7.2 Billion Deal Buys Celgene Time for Dicier Bets to Blossom

Ice Cream Maker Blue Bell Receives Investment

Marchionne, Chief of Fiat Chrysler, Backs Away From G.M. Bid

Honda Finance Arm to Pay $25 Million to Settle Discriminatory Lending Allegations

Hong Kong Regulator Orders Suspension of All Hanergy Trading

Cullen Roche: Charts That Make Me Go Hmm

Howard Lindzon: ‘El Chapo’ escapes prison and Vows to Give up Drug Business for more lucrative ETF Business

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Retail Sales Drop
Posted by Eddy Elfenbein on July 14th, 2015 at 11:01 am

This morning’s report on retail sales was not a good one. Wall Street had been expecting an increase of 0.3% for June. Instead, it was a drop of 0.3%.

An early Memorial Day holiday that may have boosted sales in May at the expense of last month, and a longer school year caused by the harsh winter probably contributed to the more subdued sales performance for the quarter. Stronger gains in incomes will probably be needed to give consumer spending, which accounts for almost 70 percent of the economy, a bigger lift heading into the second half of the year.

“The weakness is pretty broad-based, but it does look like categories that you would consider to be seasonal in nature looked to be very weak,” said Stephen Stanley, chief economist at Stamford, Connecticut-based Amherst Pierpont Securities LLC, who projected June retail sales would be unchanged from the prior month. “It puts a little cold water on the idea that the consumer was gathering momentum.”

Retail sales are up 1.4% in the last year.

Wells Fargo Earns $1.03 per Share
Posted by Eddy Elfenbein on July 14th, 2015 at 8:09 am

Wells Fargo (WFC) just reported Q2 earnings of $1.03 per share which matched Wall Street’s expectations.

Wells Fargo & Company (reported net income of $5.7 billion, or $1.03 per diluted common share, for second quarter 2015, compared with $5.7 billion, or $1.01 per share, for second quarter 2014, and $5.8 billion, or $1.04 per share, for first quarter 2015.

“Wells Fargo’s second quarter results reflected continued strength in the fundamental drivers of long term growth,” said Chairman and CEO John Stumpf. “Compared with a year ago, we grew loans, deposits and capital, and our balance sheet remained strong. Credit results also improved and we continued to adhere to our disciplined approach to risk management. As the economic and interest rate environments evolved, our diversified business model continued to generate strong results for shareholders, and we were pleased to increase our common stock dividend 7 percent in the second quarter, to $0.375 per share. Wells Fargo is well positioned for the future and I remain confident in the ability of our 266,000 team members to help our customers succeed financially and to serve our communities.”

Chief Financial Officer John Shrewsberry said, “Wells Fargo’s second quarter results once again reflected the benefit of our balanced business model. Compared with the first quarter, revenue increased on net interest income growth and expenses declined. Our balance sheet remained strong, as evidenced by solid asset quality, liquidity and capital, and we were within our targeted ranges for ROA, ROE and efficiency.”

Morning News: July 14, 2015
Posted by Eddy Elfenbein on July 14th, 2015 at 7:14 am

EU Populists Vindicated By Tsipras’s Struggle Take Aim At Euro

Iran, World Powers Have Reached Nuclear Agreement

U.K. Inflation Slows to Zero as Core Rate Unexpectedly Falls

Why The Smart Money Was Right About Crude Oil Again

JP Morgan Profit Beats Estimates As Expenses Fall

Problems Big And Small For China’s Micron Bid

GM Is First of Big 3 To Open Contract Talks With The UAW

Starbucks Strikes Deal to Open Stores in South Africa Starting Next Year

Marathon to Buy Gas-Rich MarkWest for $15.8 Billion

Digital Realty to Buy Telx For $1.89 Billion

Valero Expands Into Ethanol Export Market for First Time

Hundsun Tech Under Probe After China Stock Bust

Joshua Brown: The Beatings Will Continue Until Populism Fades

Roger Nusbaum: Greece: A Long Global Nightmare Is Over?

Jeff Carter: Financial Regulation is Gerrymandering At Its Finest

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Slowly, the US Budget Improves
Posted by Eddy Elfenbein on July 13th, 2015 at 2:57 pm

I want to be very cautious on this topic, but the US budget deficit is improving. Obviously, it’s far from good, but it’s much better than it was. The deficit is now at a seven-year low.

The U.S. reported a $52 billion surplus in June, a month in which the government in recent decades has typically generated a surplus on account of corporate and individual taxes collected at month’s end.

The monthly surplus brought the budget deficit over the past 12 months to $431 billion, down nearly 20% from a year earlier. It represents the second lowest 12-month deficit since August 2008.

The budget picture has improved this year amid higher revenues and better economic growth, even though federal spending has also ticked higher. Revenue for the 12-month period ended June is nearly 9% over the year-earlier level, while spending is up 4%.

Since the start of the fiscal year last October, the deficit reached $313 billion in June, down from $366 billion for the year-earlier period.

In March, the CBO projected this year’s deficit at $485 billion. I think they’ll revise that lower soon.

Stocks Rally on Greek Deal
Posted by Eddy Elfenbein on July 13th, 2015 at 12:51 pm

The stock market is rallying today on the heels of the news of a deal reached for Greece. The Greek Prime Minister, Alexis Tsipras, had won support from parliament for a deal that was largely seen as agreeing to the EU proposal, which the referendum had shot down.

I thought that was the end of things but it still needed support from the EU. After contentious negotiations over the weekend, the deal was finally reached which requires, in the words of the WSJ, the “Greek government’s near-total surrender to creditors’ demands.”

For the first time, there appeared to be serious discussion of Greece leaving the eurozone. Until now, that’s not been an issue for discussion. Even though “Grexit” wasn’t agreed to, we now know that it was considered. It’s hard to escape the view that Germany has been trying to humiliate Greece. Now Tsipras has to get his parliament to approve a deal that was even harder than the one before.

The S&P 500 has been as high as 2,097.87 today, which is a two-week high. The index was last over 2,100 on June 26.