• Stryker Earns $1.11 per Share
    Posted by on April 21st, 2015 at 4:17 pm

    Stryker (SYK) reported Q1 earnings of $1.11 per share. That was three cents better than estimates. The company also raised the low end of their full-year forecast by five cents per share. The new range is $4.95 to $5.10 per share. Net sales rose by 3.2% to $2.4 billion, or 7.4% in constant currency.

    “We are pleased with our first quarter results, with another strong quarter of nearly 6% organic sales growth and disciplined expense management,” said Kevin A. Lobo, Chairman and Chief Executive Officer. “We expect this momentum, which is balanced across segments and regions, to continue and are raising the low end of full year sales and earnings guidance.”

    (…)

    We expect 2015 constant currency sales growth in the range of 6.0% to 7.0%, including organic sales growth in the range of 5.0% to 6.0%. Based on current foreign currency exchange rates we expect adjusted diluted net earnings per share to be in the range of $1.15-$1.20 and $4.95-$5.10 in the second quarter and the full year, respectively. If foreign currency exchange rates hold near current levels, we expect sales in the second quarter and full year of 2015 to be negatively impacted by approximately 3.5% to 4.5% and adjusted diluted net earnings per share to be negatively impacted by approximately $0.25 to $0.30 in the full year, approximately half of which will be in the first half of the year.

  • Signature Bank Earns $1.64
    Posted by on April 21st, 2015 at 9:49 am

    Signature Bank (SBNY) reported Q1 earnings of $1.64 per share, five cents better than estimates.

    Net income for the 2015 first quarter reached a record $83.4 million, or $1.64 diluted earnings per share, versus $66.0 million, or $1.37 diluted earnings per share, for the 2014 first quarter. The record net income for the 2015 first quarter, versus the comparable quarter last year, is primarily due to an increase in net interest income, fueled by strong deposit growth and record loan growth. These factors were partially offset by an increase in non-interest expense.

    Net interest income for the 2015 first quarter reached $222.5 million, up $36.0 million, or 19.3 percent, when compared with the 2014 first quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $28.59 billion at March 31, 2015, an increase of $5.48 billion, or 23.7 percent, from $23.10 billion at March 31, 2014. Average assets for the 2015 first quarter reached $27.98 billion, an increase of $5.28 billion, or 23.3 percent, compared with the 2014 first quarter.

    Deposits for the 2015 first quarter rose $1.41 billion, or 6.2 percent, to $24.03 billion at March 31, 2015. When compared with deposits at March 31, 2014, overall deposit growth for the last twelve months was 31.2 percent, or $5.72 billion. Excluding short-term escrow and brokered deposits of $3.38 billion at the end of the 2015 first quarter and $3.08 billion at year-end 2014, core deposits increased $1.11 billion for the quarter. Average deposits for the 2015 first quarter reached $23.38 billion, an increase of $1.24 billion, or 5.6 percent.

    “2015 is off to an outstanding start as we again set records in both earnings and loan growth while also delivering very strong deposit growth,” stated Joseph J. DePaolo, President and Chief Executive Officer.

  • Morning News: April 21, 2015
    Posted by on April 21st, 2015 at 5:46 am

    Greece Makes It Expensive to Hedge European Stocks

    ECB Is Studying Curbs on Greek Bank Support

    Europe Is Expected to Bring Antitrust Charges Against Gazprom

    Iran Wants OPEC to Pave Way For Its Extra Oil Production When Sanctions Lifted

    The Fed Still Wants Easy Money

    Goldman Sachs and Morgan Stanley Find Different Paths to Profits

    Credit Suisse Says Quarterly Profit Up 23% Courtesy of Healthy Trading

    IBM First-Quarter Earnings Top Wall St. Expectations

    Halliburton Beats Estimates, Boosts Job Cuts After Oil Crash

    Boutique Banks to Suffer Most If Comcast-Time Warner Cable Deal Vetoed

    SAP Quarterly Revenue Exceeds Estimates on Currency Boost

    Sky Profits From Surge in U.K. and Europe Customer Numbers

    Sun Pharma Slumps Most in Near Six Years on Daiichi’s Share Sale

    Roger Nusbaum: A Bloomberg Outage Caused The Market to Fall? Really?

    Jeff Carter: How To Make Great Leaps Forward In Civilization

    Be sure to follow me on Twitter.

  • Hormel on Avian Flu
    Posted by on April 20th, 2015 at 5:30 pm

    Hormel Foods (HRL) just issued a press release on the Avian Flu. Short version: It’s impacted their turkey business but they expect the impact to wane as the year goes on. Hormel is keeping their full-year guidance at $2.50 to $2.60 per share. That’s no change.

  • Risks that Investors Face
    Posted by on April 20th, 2015 at 3:05 pm

    I love this quote from Benjamin Graham:

    The risk of paying too high a price for good-quality stocks – while a real one – is not the chief hazard confronting the average buyer of securities. Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions. The purchasers view the current good earnings as equivalent to “earning power” and assume that prosperity is synonymous with safety.

  • The Long End of the Treasury Curve
    Posted by on April 20th, 2015 at 12:07 pm

    In the summer of 2012, the bond market reached incredible heights. On July 24, 2012, the yield on the 10-year Treasury fell to 1.39%. That was the lowest in the history of the republic. (That appears to be the case; these facts aren’t so easy to nail down.)

    At the time, I thought that was at the end of the bond market’s amazing 31-year run. The 10-year had gotten to 15.84% on September 30, 1981, also the highest in the history of the republic. Now I’m not so sure the rally is over.

    During 2013, Treasury yields bounced higher and the 10-year yield broke above 3%. But then something unexpected happened, the bond market began to rally again. By this past February, the 10-year got as low as 1.65%. That’s still above the July 2012 mark but the 20- and 30-year yields both reached new lows.

    On January 30, 2015, the 30-year got down to 2.23% which was 22 basis points below its July 2012 low. The 20-year got to 2.04%, seven basis points below its July 2012 low.

    So the longer-date parts of the yield curve have moved lower while the shorter part hasn’t. This means the spread between the two has narrowed. Is it worthwhile looking at the spreads of such long term bonds?

    Generally, the higher longer-term bonds yield more than shorter-term bonds, the better the outlook for the economy. When the spread is low or even negative, that’s not so good for the economy. My preference is to look at the difference between the 2- and 10-year yields. The two-year note is short enough without being overly influenced by the Fed Funds rate.

    I don’t think the long-end spreads are as important but it’s interesting to note that the spread between the 30- and 10-year bonds has been falling almost consistently for two years. The spread between the 20- and 30-year doesn’t strike me as particularly important.

  • Back Above 2,100
    Posted by on April 20th, 2015 at 10:12 am

    The S&P 500 is back over 2,100. Still, the 2,040 to 2,120 trading range continues.

    This is a very big week for earnings. For some reason, there aren’t as many earnings reports on Monday and Friday. But one big earnings report came from Morgan Stanley (MS) this morning. The bank had a very strong quarter; profits soared 60%. They earned 85 cents per share which was seven cents better than expectations. The stock is currently up about 0.5%.

    I’m not a fan of MS until they start paying a more reasonable dividend. Given their profits, they should be paying out something like 25 cents per share. Instead, they pay out 10 cents per share. As an investor, I want to see more of a cushion (unless there’s a very good reason).

    The Dow is leading the rest of the market thanks to a strong day from IBM (IBM). Since the Dow is price weighted, the higher-priced stocks have greater say. The 10-year yield is currently holding at 1.87%. The yield is very close to a 10-week low. In February, the 10-year yield got as low as 1.65% which was the lowest since May 2013.

  • Software Can’t Catch to Explosion of Trading in China
    Posted by on April 20th, 2015 at 9:47 am

    The Chinese market has doubled in the last six months. Turnover in Shanghai and Shenzhen surpassed the NYSE and Nasdaq last month. Apparently, this is causing some problems.

    China’s stock trading fever has made the Shanghai Stock Exchange the world’s biggest in terms of turnover, surpassing the New York Stock Exchange, but the explosion in volumes has exceeded the ability of the exchange’s software to report it.

    The exchange’s trading turnover exceeded 1 trillion yuan ($161.28 billion) for the first time on Monday, but the data could not be properly displayed because its software was not designed to report numbers that high.

    “This is a software configuration issue, not a technical glitch,” the Shanghai Stock Exchange said in a statement, adding that trading and price quotes for individual stocks were not affected.

    The exchange said it would need to replace its current software files that handle volume reporting to resolve the issue.

    One of the forgotten episodes on Wall Street was the paperwork crisis on the late 1960s. The NYSE had to shorten trading hours so brokerage houses could catch up.

  • The Illusion of Control
    Posted by on April 20th, 2015 at 8:56 am

    From Jason Zweig’s The Intelligent Investor:

    And a streak of being right can make anyone forget how important luck is in determining the outcome.

    Research led by psychologist Ellen Langer, now at Harvard University, shows that when people who predict the tosses of a coin are told they got eight out of their first 10 flips correct, they conclude that they are significantly better than average at calling heads or tails—and that they could get well over half their guesses right if the coin were tossed another 100 times.

    Prof. Langer called these incorrect beliefs “the illusion of control.”

    If, however, people either get most of their early guesses wrong or win and lose in a random pattern, they don’t believe they have any special gift for calling heads or tails; nor do they remember being correct more often than they were.

    Guarding against the illusion of control takes constant vigilance. The longer you’ve been right, the harder it gets.

  • Morning News: April 20, 2015
    Posted by on April 20th, 2015 at 7:09 am

    Dilbert

    Euro Area Seeks Greece Roadmap to May Agreement

    Greece Flashes Warning Signals About Its Debt

    Bond Yields Vanish Across Euro Zone on Grexit Worries

    For the People’s Bank of China, Bond Buying Is Both Easy and Hard

    China Really Wants a Rising Stock Market

    China’s Reserve Cut Move Boosts Oil Price

    Just How Leaky Is The Fed?

    Prologis, Norway Buy KTR Real Estate for $5.9 Billion

    Liberty Global’s Subsidiary Telenet to Acquire BASE

    Comcast, Time Warner Cable to Meet Regulators in Bid to Save Merger

    Morgan Stanley Profit Jumps 60% on Trading Revenue

    Shanghai GM to Spend $16 Billion Developing New Vehicles

    Europe’s Used Jets Luring U.S. Bargain Buyers With Strong Dollar

    Cullen Roche: Finding Religion on “Crowding Out”

    Jeff Miller: Weighing the Week Ahead: A Geopolitical Risk to U.S. Stocks?

    Be sure to follow me on Twitter.