Morning News: February 20, 2015
Posted by Eddy Elfenbein on February 20th, 2015 at 7:08 am

Euro Region Economy Strengthens Amid Wrangling on Greece

Europe’s Firewalls May Not Be Enough to Stem Grexit Investor Panic

US Shale Leader EOG Resources Confidence No Match for Cheap Oil

Dollar Remains Stronger as Traders See Fed Set for ’15 Rate Rise

Yellen Confronts Economists’ Ignorance

Trappings of Chinese New Year Left at Sea by West Coast Port Dispute

Wal-Mart Just Put Huge Pressure on Target

The Bad News for American Express Just Won’t Stop

Morgan Stanley Predicts New Highs for Tesla’s Stock Even as Cash Could Get Tight

FTC Files Lawsuit Challenging Sysco-US Foods Merger

U.S. and British Spies ‘Hacked World’s Largest Sim Card Maker’

TransCanada to Seek U.S. Approval for $600 Million Upland Pipeline

Ex-Qualcomm Executive Pleads Guilty to Insider Trading

Jeff Carter: Valuations-Be Careful

Howard Lindzon: The State of The Markets – FOMO (Fear of Missing Out) and FOHB (Fear of Holding the Bag)

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Beginning of the Week Is the Winner
Posted by Eddy Elfenbein on February 19th, 2015 at 11:27 am

Since 1986, the Dow Jones Industrial Average has had a pretty good run. The index has increased from 1,546.67 on the last day of 1985 to 18,029.85 today. That’s an increase of more than 1,000% in a little over 29 years. Not too shabby.

But here’s an interesting catch—nearly the entire gain has come at the beginning of the week. The combined gain on Monday, Tuesday and Wednesday comes to 988.46%. But the combined gain of Thursday and Friday is just 7.10%. That’s an amazing gap.

The Dow’s been taking four-day weekends on us and no one’s noticed! Of course, there’s no way this stat can translate into usable investment advice, but it’s interesting how the market can have a mind of its own. For nearly three decades, all that Thursday and Friday trading has added up to nothing.

Here’s a chart of how the Dow has performed since 1986. I divided it into two lines — the blue line is the combined return of being invested on Monday, Tuesday and Wednesday. The red line is for Thursday and Friday. I baselined both lines to start at 100.

Hormel Rises on Good Earnings
Posted by Eddy Elfenbein on February 19th, 2015 at 9:54 am

This morning, Hormel Foods (HRL) reported Q1 earnings of 69 cents per share which beat estimates by five cents. Quarterly revenue rose 6.8% to $2.4 billion. That was a bit below consensus of $2.37 billion.

“We are off to an excellent start to our fiscal year with double-digit earnings growth and record sales in the first quarter,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer.

“Jennie-O Turkey Store increased operating profit by 56 percent, with strong value-added product sales growth, robust turkey markets, and favorable input costs,” remarked Ettinger. “Refrigerated Foods also turned in an excellent quarter by driving increased value-added sales, aided by the benefit of lower pork costs. Grocery Products was challenged by high input costs and soft sales on some brands, while International & Other delivered increases despite difficult export markets,” commented Ettinger. “Specialty Foods is focused on driving higher margins in the newly acquired CytoSport business, and going forward we believe the business is well positioned to deliver results in line with our expectations.”

The best news is that Hormel raised their full-year guidance. They now see earnings ranging between $2.50 and $2.60 per share. That’s an increase of five cents at both ends, which matches today’s earnings beats. Wall Street had been expecting $2.54 per share.

The stock has been up as much as 3% this morning.

Morning News: February 19, 2015
Posted by Eddy Elfenbein on February 19th, 2015 at 7:03 am

ECB Profit Declines as Interest Rates Drop, Staff Costs Surge

Greece Asks Eurozone for Loan Extension

Oil Prices Fall as U.S. Crude Stockpiles Grow

Port Dispute is Felt All Along the West Coast

Could Apple Compete With Tesla?

Ball Corp. Rolls Up Rexam With Sweetened $6.7 Billion Offer

Barrick Gold Reveals Asset Sale and Debt Reduction Plan

Nestle Forecasts Improvement in 2015

TurboTax, Phishing, E-Filing, And IRS Security

Strike Creates Turbulence for Air France-KLM

Is Snapchat Really Worth What Silicon Valley Thinks It Is?

T-Mobile US Swings to Profit As Revenue Surges

BAE Systems Posts More Than Fourfold Rise in 2014 Net Profits

Joshua Brown: Where Does the Fed See Systemic Risk?

Jeff Carter: Go Big or Go Home

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PPI Drops 0.8% in January
Posted by Eddy Elfenbein on February 18th, 2015 at 10:04 am

Here’s a look at the seasonally-adjusted PPI. That’s the index of wholesale prices. This means that the Fed is in no hurry to raise rates.

Wabtec Earns 95 Cents per Share
Posted by Eddy Elfenbein on February 18th, 2015 at 8:47 am

Wabtec ($WAB) earned 95 cents per share for Q4. That was a penny above consensus. For the year, WAB earned $3.62 per share. They also issued guidance of $4.05 per share for all of this year.

CEO Raymond T. Betler said: “We finished the year with a strong performance in the fourth quarter, and we are anticipating record results again in 2015. While we expect to face challenges this year, including global economic uncertainty and foreign currency exchange headwinds, we will benefit from ongoing investment in freight rail and passenger transit projects around the world. Our long-term growth prospects remain solid, thanks to our diversified business model, balanced strategies and rigorous application of the Wabtec Performance System.”

Morning News: February 18, 2015
Posted by Eddy Elfenbein on February 18th, 2015 at 6:59 am

Greece to Seek Extension on Loan Agreement

Swiss Prosecutors Search Offices of HSBC Unit

Kuroda Sees Inflation on Track as BOJ Keeps Record Stimulus

As Rivals Falter, India’s Economy Is Surging Ahead

U.S. Household Debt Rises Slightly

Mortgage Applications Plunge as Rates Hit Highest Level of the Year

Warren Buffett Buys a Stake in Rupert Murdoch’s 21st Century Fox

Soros Shifts to Europe, Asia as Investors Cut U.S. Equities

Snapchat Said to Seek Up to $19 Billion Value in Funding

Telecoms Tycoon Seeks to Buy Out Vivendi from Numericable

Sony Outlines 3-Year Recovery Plan, Targets $4.2 Billion Earnings

Why Tesla Continues To Flop In China

Why Candy Bars May Never Be The Same Again

Cullen Roche: Negative Volatility in Long Bonds Surges

Joshua Brown: Why Active Management Fell Off a Cliff – Perhaps Permanently

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The Impact of Higher Yields
Posted by Eddy Elfenbein on February 17th, 2015 at 1:58 pm

I spotted this at Bloomberg:

Following the biggest one-week jump in 10-year Treasury yields in more than a year, investors are selling the highest-yielding companies in the Standard & Poor’s 500 Index. The top quarter of dividend-yielding stocks in the S&P 500 have lost an average 0.4 percent since an employment report on Feb. 6 showed the U.S. is adding jobs at a faster rate than estimated. That compares with a gain of 2.6 percent for stocks with the smallest dividends, and a 1.7 percent climb in the benchmark gauge.

Stocks including utility companies and real-estate investment trusts have weighed on the benchmark gauge since Treasury yields climbed 32 basis points the week of the report, signaling caution to investors who piled into dividend stocks through the bull market, according to Sam Stovall, chief equity strategist at S&P Capital IQ.

Simple math: When bonds go down, those higher-yielding stocks lose some of their luster.

It’s Actually Happening
Posted by Eddy Elfenbein on February 17th, 2015 at 1:44 pm

The Nasdaq Composite is over 4,900, and it’s within sight of its all-time high reached 15 years ago. The index peaked at 5,048.62 on March 10, 2000. That’s 15 long years without making a new high.

That sounds bad but it’s been worse. The Dow didn’t break its September 3, 1929 high until November 23, 1954.

The Market Closed at Another High
Posted by Eddy Elfenbein on February 17th, 2015 at 9:37 am

I hope everyone had a nice three-day weekend. The stock market closed Friday at a new all-time high. The S&P 500 finished the week at 2,096.99 and the Dow is back over 18,000. This was almost certainly a new inflation-adjusted high. Our Buy List continues to outpace the climbing market as well. I try not to get worked up about short-term moves, but this is nice to see. This month, our Buy List is up 7.88% to the S&P 500’s 5.11%.

Things may get jittery this week as investors turn their attention to the soap opera between Greece and the rest of Europe. The debt talks have broken down but still, investors seem optimistic that some sort of deal will be reached. I think both sides are working hard to position themselves as not “caving in” in the eyes of their respective voters. Once this is achieved, they can hammer out a deal. Consider that consumer prices in Greece have fallen for 23 months in a row. This is a problem that the important people in suits cannot allow to go on much further.

The bond market has quietly retreated over the past few days, bearing in mind that this comes after a spectacular run. The yield on the 10-year Treasury fell as low as 1.65% on January 30 and February 2. Since then, the yield has drifted higher as it’s up to 2.06 this morning. That’s still very low, but it’s interesting to see the bond market finally move downward.