Morning News: March 13, 2015
Posted by Eddy Elfenbein on March 13th, 2015 at 7:02 am

Language of Greek Crisis Shifts From Financial Jargon to Humiliation

With Plan to Join China-Led Bank, Britain Opens Door for Others

Nikkei Stock Average Finishes Above 19000 Mark

Modi Builds Ties in Sri Lanka Visit as China’s Clout Wanes

Russia Cuts Main Rate to 14% as Inflation Eases Amid Slump

Dollar Drop Short-Lived as Policy Divergence Prompts One-Way Bet

Wealth Gains Start to Lift More Boats

Retail Sales Plunge As Consumers Hesitate to Spend Gas Savings

Fed ‘Stress Tests’ Still Pose Puzzle to Banks

F.C.C. Sets Net Neutrality Rules

Here’s Everything That’s Wrong With Cable and Satellite TV Bills

Intel Slashes Revenue Outlook, Noting Lower Demand For Desktop Computers

Nomura, RBS Face U.S. Mortgage Trial; $1 Billion Damages at Stake

Cullen Roche: All Securities Issued Are Always Held By Someone

Joshua Brown: Another Bulls*** Myth Debunked

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Morning News: March 12, 2015
Posted by Eddy Elfenbein on March 12th, 2015 at 7:06 am

Euro’s Freefall Toward U.S. Dollar Parity Continues

No Reason Why India Can’t Resume 8-9% Growth: IMF

Spain’s Banco Sabadell in Talks to Buy Britain’s TSB Group

Senate Finance Committee To Hold A Hearing on Tax Fraud

Three Banks Uncover the Path to Payouts in the Fed’s Stress Test

The U.S. Has Too Much Oil and Nowhere to Put It

Utah Passes White-Collar Felon Registry

Alibaba Invests $200 Million in Snapchat

KFC Faces Pressure After McDonald’s Says No Antibiotics in Chicken

Shake Shack Tumbles After Inaugural Earnings Fail to Impress

Dollar General Forecasts Full-Year Profit Below Estimates

Uber, Lyft Rebuffed in Bids to Deem Drivers Independent Contractors

Ellison’s Paycheck Is $103 Million and He’s Still a Bargain

Edward Harrison: Wolfgang Schaeuble the Salesman

Jeff Carter: Feedback, or Criticism?

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The Fed Gives Wells Fargo a Clean Bill of Health
Posted by Eddy Elfenbein on March 11th, 2015 at 5:26 pm

The Federal Reserve just said that it has no objection to the capital plan submitted by Wells Fargo (WFC). This means the bank can now raise its dividend to 37.5 cents per share from the current level of 35 cents per share. That’s a 7.1% increase. That’s what the bank’s board is planning to do at their meeting next month.

“We are pleased to receive the Federal Reserve Board’s non-objection to our capital plan to increase our common stock dividend and continue our strong share repurchase activity,” said Chairman and CEO John Stumpf. “This result again demonstrates the benefit of our diversified business model and conservative risk discipline, which have positioned us well to return capital to shareholders within our targeted range while maintaining strong capital levels.”

The shares are up 19 cents in after-hours trading.

The Dollar and Euro Move Near Parity
Posted by Eddy Elfenbein on March 11th, 2015 at 9:25 am

Thanks to the start of European QE, and the prospect for higher rates soon in the U.S., the dollar has been surging against the euro. Ten months ago, one euro was worth $1.39. Today that same euro gets you just $1.06. That’s a 12-year low. Now people are wondering if we’ll hit parity soon.

Interest rates in Europe are becoming a joke. The 10-year bond in Germany just fell to 0.2%. In other words, you get 2% combined for the entire life of the bond!

Adding to the dollar’s rally is next week’s Fed meeting. The talk on Wall Street is that the Fed will abandon its “patient” language which will set the stage for rate hikes. The last time the Fed raised interest rates was June 2006.

Morning News: March 11, 2015
Posted by Eddy Elfenbein on March 11th, 2015 at 7:09 am

Ex-Soviet Republics Feeling Putin’s Ruble Pain Now

China Data Paint Gloomy Picture

China to Increase Scrutiny of New Zealand Milk

Euro Nears Parity With U.S. Dollar

Crude Falls to One-Month Low as Glut Seen Growing, Dollar Gains

History Suggests OPEC’s Days Could Be Numbered

Next Step in Global Cost and Efficiency Program

Banking Arbitration Hurts Consumers, Regulator Says

Alibaba in Talks to Invest in Indian Online Marketplace Snapdeal

Ineos to Acquire Stakes in Igas, a Boost to British Shale Gas

UBS Poaches Bank of Montreal Oil Banking Team

Google Could Be About to Do a $1 Billion Deal That Would Solidify Its Domination of Mobile Advertising For Years

Retiring Google CFO Writes The Best ‘Spend More Time With Family’ Memo Ever

Credit Writedowns: Five Investing Themes That Need Further Examination

Howard Lindzon: Charles Schwab versus The Robo’s and Wealthfront…

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The S&P 500 Loses 1.70%
Posted by Eddy Elfenbein on March 10th, 2015 at 7:20 pm

Today was a rough day for the stock market. The Dow lost 332 points. The S&P 500 lost 35.27 points or 1.70%. The trading year is still young, but today was the second-worst day this year for the S&P 500. Friday was the third-worst.

The S&P 500 dropped below its 50-day moving average, and it’s not too far from 2,001.28 which is the current 200-DMA.

Since the bull market started six years and one day ago, the S&P 500 has fallen 5% or more 12 separate times. Each time it has rallied to a new high. At today’s close, we’re down 3.46% from the last closing high.

Here’s a chart of the 12 dips, along with what might become Lucky #13:

It’s odd how January was quite bad, then February was very good, and now March looks soggy. Calendar months are apparently becoming feast or famine.

Breaking down the market, the low vol stocks fell much less than high beta stocks. Of course, that’s what they’re supposed to do but it appeared particularly dramatic today. The S&P 500 Low Vol Index fell just 1.18% today while the High Beta Index lost 2.18%. They were exactly 1% apart.

The big-cap S&P 100 fell 1.81% while the smaller-cap Russell 2000 lost 1.24%. The Tech Sector was the big loser with a loss of 2.19%. Financials were just behind at 2.12%. Utilities fared the best with a loss of just 0.16%. Bonds did quite well. The Long Bond ETF (TLT) gained 1.32% today.

Not too long ago, crude oil appeared to be recovering. Not anymore. Spot West Texas fell to $48.76 today. That’s the lowest close in a month.

The Buy List had another good day — and by that, I mean we sucked a little bit less than everybody else. Our Buy List lost “only” 1.59% today which is the fifth day in a row we’ve beaten the S&P 500. Unfortunately, three of those days were losses, and Qualcomm’s dividend news wasn’t enough to beat the anti-tech trend today. QCOM lost 1.13% today which was one of the better results in the large-cap tech sector.

Specialty Drug Spending
Posted by Eddy Elfenbein on March 10th, 2015 at 12:59 pm

The S&P 500 Falls Below Its 50-DMA
Posted by Eddy Elfenbein on March 10th, 2015 at 12:16 pm

The Market Can Rally Past Profits
Posted by Eddy Elfenbein on March 10th, 2015 at 11:17 am

Over at Bloomberg, Lu Wang notes that the market can and has rallied past its peak profitability:

Even if corporate profitability peaked today in the U.S., the market would rally for another year.

That’s the finding of Jason Trennert, the chief investment strategist at Strategas Research Partners in New York, who studied the relationship between equities and earnings margins since 1949. On average, the peak in profit margins came four quarters before the market’s top, the study shows.

(…)

Thanks to near-record low interest rates, stagnant pay and more than $2 trillion of share buybacks, chief executive officers have increased profit by an average 15 percent a year since 2009, three times faster than sales.

Operating margins for S&P 500 companies, the difference between revenue and expenses, climbed to a record 10.1 percent in the third quarter of 2014 and probably slipped to 9 percent in the final three months, data compiled by S&P Dow Jones Indices show.

Profit margins peaked in September 2006 during the last bull market, four quarters before the S&P 500 reached an all-time high in October 2007, data compiled by Strategas show. The equity gauge’s record in March 2000 came 10 quarters after corporate profitability hit a high. The shortest gap occurred in 1973, when there was only one quarter between peaks of margins and the market.

“I’d follow the trend of margins,” Trennert said. “They’re not noisy and there are clear cycles.”

Morning News: March 10, 2015
Posted by Eddy Elfenbein on March 10th, 2015 at 7:13 am

Draghi Urged Greece to Allow Troika Back Before It’s Too Late

A Tap on Brakes for China Car Sales

Russia’s Well for Corporate Bailouts Appears to Be Running Dry

New Zealand Market Shudders at Threat to Dairy Industry

Brent Oil Futures Fall Below $58 as Dollar Hits 11-Year High

Gold Drops to Three-Month Low on Dollar, U.S. Rate Expectations

Obama Directing Changes to Make Student Loan Navigation Easier

Former SEC Director Rips the Red Tape Off His Mouth

New Credit Suisse Boss Has Plenty of Challenges in His In-Tray

GM Sets Buyback, Placating Activists

Under-Fire Uber Pledges to Enlist 1 Million Female Drivers By 2020

Lovin’ Goes Only So Far as McDonald’s Sales Slide Again

7 Reasons People Think They Can Ignore Warren Buffett’s Advice

Joshua Brown: The Riskalyze Report: Advisors Buy the Corporate Bond Dip

Cullen Roche: Tax Loss Harvesting – Too Good to Be True?

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