The 20-Year Bull Market
Posted by Eddy Elfenbein on November 11th, 2014 at 3:41 pm

The first decade of the 21st century was very unusual for the stock market. We had two once-in-a-generation crashes within nine years of each other. That’s not supposed to happen, yet it did.

I’ve often seen this offered as proof as to why the stock market is a bad deal. However, if we adjust out starting points just a bit, we can see much better results.

We’re coming up on the 20th anniversary of an important low point for the stock market. On December 8, 1994, the market began its huge run that characterized the latter 1990s. Technically, December 8th wasn’t the low for the year, but after that is when things really heated up. It was also a few weeks after the GOP took control of Congress for the first time in decades.

From December 8, 1994 to yesterday, the Wilshire 5000 Total Return Index is up 588.93%. That’s more than 10% annualized. Meanwhile, the CPI is up by 59.16% over the last 20 years, or 2.35%.

Stepan: 47 Consecutive Dividend Increases
Posted by Eddy Elfenbein on November 11th, 2014 at 12:50 pm

I forgot to mention this, but a few weeks ago, Stepan ($SCL) raised its dividend for the 47th year in a row. It’s not much of an increase. The quarterly dividend is going from 17 to 18 cents per share. That gives the stock a yield of 1.64%.

What do they do? This is from Stepan’s corporate profile:

Stepan Company is a major manufacturer of specialty and intermediate chemicals used in a broad range of industries. Stepan is a leading merchant producer of surfactants, which are the key ingredients in consumer and industrial cleaning compounds. The Company is also a leading supplier of Polyurethane polyols used in the expanding thermal insulation market, and C.A.S.E. (Coatings, Adhesives, Sealants, and Elastomers) industries.

Sexy, no? I often talk about how seemingly boring business can be very profitable.

Frankly. I think Stepan is keeping their dividend payout low so they can keep the streak alive. Ideally, I’d like to see companies pay out about one-third of their profits as dividends.

Stepan has had a rough year and the stock is down. SCL is currently down 35% from its 52-week high.

Earnings Update
Posted by Eddy Elfenbein on November 11th, 2014 at 11:03 am

Earnings season is just about done, so let’s look at where we stand.

Of the 445 companies in the S&P 500 that have reported so far, 332 beat expectations, 73 missed and 40 met.

For Q3, the S&P 500 is on track to report operating earnings of $29.83 per share. That’s an index-adjusted number. That’s an increase of 10.8% over last year’s Q3. (These numbers are from S&P and they sometimes differ from other news sources.) At the start of the year, Wall Street had been expecting $30.89 for Q3. The estimates gradually fell as the year wore on.

Over the last four quarters, the S&P 500 has earned $114.74 per share, so the index is going for 17.8 times that. Wall Street currently expects Q4 earnings to come in at $31.13 per share. That would be an increase of 10.2% over last year’s Q4.

Interestingly, the estimates for Q4 had been fairly stable for much of the year. At the beginning of 2014, Wall Street was expecting $32.17 for Q4. On September 30, the estimate had increased by a tiny bit to $32.24. Only recently have the numbers come down.

If the current Q4 estimate is accurate, then it would bring full-year earnings to $117.62. That would be an increase of 9.6% over last year. Yesterday was the first time that the S&P 500 closed up over 10% for the year. In other words, the S&P 500 has largely kept pace with earnings this year. Valuations haven’t changed.

Ford Starts Production on the New F-150
Posted by Eddy Elfenbein on November 11th, 2014 at 10:15 am

Today’s the big day for Ford ($F). The car maker is starting production on its aluminum-bodied F-150 pickup trucks.

It’s Ford Motor Co.’s biggest bet in decades: an aluminum-sided F-150 that could set a new industry standard — or cost the company its pickup truck crown.

Ford was scheduled to start production of the 2015 F-150 Tuesday at its Dearborn Truck Plant, four miles from the company’s headquarters. It will arrive at U.S. dealerships next month.

Ford thinks a truck that is lighter and more fuel efficient, but even more capable, will win buyers while its competitors struggle to catch up. Aluminum — which is lighter than steel but just as strong — isn’t new to the auto industry, but this is the first time it will cover the entire body of such a high-volume vehicle. Ford made 647,697 F-150 pickups at its two U.S. plants last year; that’s one every 49 seconds.

Here’s the CEO on CNBC:

Bed Bath & Beyond Breaks $70
Posted by Eddy Elfenbein on November 11th, 2014 at 9:56 am

It took a while, but shares of Bed Bath & Beyond ($BBBY) finally broke $70.

Thanks Vets
Posted by Eddy Elfenbein on November 11th, 2014 at 9:51 am

Morning News: November 11, 2014
Posted by Eddy Elfenbein on November 11th, 2014 at 7:19 am

One Country, One Market? Making Money From Shanghai-Hong Kong Stock Connect

With a Stealth Fighter, China Tries to Gain Attention

Why China’s Singles Day Won’t Become a American Shopping Holiday

British Banks Sued By Wounded US Veterans Over ‘Funds to Iraqi Rebels’

Davos-Man Ackermann Lured to Cyprus Bank by Billionaires

Obama Asks F.C.C. to Adopt Tough Net Neutrality Rules

Google Signs 60-Year, $1 Billion NASA Lease

Vodafone Cheered by European Recovery

GoPro Launches $800 Million Offering, CEO to Sell Some Shares

Standard Chartered to Cut Bank Branches

Rivals Outdo Gross in Race for Bond Cash

Caesars Entertainment Loss Widens

To Get the Best Deals, Skip Black Friday

Joshua Brown: Is The Internet a Utility?

Roger Nusbaum: AdvisorShares Weekly Market Review – Week Ending 11/7/2014

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Switzerland’s Nutty Gold Referendum
Posted by Eddy Elfenbein on November 10th, 2014 at 2:08 pm

Later this month, Switzerland will hold a rather unusual referendum. If passed, it will require the Swiss central bank to increase its holdings of gold from 8% to 20%. It’s kind of a nutty idea. The central bank would also be forced to hold gold within the country.

Normally, these ideas are dismissed as irrelevant, but this referendum has a serious chance of passing. As you’d expect, all the important people are against the referendum.

If passed, the referendum would prompt the Swiss Fed to dump its holdings of foreign currencies, the euro in particular. As a result, the Swiss franc has rallied. The Swiss government tries to prevent the franc from going for more than 1.20 per euro. That band might soon be breached. It’s recently come to the edge.

Bond yields in Switzerland are now at an 18-month low. The yields are absurdly low. The five-year yield has fallen 0.02% to 0.04% while the two-year is down 0.05% to -0.12%. This is going to be interesting, but I would be very surprised to see the referendum actually pass.

The Markets at 1 pm
Posted by Eddy Elfenbein on November 10th, 2014 at 1:03 pm

At 1 pm, the stock market is having another good day. The S&P 500 has been as high as 2,038.70 today which is yet another all-time high. If we close higher today, it will be the 13th time in the last 18 sessions that we’ve rallied. That’s an amazing turnaround from a few weeks ago.

The stock market reached its previous peak on September 18 which was the same day that Alibaba ($BABA) had its IPO. The IPO was thought to be a flop; the shares pulled back to $82 from close to $100. But since then, it’s been on fire. Alibaba has been as high as $117 today. The company now has a market cap of $288 billion. It’s larger than Walmart ($WMT) or General Electric (GE).

I’ve been steering clear of Target ($TGT) for a few months now. I love the company but I’m not such a big fan of the stock. However, I have to concede that it’s rebounded impressively over the past few days. The shares were upgraded today by Oppenheimer. Earnings will come out again on November 19.

On our Buy List, McDonald’s ($MCD) is up by a tick. The company reported that same-store sales fell but by less than expected. Wall Street had been expecting a decline of 2.2% but MCD reported a drop of only 0.5%.

Morning News: November 10, 2014
Posted by Eddy Elfenbein on November 10th, 2014 at 6:45 am

China October Inflation Hovers Near Five-Year Low, Deflation Risks Seen Growing

Rouble Rockets as Russian Central Bank Ends FX Regime

Spain Outshines Euro Area as Draghi Morality Tale Echoes

Mark Carney Promises No More Bank Bailouts Ever

G20 Proposes Buffer To End Too Big To Fail Banks

Bullish Oil Wagers Cut in Sign of Growing OPEC Skepticism

Who’s Afraid of Fed Raising Rates? Not These Bond Buyers

Nutreco Center of Bidding War as Cargill Come-Back Seen

Japan’s SMBC Aviation Capital Orders 80 Boeing Planes in $8.5 Billion Deal

Samsung Electronics to Build $3 Billion Smartphone Plant in Vietnam

Uber Said in Early Talks to Raise $1 Billion to Fund Growth

Buffett’s $15 Billion From BNSF Show Railroad Came Cheap

Communities Fight State Laws That Can Divide Broadband Access

Joshua Brown: Professor Snowball: Passive Doesn’t Exist

Jeff Miller: Weighing the Week Ahead: Too Late to Join the Stock Rally?

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