Q1 GDP Growth = 0.1%
Posted by Eddy Elfenbein on April 30th, 2014 at 9:27 am

The government reported that the economy grew by a measly 0.1% in the first quarter of this year. That’s a terrible number. Obviously, the weather was an issue, but even so, 0.1% is very bad.

This was the worst quarter for the economy since the first quarter of 2011. We barely came in below the growth rate of the fourth quarter of 2012. Over the last seven years, the economy has grown by 8.3% in real terms. In the last 32 quarters, economic growth has topped 3.2% only five times. The U.S. economy grew less over the last 14 years than it did in the seven years prior to that.

Morning News: April 30, 2014
Posted by Eddy Elfenbein on April 30th, 2014 at 6:24 am

Euro Edges Lower Ahead of Pre-ECB Inflation Data

Nikke Pares Gains as BOJ Stands Pat, Set to Fall for 4th-Straight Month

France Won’t Block Alstom Bids If Keeps Control of Nuclear Assets

George Osborne Loses Legal Challenge to Robin Hood Tax

Budget Cutbacks Spurring Defense Mergers

BNP Warns U.S. Fine May “Far Exceed” $1.1 Billion Provision

Twitter Beats Estimates, But Shares Slammed on User Growth Worries

3D Systems Reports First Quarter 2014 Financial Results

Shell Profit Beats Analyst Estimates on Higher Gas Earnings

Target’s Move to Chip and PIN Seeks to Assure Consumers

If Apple Did What eBay Has Just Done Then They’d Have A $44 Billion Tax Bill

Wal-Mart Brings One-Stop Shopping to Car Insurance

Coach Gets Marked Down, But It’s Still No Bargain

Jeff Carter: DATA Act Passes Congress-Now What?

Edward Harrison: Steve Hanke on Currency Boards and Paul Brodsky on Bottom-Up Investing

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Four Buy List Earnings Reports
Posted by Eddy Elfenbein on April 29th, 2014 at 7:34 pm

After the closing bell, we had four Buy List earnings reports. Here’s a summary:

AFLAC ($AFL) actually reported results slightly before the closing bell, but it’s the same story we know well. The supplemental insurance company is doing very well businesswise but the yen is eating their profits. For Q1, AFLAC had operating earnings of $1.69 per share. The weak yen knocked off ten cents per share. Excluding currency, operating earnings were up 5.9% from a year ago.

Now for guidance. For Q2, AFLAC sees earnings ranging between $1.54 and $1.68 per share. That’s pretty good. Wall Street had been expecting $1.58. The downside is that AFLAC lowered their full-year guidance. The original range was $6.31 to $6.49 per share. Now it’s $6.06 to $6.40 per share. Those estimates are based on a yen/dollar rate between 100 and 105. The stock got a nice jump in the last few minutes of trading on Tuesday.

Now on to eBay ($EBAY) which gets a lot of attention on the Street. The company reported Q1 adjusted earnings of 70 cents per share which beat the Street by three cents per share. Officially, eBay lost $2.3 billion last quarter going by net earnings but that’s because they took a massive tax charge in order to repatriate foreign earnings.

For Q2, eBay sees earnings of 67 to 69 cents per share which was a tad below the Street’s consensus of 70 cents per share. Importantly, eBay reiterated their full-year guidance of $2.95 to $3.00 per share. Wall Street is at $2.99 per share. These numbers are pretty much what I expected, although the shares were down 4.3% in the after-hours market.

Express Scripts ($ESRX) reported Q1 earnings of 99 cents per share which was two cents below expectations. One troubling note is that they lowered their full-year guidance by six cents per share at each end. The new range is $4.82 to $4.94 per share, but that’s still year-over-year growth of 17% to 20%. The shares were down more than 5% in the after-hours market.

Fiserv ($FISV) may be the big star of this earnings season. For Q1, they made 82 cents per share which easily beat Wall Street’s estimates of 74 cents per share. Earnings were up 22% from a year ago while quarterly revenue was up 7.1% to $1.23 billion which also beat expectations. Fiserv reaffirmed full-year guidance of $3.28 to $3.37 per share which represents growth of 10% to 13%. The stock rallied 1.25% today, and was up another 3.1% in the after-hours market.

Europe Recovers—Slowly
Posted by Eddy Elfenbein on April 29th, 2014 at 11:47 am

It wasn’t that long ago that Europe was falling apart. The economies there are still in rough shape, but their stock markets are doing well. The lesson for investors is that things do turn around, it’s just a matter of time.

Here’s a look at the ETFs for Spain ($EWP), Italy ($EWI) and Germany ($EWG). I also included the S&P 500 for comparison.

Another Lucky Tuesday
Posted by Eddy Elfenbein on April 29th, 2014 at 11:02 am

The stock market is up again today, at least by a little bit. Interestingly, Tuesdays have been the lucky day of the year. So far, the S&P 500 has risen on 13 of the 15 Tuesdays in 2014.

Today is also a big day for earnings. We have four Buy List stocks due to report after the close. This is also the beginning of a two-day Fed meeting, so expect a lot of news this week.

In yesterday’s market, we saw a big split between value and growth stocks. That’s continuing today, but not as wide. The split between Value and Growth, which has been so big last month, slowed down over the past few weeks, but it’s heated up again. This could last for a while.

In economic news, today’s Case-Shiller Index showed that home prices rose 12.9% over the past year through February. Also, consumer confidence fell a bit in April. The Conference Board Index dropped from 83.9 to 82.3. Consumer confidence is still near a six-year high.

A quick word about the bond market. I’ve been surprised at how steady rates have been. The 10-year yield has been locked in a trading range, between 2.6% and 2.8%, for three months. The bond market has been much stronger this year than I expected.

Yesterday, Bank of America ($BAC) dropped sharply today after the company said it was abandoning its dividend increase and share buyback plan. The bank said it discovered flaws in the info it provided to the Fed for its stress test. BAC had planned to raise its dividend from one penny to five cents per share. That’s embarrassing but they did the right thing by coming clean. By many measures, BAC seems cheap, but I won’t even consider it until they start paying a respectable dividend.

One interesting note about BAC. Due to its low share price, it’s a favorite among traders. The stock usually tops the daily list of high volume stocks. BAC trades an average of 109 million shares each day. Wow! That’s more than 4,600 shares every second, and it’s much higher than that towards the opening and closing bells. Yesterday, BAC traded an astounding 344 million shares, including 20 million in the first five minutes.

Morning News: April 29, 2014
Posted by Eddy Elfenbein on April 29th, 2014 at 6:45 am

Why Draghi Believes the FOMC Way Is The Best Way

Spanish Jobless Rate Falls From Year Ago

Yellen’s Dots Dash Effort for Greater Fed Clarity on Rate Rises

Bank of America’s Bad Accounting

Banco Santander Offers to Buy 25% Of Its Brazilian Subsidiary

Deutsche Bank Profit Beats Estimates on Trading Revenue

GE Trumpets 40-year Jet Engine Venture to Bolster Alstom Bid

Texas Enterprise Fund Will Grant $40 Million to Toyota

Samsung Mobile Sales Fall as Chinese Rivals Win Customers

AstraZeneca Chief Puts Cancer Ahead of Megadeals

Nokia Names Networks Head Rajeev Suri as CEO

Warren Buffett Defends High CEO Pay: It’s Not ‘Out Of Whack’

Forest Laboratories to Acquire Furiex for $1.1 Billion

Cullen Roche: Our Unhealthy Obsession With Central Banks

Howard Lindzon: What is The Market Whispering…and Hiding Out in France – The New Safe Haven?

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Morning News: April 28, 2014
Posted by Eddy Elfenbein on April 28th, 2014 at 6:50 am

Strong Euro is a Powerful Deflationary Factor: ECB’s Christian Noyer

Russian Billions Scattered Abroad Show Trail to Putin Circle

France Says Could Block Alstom Deal as President Meets GE’s CEO Jeff Immelt

International Monetary Fund Raises China growth Outlook

Oil Climbs on Worries Over Ukraine Crisis

Fannie-Freddie Fate Hangs on Senate Action This Week: Mortgages

Pfizer Offering $100 Billion for AstraZeneca

Gibson Brands Announces Agreement to Acquire Philips’ Audio and Home Entertainment Business

Sweden’s Meda Rejects Sweetened Bid From Mylan

Panasonic Expects 16% Profit Rise This Full Year

Holcim Reports Lower Sales and Profits on Currency Movements

Charter Reaches Deal With Comcast for Subscribers

Toyota Restructures U.S. Marketing Arm; Voluntary Exits Offered

Joshua Brown: “the most important thing going on in global markets”

Jeff Miller: Weighing the Week Ahead: Time to Sell in May?

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FT: 2,500 Years of Financial Crises
Posted by Eddy Elfenbein on April 25th, 2014 at 9:35 am

Moog Earned 82 Cents per Share
Posted by Eddy Elfenbein on April 25th, 2014 at 8:04 am

Moog ($MOG-A) just reported earnings of 82 cents per share which matched estimates.

Moog Inc. today announced second quarter net earnings of $38 million and earnings per share of $.82, a 3% increase over last year. Total sales of $650 million were up 1% from a year ago.

Total Aircraft Controls sales in the quarter were $275 million, up 6%. The Company’s commercial OEM sales were $99 million, 17% higher, including $58 million in sales to Boeing and $17 million in Airbus sales. Commercial aftermarket sales of $35 million were up 19% on initial provisioning spares for the 787 program.

Military aircraft sales were down 3% to $141 million. F-35 Joint Strike Fighter production revenues were higher but offset by lower revenues for other fighter and helicopter programs including Light Combat Aircraft, Black Hawk and the V-22 tilt rotor aircraft. Military aftermarket sales were down 4% to $59 million.

Space and Defense segment sales, at $95 million, were 10% lower than a year ago. Products sold for satellite and launch vehicles were $52 million, down 16%. Defense sector sales for ground vehicles were lower but were offset by stronger sales of security products, which increased 10%.

The Company’s Industrial Systems segment had sales of $151 million, an increase of $7 million, or 5%. Sales of controls for industrial automation applications were $9 million higher, at $80 million. Sales of energy controls totaled $39 million and included a $3 million increase in sales of wind energy pitch controls. Simulation and test products, including motion bases for flight training simulators, were down $4 million as major simulation customers adjusted their inventories.

Sales for the Components Group of $101 million were $2 million higher than last year’s second quarter. Sales of industrial products were stronger due to the Aspen Motion Control acquisition completed a year ago. Aerospace and defense sales were down 11% while medical and energy sales were unchanged.

The Medical Devices segment had sales of $27 million, down $8 million year over year, the result of the June 2013 Ethox Buffalo sale as well as recent inventory adjustments for pumps and sets at a distribution partner.

The Company’s twelve month backlog is $1.4 billion.

The Company also updated its projections for 2014 to include sales for the year at $2.64 billion, net earnings of $169 million and earnings per share of $3.65.

“This was a good news quarter with earnings coming in ahead of plan and healthy cash flow,” said John Scannell, Chairman and CEO. “We are anticipating margins will improve in the second half on slightly higher sales and an improving mix.”

Ford Earns 24 Cents per Share
Posted by Eddy Elfenbein on April 25th, 2014 at 7:49 am

Ford just reported Q1 earnings of 24 cents per share.

Ford Motor Co.’s worldwide sales rose in the first quarter, propelled by growing strength in Asia and Europe. But weakness in North America dragged down the company’s profit.

Its earnings missed Wall Street’s expectations, while revenue beat. Its shares fell 3 percent in premarket trading.

Ford’s first-quarter net income fell 39 percent to $989 million, or 24 cents per share, down from $1.64 billion, or 41 cents per share, in the January-March period a year ago.

That was far short of Wall Street’s expectations. Analysts polled by FactSet forecast earnings of 31 cents per share.

Revenue rose slightly to $35.9 billion, beating analysts’ expectations for $34.2 billion. Worldwide sales were up 6 percent to nearly 1.6 million.

Ford’s U.S. sales fell 3 percent to 580,260 in the January-March period, the victim of bad weather and low buyer interest in smaller, fuel efficient cars like the Focus and C-Max hybrid. While the F-Series pickup continued to see gains, sales of other key vehicles like the Fusion sedan and Escape SUV were down.

In China, first-quarter sales soared 45 percent to 271,321 vehicles, while European sales were up 11 percent to 326,000.

Ford’s North American operations were hit with $100 million in weather-related charges during the brutal winter, including increased costs for parts shipments. The company also set aside $400 million for its warranty reserves for the repair of prior models.

North American pretax profit fell 37 percent to $1.5 billion.