Qualcomm Raises Dividend by 20%
Posted by Eddy Elfenbein on March 4th, 2014 at 10:45 am

Now that the fears from Europe have subsided somewhat, the S&P 500 is rallying strongly this morning. According to the latest reports, Russian soldiers have concluded their exercises in western Russia. The S&P 500 has been as high as 1,868.94 this morning which is a new all-time intra-day high. The high close is 1,859.45 from last Friday.

The stocks in the small-cap Russell 2000 are especially strong today. Next month, the small-cap cycle turns 15 years old. If the S&P 500 had kept pace with the Russell 2000 since the start of this cycle, the S&P 500 would be over 4,000 today.

Several of our Buy List stocks are also doing well today. Moog ($MOG-A) was crushed in January, but the stock is creeping higher today. The shares are up close to 5% today, and are up more than 12% from last month’s low. DirecTV ($DTV) is up to a new high, and the stock came close to hitting $80 per share this morning. Oracle ($ORCL) is back over $39 per share this morning. The company said that it will release its next earnings report in two weeks, on March 18.

The best news for us this morning is that Qualcomm ($QCOM) announced a 20% increase to its dividend. The quarterly payout will rise from 35 cents to 42 cents per share. The board also approved a $5 billion increase to their buyback authorization. That brings the total authorization to $7.8 billion. Going by the late-morning share price, QCOM now yields 2.2% which is about the average for the market.

Morning News: March 4, 2014
Posted by Eddy Elfenbein on March 4th, 2014 at 6:34 am

Dollar Surges, While Ukraine Crisis Looms

Ukraine: Pressure Is On But No Need to Panic

Germany’s RWE Slides to €2.8 Billion Net Loss for 2013

RBA Reiterates Likely Period of Rate Stability After Holding

Supreme Court to Consider Employee Pay for Security Screenings

SEC Can Explain Why It’s So Good at Selling Stocks

Carmakers Find Working With EPA on Smog Better Than Fight

Deal May Be Near for Men’s Wearhouse and Jos. A. Bank

Reynolds Eyes Lorillard Tobacco Bid

Hopes High for Zinc But Glencore Profits Down

Beiersdorf Sees Margin Improvement Amid Emerging-Market Push

Citigroup Joins JPMorgan in Seeing Trading-Revenue Drop

Buffett Fails to Dispel Investor Angst Over Succession Plan

Joshua Brown: Nonsense Forecasts

Howard Lindzon: 20 Years of Angel Investing

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The Russian Market Tanks
Posted by Eddy Elfenbein on March 3rd, 2014 at 5:12 pm

Here’s a look at the S&P 500 compared with the Russian ETF ($RSX) over the past few years.

Ford’s February Sales Fell
Posted by Eddy Elfenbein on March 3rd, 2014 at 1:44 pm

From USA Today:

Ford Motor said it sold 183,947 new cars and trucks in February, down 6.1% from a year ago.

Cars and SUVs were down, but pickup trucks were about flat. The only Ford-brand car that posted a gain was the Mustang, up 6.4%.

Among Ford SUVs, older-design Edge, Flex and Expedition all were up, while Escape and Explorer, the newer models among the SUV lineup, both were off.

F-series, the company’s golden goose and America’s best-selling vehicles of any kind for more than three decades, was up a modest 2.6%. Still, Ford said, it was the line’s best February in eight years.

But the Transit Connect, which had been the talk of tradesmen and small business owners because of its relatively low price, good mileage and cavernous cargo space, tumbled 38%.

Not as bad as it looks, Ford said. “Sales surged in the final week, providing us momentum after a slow start to the month,” said John Felice, Ford vice president in charge of U.S. marketing, sales and service. “Ford Fusion continued its strong retail sales performance in the West, outpacing the mid-size sedan segment. F-Series and Lincoln also continued to perform well.”

The Lincoln brand’s MKZ, an entry-luxury sedan based on the Ford Fusion and one of the new models that Ford hopes will revive Lincoln, was up a hefty 222.1%. The MKX midsize SUV was up 8.4% and overall, the Lincoln brand was up 36.4% for its fifth straight consecutive month of sales gains.

Lincoln has foundered, unable to convince buyers to take it seriously as a luxury alternative to Cadillac, Infiniti or Lexus, but in the past five months, Lincoln sold 34,476 vehicles, representing a 26% increase over the same period one year ago.

Ford Motor fleet sales were off 10% in February, as winter weather again delayed a portion of fleet orders. The volumes are anticipated to be made up in March.

Putin Sinks the Market
Posted by Eddy Elfenbein on March 3rd, 2014 at 12:29 pm

The stock market is down today after the terrible news of the Russian invasion of Ukraine. The Russian stock market is getting crushed, and the ruble is down sharply. The Russian Fed had to step in and raise interest rates by 150 basis points. At one point, the MICEX was down by as much as 12.5%. On the U.S. market, shares of Gazprom ($OGZPY) dropped nearly 14%. The yield on six-month Ukrainian paper is close to 50%.

The S&P 500 is currently down 23 points. There’s now talk that Q1 GDP growth will come in around 1.7% or 1.8%, when not too long ago people thought it would top 3%.

The real action today has been in the gold pits. The yellow metal is currently up $32.40 to $1354 per ounce. Most of our Buy List is down today. Shares of DirecTV ($DTV), however, are holding up well. The latest disclosure from Warren Buffett indicates that the investing icon likes DTV. Buffett has increased his DTV substantially. Meanwhile, he’s sold out of DISH.

Qualcomm ($QCOM) is having rough day even though JMP Securities raised its price target to $85 per share, and they have an “outperform” rating.

February ISM = 53.2
Posted by Eddy Elfenbein on March 3rd, 2014 at 10:51 am

We got a little bit of good news this morning; the ISM for February came in at 53.2. Expectations were for 52.3.

This ISM report is significant because we’re starting to get economic data that’s post “bad weather.” January’s ISM took a big dive and dropped to 51.3.

This shocked a lot of folks but people mostly bought the excuse that poor winter weather held back consumers. We also saw that effect in other data.

Now, however, the bad weather has passed and investors have become curious if the weather excuse was really a smokescreen for poor economic performance. Today’s ISM suggests that the weather excuse was indeed accurate and the economy continues to expand. The ISM report has been 49.0 or better for the last 56 months in a row.

S&P 500 Sectors and the Bull Market
Posted by Eddy Elfenbein on March 3rd, 2014 at 9:19 am

We’re coming up on the fifth anniversary of the great Bull Market. Here’s a look at the relative strength of the S&P 500 sectors since the market’s low.

So what is this chart? I took the total return index of each sector and divided it by the S&P 500 total return index, then set each one to start at 100 on March 9, 2009. If the line is rising, then the index is outperforming the market. If not, then it’s trailing. This way, you can see the make-up of the rally.

A few takeaways. The bull market was started by a huge rally in financials (see that early surge in the green line). To put this in perspective, the Financial Sector ETF ($XLF) doubled in two months. Of course, that’s after an epic collapse.

Even though the green line shot up so much so early, I think the bull market has been relatively evenly distributed. Sure, it’s not perfect, but I don’t see any gross imbalances like we saw with the tech bubble.

The consumer discretionary sector has been very strong, and consistently so. The outperformers have been financials, discretionary, industrials and tech. The laggards have been utes, telecom and energy. I’ve been a little surprised that tech (navy blue) has mostly been a so-so performer. Tech got left behind during much of 2012-13 and has only been a market leader during the last six months or so.

Healthcare and Staples Diverge
Posted by Eddy Elfenbein on March 3rd, 2014 at 8:11 am

I want to revisit a subject I touched on a few months ago, and that’s the major divergence between healthcare stocks and consumer staples stocks.

Market watchers have long known that these two sectors tend to behave similarly. The reason is that both are countercyclical economic sectors. If the economy goes down the drain, folks cut back on other stuff a lot more than they do healthcare or toothpaste. That’s just how it is, so these two sectors tend to hold up well when things aren’t so hot.

But in the last few months, healthcare has ticked up while staples haven’t done much at all. So what’s going on? I honestly don’t know. Perhaps something about Obamacare? Either way, I pay attention whenever long-term trends break down.

Morning News: March 3, 2014
Posted by Eddy Elfenbein on March 3rd, 2014 at 6:49 am

China’s Weakening Currency

High-Interest Web Banks on the Rise in China

Bank of Ireland Narrows Loss

UK Manufacturing Rises in February as Employment Surges

U.K. Mortgages Soar With House Prices as Economy Strengthens

Qantas Won’t Get Debt Guarantee From Australia, Abbott Says

G-8 Suspension Tops Limited Toolkit to Sway Russia on Ukraine

Gold Jumps More Than 1% on Crisis in Ukraine

Palm Oil Hits Highest in Almost 1-1/2 Years on Dry Weather Fears

Losses Mobilize the Bitcoin Police

SEC Investigates Citigroup Over Fraudulent Mexican Loans

GrubHub, In IPO Filing, Reveals Too Lazy to Cook Site Is Profitable

Disney Will End Funding to Boy Scouts Over Anti-Gay Policy

Epicurean Dealmaker: This Situation Absolutely Requires a Really Futile and Stupid Gesture

Jeff Miller: Weighing The Week Ahead: More Clarity About Employment?

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Q4 GDP Revised Down to 2.4%
Posted by Eddy Elfenbein on February 28th, 2014 at 8:58 am

The government just revised its estimate for fourth-quarter GDP growth. The original estimate was for 3.2%. Today, that was lowered to 2.4%. Here’s a look at quarterly GDP for the last few years: