• Morning News: March 5, 2014
    Posted by on March 5th, 2014 at 6:01 am

    Economic Expansion in Euro Zone Accelerates

    ECB May Repeat Japan Mistake That Triggered Lost Decade

    From Funds to Gold, How Will Ukraine Affect My Investments?

    China Vows Tough Reforms, Stronger Defense

    IDC: China Smartphone Growth To Slow

    Qatar Stocks Fall Most in Five Months as GCC States Pull Envoys

    Market and Rates Helped Private Equity Chiefs Thrive Last Year

    Obama Budget Sets Up Election-year Clash With Republicans

    Chicago Cut to Three Levels Above Junk by Moody’s Ahead of Sale

    Carrefour Boosts 2014 Capex After 2013 Profit Rises

    Forget About Windows 8, Insiders Say Microsoft’s Real Money Maker Is Broken

    Darden Expects Weak Q3, Re-Affirms Outlook

    Will 1,100 Stores Closures Save RadioShack? Probably Not

    Roger Nusbaum: Getting in Front of Changing Retirement Dynamics

    John Hempton: Letting Qantas Go Bankrupt Would Be Good For Australia

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  • S&P 500 Jumps to 1,873
    Posted by on March 4th, 2014 at 5:25 pm

    Great day for the market today. The S&P 500 soared 1.53% to close at 1,873.91. That was our best day since December 18.

    But the real stars were the small-cap stocks. The Russell 2000 ($RUT) index jumped 2.75% to close at 1,208.65. That’s a huge outperformance for a single day. The VIX plunged back down to 14.10. This was a good day for the optimism trade.

    Our Buy List also had a good day. Our portfolio rose 1.62% which edged out the rest of the market. Moog ($MOG-A), which has been a laggard, jumped 5.44%. At one point, it was up as much as 6.79%.

    Qualcomm ($QCOM) had a good day with the news of its 20% dividend hike. The company also announced that Steve Mollenkopf will take over as CEO and Paul Jacobs will become the executive chairman.

    For the year so far, our Buy List is up 1.73% compared with 1.38% for the S&P 500.

    Here’s a remarkable chart. This is the Russell 1000 (in black) compared with the Russell 2000 (gold). The R1000 is the one thousand largest stocks in the R3000 Index, while the R2000 are the smallest two thousand. It’s stunning to see this divergence last for 15 years.

    big.chart03042014m

  • 225 Years Ago Today
    Posted by on March 4th, 2014 at 2:34 pm

    Today is the 225th anniversary of the U.S. government. Congress first met in New York on March 4, 1789.

    Not much happened. They took roll and not enough people had made it there yet. Just nine of 22 senators and 13 of 59 representatives showed up.

    George Washington wasn’t inaugurated until April, but March 4th remained Inauguration Day until 1933 when it was changed to January 20th.

    Here’s a look at the Congressional Record from 225 years ago today.

  • Qualcomm Raises Dividend by 20%
    Posted by 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 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 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.

    big03032014g

  • Ford’s February Sales Fell
    Posted by 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 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 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.

    fredgraph03032013a

  • S&P 500 Sectors and the Bull Market
    Posted by 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.

    image1384

    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.