• Today’s Fed Statement
    Posted by on May 1st, 2013 at 2:01 pm

    Here’s today’s Fed statement:

    Information received since the Federal Open Market Committee met in March suggests that economic activity has been expanding at a moderate pace. Labor market conditions have shown some improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth (shots fired at Congress! – Eddy). Inflation has been running somewhat below the Committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee continues to see downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

    To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

    The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.

    To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

  • April ISM = 50.7
    Posted by on May 1st, 2013 at 10:12 am

    The ISM for April was 50.7 which is down from 51.3 for March. Economists were expecting 50.8. For the 46th month in a row, the ISM has been 49.9 or better.

    fredgraph05012013

  • WEX Inc. Reports Earnings of 98 Cents per Share
    Posted by on May 1st, 2013 at 10:01 am

    WEX Inc. ($WEX) reported first-quarter earnings of 98 cents per share which was two cents better than estimates. Revenue rose 18% to $165.4 million.

    “We kicked off 2013 with first quarter revenue and adjusted net income exceeding our guidance, increasing 18% and 8%, respectively, over last year driven by strong transaction growth, exceptional credit loss performance and investments in our business to support future growth,” said Michael E. Dubyak, WEX chairman and chief executive officer. “Year to date we have made strides in executing on all fronts of our multi-pronged strategy. We advanced our international presence within Asia-Pac, Brazil and Europe as a result of investments in WEX Travel, our virtual payment solution for the travel industry, and further diversified our business all while expanding our Americas Fleet business with some marquee wins. With positive momentum in the business and a robust pipeline of opportunities, we have also positioned WEX for future success as we leverage our investments in our burgeoning growth platforms.”

    For Q2, WEX expects earnings to range between 98 cents and $1.05 per share. For the entire year, the company sees earnings ranging between $4.20 to $4.35 per share. Wall Street had been expecting $4.46 per share. The stock is off 7% this morning.

  • Morning News: May 1, 2013
    Posted by on May 1st, 2013 at 7:39 am

    China’s Manufacturing PMI Drops in April

    Chinese Way of Doing Business: In Cash We Trust

    We Now Know That An Anti-Corruption Drive In China Helped Cause The Crash In Commodities

    Slovenian Credit Lowered to Junk by Moody’s as Bond Sale Delayed

    Fed Seen Slowing Stimulus With QE Cut by End of This Year

    Consumer Confidence Jumps as U.S. Home Values Climb

    Pfizer 1st-Quarter Profit, Sales Miss Estimates as Lipitor Pressure Continues

    New York Times Leads Major Newspapers With 18% Circulation Gain

    IBM Assures Shareholders of Profit Goals After Earnings Stumble

    Merck First-Quarter Sales Disappoint

    To Satisfy Its Investors, Cash-Rich Apple Borrows Money

    Yahoo Scraps Deal for French Video Site

    Yahoo’s Mayer Offers Paid 16-Week Leave After Birth of Child

    Marc Chandler: Enrico Letta’s Italy

    Cullen Roche: NYSE Margin Debt Approaches All-Time High

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  • S&P 500 = 1,597
    Posted by on April 30th, 2013 at 10:39 pm

    April is officially on the books. Today was the 16th-straight Tuesday rally for the Dow. The S&P 500 closed today at 1,597.57 which is another all-time high close. The index is now up 12.02% for the year, and including dividends, it’s up 12.74%.

    However, the index is still very far from an inflation-adjusted new high. On March 23rd, 2000, the S&P 500 closed at 1,527.35. It actually rose 0.11 the next day but that little gain was just slightly below the inflation rate for March.

    We don’t have the inflation numbers yet for April, but if we assume an inflation rate of 0.1%, the S&P 500 would have to be 2,083.15 to match the inflation-adjusted high from 13 years ago. That’s another 30.4% from here.

  • Fiserv Earned $1.33 per Share for Q1
    Posted by on April 30th, 2013 at 4:31 pm

    Fiserv just reported first-quarter earnings of $1.33 per share which was one penny below consensus. For Q1 last year, the company made $1.15 per share. Fiserv’s CEO, Jeffery Yabuki, said the company is “on-track to achieve our targeted results for the year.”

    For the entire year, Fiserv expects adjusted revenue growth in excess of 10%, and earnings-per-share are expected to rise between 15% and 19% to a range of $5.84 to $6.03. The Street had been expecting $5.97 per share.

    The stock is down a bit in after-hours trading but there’s nothing surprising in this report. This is exactly what we expect of Fiserv.

  • Sell in May: What’s the Historical Record?
    Posted by on April 30th, 2013 at 12:10 pm

    Today is the last day of April. Believe it or not, we’re already one-third of our way through this decade. It’s at this time of year we often hear the old Wall Street adage, “sell in May and go away.”

    I recently crunched the data on the Dow’s historical returns — and by that, I mean every single day for the last 117 years since the index was born. I looked over the numbers and it turns out that the Dow has performed rather poorly from early-May through late-October.

    image1330

    Specifically, from May 6th to October 29th, the Dow has gained, on average, only 0.3%. That’s just shy of half the year (176 days to be exact). For the other half, the Dow has gained an average of 6.96%.

    Just to be clear, these numbers don’t include dividends. Also, I don’t believe there’s any advantage for investors in trading around these events. I just think it’s fascinating that after 117 years, some definite patterns have evolved.

  • Facebook Is Hemorrhaging Users
    Posted by on April 30th, 2013 at 9:59 am

    I haven’t been a fan of Facebook‘s ($FB) stock. Now there’s evidence that Facebook has been losing millions of users. It turns out that FB is just not cool anymore:

    Facebook has lost millions of users per month in its biggest markets, independent data suggests, as alternative social networks attract the attention of those looking for fresh online playgrounds.

    As Facebook prepares to update investors on its performance in the first three months of the year, with analysts forecasting revenues up 36% on last year, studies suggest that its expansion in the US, UK and other major European countries has peaked.

    In the last month, the world’s largest social network has lost 6m US visitors, a 4% fall, according to analysis firm SocialBakers. In the UK, 1.4m fewer users checked in last month, a fall of 4.5%. The declines are sustained. In the last six months, Facebook has lost nearly 9m monthly visitors in the US and 2m in the UK.

    Users are also switching off in Canada, Spain, France, Germany and Japan, where Facebook has some of its biggest followings. A spokeswoman for Facebook declined to comment.

    “The problem is that, in the US and UK, most people who want to sign up for Facebook have already done it,” said new media specialist Ian Maude at Enders Analysis. “There is a boredom factor where people like to try something new. Is Facebook going to go the way of Myspace? The risk is relatively small, but that is not to say it isn’t there.”

    Facebook is due to report earnings tomorrow. Wall Street currently expects FB to earn 57 cents per share this year (down from 66 cents per share three months ago) and 78 cents per share in 2014 (down from 87 cents per share three months ago).

    I think Facebook will continue to be profitable. To me, the big issue is the rapid growth that people expect. If the stock is going for 47 times this year’s earnings, that means the market expects very strong growth for years to come. I’m not sure that will come.

  • Harris Earns $1.12 Per Share
    Posted by on April 30th, 2013 at 8:30 am

    This morning, Harris ($HRS) reported fiscal third-quarter earnings of $1.12 per share which was inline with expectations. As the company warned us, the sequester is putting the squeeze on them. Those issues aside, the business fundamentals are strong.

    “Third quarter results were in line with our preliminary release issued April 11 and weaker than previously expected primarily due to U.S. and international tactical radio procurement delays,” said William M. Brown, president and chief executive officer. “U.S. Government funding constraints resulting from the continuing resolution were magnified when sequestration was triggered. Additionally, in the international market several key tactical radio orders have been pushed to later in the year or early next fiscal year.”

    “We recently announced company-wide restructuring actions that are expected to generate net annualized cost savings of approximately $40 to $50 million. These cost savings, combined with benefits from our ongoing focus on operational excellence and reduced discretionary spending, will allow us to be successful in a challenging government market environment while continuing to invest in R&D and fund strategic growth initiatives.”

    Harris reiterated its full-year guidance of $4.60 to $4.70 per share.

  • Morning News: April 30, 2013
    Posted by on April 30th, 2013 at 7:30 am

    Lloyds’ Profit Surges to $2.3 Billion

    UBS Records $1 Billion First Quarter Profit

    BNP Paribas Like SocGen Braces for French Eldorado End

    NYSE Euronext Sees Pick-Up In European Derivatives Trading

    Treasury Expects To Pay Down Debt For The First Time In 6 Years, Thanks To Austerity

    Consumer Spending Rises, Driven By Utility Costs

    BP’s $4.2 Billion Profit Beats Forecasts

    AB InBev Cuts Brazil Beer Forecast After Profit Misses Estimates

    Chrysler Hits a Pothole Over Retooling

    Carphone Warehouse Group PLC Proposed Acquisition and Q4 Trading Update

    ANA Holdings Group Net Profit Rises 53.1%

    Alibaba Steps Up Tencent Battle with Stake in Weibo

    Japan’s SoftBank Says No Need To Improve Sprint Offer

    Jeff Carter: Startups and Small Business

    Joshua Brown: Five Reasons I’m Not Worried About a Canadian Housing Bubble

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