Nicholas Financial = $14.12
Posted by Eddy Elfenbein on December 12th, 2012 at 9:46 am

Nicholas Financial ($NICK) is currently at $14.12 this morning. I don’t know if it will hold up, but here we are.

I also see that AFLAC ($AFL) has been as high as $54.70 this morning.

Morning News: December 12, 2012
Posted by Eddy Elfenbein on December 12th, 2012 at 7:15 am

Europe Seeks To End Discord Over Banking Union

U.K. Unemployment Falls in Sign of Labor-Market Resilience

Euro Zone Factory Output Falls Again, Recovery Far Off

China Woos Overseas Companies, Looking for Deals

Hedge Funds Stride the Stage of World Affairs

OPEC Uniting to Keep Quota as Oil Heads for Best Year

Unlikely Backers in a Battle Over Taxes

Michigan Puts Limits On Unions

Amazon, Massachusetts Strike Deal For Residents On Sales Tax

Delta Buys 49% Virgin Atlantic Stake for NYC-U.K. Service

McDonald’s $8.25 Man and $8.75 Million CEO Shows Pay Gap

HSBC to Pay Record Fine to Settle Money-Laundering Charges

AIG Bailout Exit No Finish Line as CEO Narrows Focus

Joshua Brown: Mission Accomplished

Credit Writedowns: The Great Migration of the 21st Century

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BOOM! Nicholas Financial Declares Special $2 Per Share Dividend
Posted by Eddy Elfenbein on December 11th, 2012 at 5:26 pm

Impressive. After the close today, Nicholas Financial ($NICK) declared a special $2 per share dividend. Going by NICK’s close today, that’s a 15% return.

CLEARWATER, Fla., Dec. 11, 2012 — Nicholas Financial, Inc. (NICK) announced today that its Board of Directors has declared a special cash dividend of $2.00 per share on its common stock to be paid on December 28, 2012 to shareholders of record as of December 21, 2012.

Peter L. Vosotas, Chairman and CEO noted, “Today’s announcement of a $2.00 special cash dividend, to be paid before the end of the calendar year, is our effort to return capital to our shareholders in the most tax efficient manner as possible. Our strong balance sheet and favorable access to the credit markets allow us to provide shareholders with this dividend while maintaining our conservative capital structure. The payment is in addition to our $0.12 cent quarterly dividend paid on December 6. Based on the decision to pay this special dividend, the company may elect to forego future dividends.

Although NICK’s HQ is in Florida, it’s actually a Canadian company so the dividend will be subject to foreign tax rules (please consult your advisor on these matters).

Looking At This Week’s Fed Meeting
Posted by Eddy Elfenbein on December 11th, 2012 at 3:10 pm

The Federal Reserve meets today and tomorrow, and Ben Bernanke will hold a press conference tomorrow. There may actually be news to come from this meeting.

For one, the Fed will release a summary of its economic projections. Although Q4 looks like it will be a dud for GDP, there’s renewed optimism for above-trend growth next year.

The Fed will also probably extend some of its bond-buying programs. Operation Twist expires at the end of the year, although its impact has probably been very minor. I expect the Fed to announce some sort of program extension but I can’t say what.

There’s also the issue of what metric to follow when looking at monetary policy. Meaning, the Fed ought to continue to use quantitative easing until X happens. What’s X then? This idea is clearly bouncing around the Fed. The most popular idea in the blogosphere is for the Fed to target nominal GDP growth. I think the Fed may also consider growth in non-farm payrolls. Remember the C of FOMC is for committee so it may be a compromise.

The Fed has also taken to announcing when they expect interest rates to rise. I’m now at the point where I suspect that it may be too early to even guess. Most Fed members think rates will go up sometime in 2015. That seems so far away that I don’t know how much value it has. But the message to the market is to not wait for rates any time soon. However, the rather poor performance of gold suggests that some folks think rates could soon rise.

We’ll know more tomorrow.

The S&P 500 Breaks 1,430
Posted by Eddy Elfenbein on December 11th, 2012 at 12:19 pm

The stock market is having a good day on the news of progress regarding Fiscal Cliff talks. The S&P 500 got as high as 1,434.27 which oddly exactly matched its high from November 2nd.

I’ve told investors not to worry about these silly Fiscal Cliff stories. The fundamentals of the market, for now, are very good. We may bounce around but the trend is in favor of the bulls. I still think the S&P 500 will break 1,500 within the next few months.

One small point of worry is that the Republicans and Democrats may wind up using the market as the ultimate veto. In other words, they’ll refuse to compromise long enough until the market has a big down day. Once that happens, they’ll finally be able to reach a serious deal since they can pretend that they were saving the market from the evil machinations of the other side. Bear in mind that end-of-the year 401k statements will be going out soon. No politician wants to be blamed for bad news.

The S&P 500 is still holding up well despite some negative comments from House Speaker John Boehner.

Good news for Stryker ($SYK). Goldman Sachs upgraded the stock from Neutral to Buy. The shares are up about 2% today.

Morning News: December 11, 2012
Posted by Eddy Elfenbein on December 11th, 2012 at 7:05 am

German Confidence Lifts Europe Shares To 18-Month High

Greek Banks Set To Top Up Bids To Meet Buyback Target

Monti Resignation Announcement Causes Fears Of Renewed Euro Turbulence

Boom in Mongolia Deflates After Deal That Started It Is Threatened

Gold Prices Rise on Euro-Zone Uncertainty

Fed Seen Pumping Up Assets to $4 Trillion in New Buying

Bailout Over, U.S. Treasury Plans to Sell A.I.G. Shares

A Cooperative Approach on ‘Too Big to Fail’ Banks

Amgen to Acquire the Gene-Hunting Firm deCODE

Diageo Ends Cuervo Talks, Will Terminate Distribution Deal

McDonald’s Sales Delivers

Ingersoll to Spin Off Security Unit

HSBC to Pay $1.92 Billion to Settle Charges of Money Laundering

Jeff Carter: Gregoire is Wrong on Internet Taxes

John Hempton: Trust Me – I Run A Pyramid Marketing Scheme

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The S&P 500 Nears Its 50-DMA
Posted by Eddy Elfenbein on December 10th, 2012 at 2:16 pm

I’m struck by how placid this market has been. The indexes just aren’t doing much of anything. As I mentioned before, the chart-watching crowd takes that as a good sign since the market hasn’t done an immediate U-turn after a nice rally.

I would think some traders would have been rattled by the news of the resignation of Italy’s Prime Minister but that hasn’t happened (although the Italian bond market wasn’t pleased). On Friday, the S&P 500 closed at its highest level since the election but it was just a hare breath below the 50-day moving average. It’s been seven weeks since the index last closed above its 50-DMA.

Analysts on Wall Street now expect Q4 earnings for the S&P 500 of $25.62 which is down from $28.32 at the beginning of the year (these are index-adjusted numbers). For Q1, the Street now expects $26.41 which would still be an all-time record, but it’s down more than $1 since the middle of the year.

I used to think the S&P 500 could break $100 in earnings this year but it looks like we’re going to fall just short. The current estimate is for $99.68. For next year, the Street expects $113.26. In 2006, the index made $87.72. That was the all-time high until last year.

For dividends, I think the S&P 500 will be able to pay out more than $30 in dividends this year. For last year, it was $26.43.

Putting the Apple Sell-off in Context
Posted by Eddy Elfenbein on December 10th, 2012 at 12:59 pm

The financial world has been gripped by the recent sell-off in shares of Apple ($AAPL). Apparently Isaac Newton was correct; apples do obey the laws of gravity.

At one point on September 21st, the stock got to $705 per share, and it hit a recent low of $505 on November. That’s $200 in less than two months. That’s a loss of roughly $188 billion, which is more than $625 per every American. Ouch!

While the numbers are staggering in nominal terms, in percentage terms, it’s not that big of a deal for any one stock — and particularly not for Apple. Here’s a logarithmic chart of Apple going back to 1985. As you can see, the recent downturn is peanuts compared with other Apple plunges.

Between March 22, 2000 and April 17, 2003, Apple dropped 82%. If it were to do the same this time, the stock would be at $128 per share in late 2015.

I’m not saying it will. I’m just saying it has.

Morning News: December 10, 2012
Posted by Eddy Elfenbein on December 10th, 2012 at 6:26 am

Central Banks Ponder Going Beyond Inflation Mandates

Greece Extends Debt Buyback Deadline After Nearing Target

Italy Vote Will Test EU Nobel Winners After Greek Buyback

Rebalancing the French-German Partnership

Japan Sinks Into Recession as Abe Calls for More Stimulus

China To Stick With 7.5 Percent Economic Growth Target In 2013

CNOOC Pledge Small Step For China Transparency, Skeptics Abound

Fed Is Likely to Sustain Its Stimulus Program

Lawmakers Open Rhetorical Space for Budget Deal in Middle

Chinese Firm Wins Bid for Auto Battery Maker

Browser Wars Flare Again, on Little Screens

Google Revenues Sheltered in No-Tax Bermuda Soar to $10 Billion

Bloomberg Weighs Making Bid for The Financial Times

Cullen Roche: Goldman Sachs: Top Trades for 2013

Jeff Miller: Weighing the Week Ahead: Something New From the Fed?

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Where’s the Volatility?
Posted by Eddy Elfenbein on December 7th, 2012 at 7:41 pm

Here’s a look at the intra-day S&P 500 over the last ten days.

The good news is that the S&P 500 just closed at a post-election high. But over the last seven days, the market has had very little intra-day volatility. The index has bounced between 1,400 and 1,423 which is roughly 1.6%.

The width of the y-axis understates my point, but if we compared the past seven days with any other period of seven days, the graph above would almost appear to be a straight line.