Morning News: March 1, 2013
Posted by Eddy Elfenbein on March 1st, 2013 at 6:45 am

Asian Manufacturing Growth Slows, Data Show

Eurozone Unemployment Hits 11.9%

Spending Cuts Signal Austere Future for Domestic Programs

Consumers, Exports Nudge Up Economy

4 Possible Silver Linings In The Sequester

Buffett Outlining Dividend Plan May Ease Successor’s Path

Groupon Dismisses Chief After a Dismal Quarter

J.C. Penney Lowest Sales in Decades Show Johnson Stumbles

Banana Republic: Turning Khaki Into Gold

Lloyds Posts Loss on Loan Insurance, Swaps Compensation

Sears Holdings Q4 Loss Narrows

Ad Firm WPP Sees Business Confidence Improving

Barnes & Noble Rethinks Its Strategy for the Nook

Roger Nusbaum: You Maniacs, You Blew It Up

Stone Street: ZAGG:SKUL::Punxsutawney:Paris

Be sure to follow me on Twitter.

Remarkable Stat on Real GDP
Posted by Eddy Elfenbein on February 28th, 2013 at 10:42 am

Here’s a stat that I find astonishing:

From 1947 to 1973, real GDP grew by 175.9603%.
From 1973 to 2012, real GDP grew by 175.9607%.

In other words, the U.S. economy grew by the same amount over the last 39 years as it did in the 26 years before, despite the latter period being 50% longer. And when I say the same, I mean almost precisely exactly the same.

Here’s quarterly GDP growth for the last few years:

The Dow Closes in on All-Time High
Posted by Eddy Elfenbein on February 28th, 2013 at 10:27 am

The Dow closed yesterday just 89.16 points from an all-time high close. This was the highest close for the index in 64 months. To give you an idea of how close we are to making a record, the 30 stocks in the Dow need to rise by a combined total of $11.61. The index has been up as much as 30 points today.

Morning News: February 28, 2013
Posted by Eddy Elfenbein on February 28th, 2013 at 7:13 am

Draghi Says ECB in No Rush to Tighten as Inflation Slows

Monti Says European Crisis Management, Populism Led to Defeat

Banker Bonuses Face Curbs in EU Basel Law Deal

Osborne’s ‘Shrink The Bank’ Strategy Means A Smaller, Less Profitable RBS

Bankia Posts Record 21.2 Billion Euros After-Tax Loss

Wheat Rises as U.S. Export Demand May Increase After Price Drop

Businesses Show Resilience Despite Drop in Goods Orders

Senate, in a More Affable Mode, Backs Treasury Nominee

Groupon Drops 24% On Weak Results, Forecast

Chief Talks of Mistakes and Big Loss at J.C. Penney

Samsung Armors Android to Take On BlackBerry

Wal-Mart Struggles to Restock Store Shelves as U.S. Sales Slump

The Excessive Uproar Over Marissa Mayer’s Telecommuting Ban

Cullen Roche: Nasdaq Sentiment Remains Near its Highest Levels Since March 2000

Jeff Miller: Investors: How tO Profit by Understanding the Fed

Be sure to follow me on Twitter.

Update on My Watch List
Posted by Eddy Elfenbein on February 27th, 2013 at 1:16 pm

I’m often asked how I go about picking stocks for my Buy List. The answer is really quite simple. I don’t have a magic formula and I hate stock screeners.

Instead, I have a Watch List of stocks that I try to follow. These are what I would call “really good companies.” They’re in the top tier of Corporate America. It’s taken me years to build up this list and I change it often.

The Watch List serves as the minor leagues for my Buy List. It’s from this list that almost all candidates for the Buy List come, and it’s where they return after they’ve been deleted.

Let me make it clear that I’m not recommending any of these stocks listed below. That’s what the Buy List is for. I just wanted to show you which stocks make the first cut in the process. Honestly, this list is too large and I should knock off around 30 names. If a stock is on this list, you can be pretty sure it’s a decent company (the price may not be).

My secret formula is nothing more than watching really good companies and making a move when the price looks good.

My Plan
Posted by Eddy Elfenbein on February 27th, 2013 at 10:11 am

Step One: Form bank holding company, the Bank of Eddy.

Step Two: Borrow $470 billion from the Federal Reserve at 0%.

Step Three: Announce tender offer to buy out Apple for $500 per share.

Step Four: Once I have control of Apple, use the $140 billion in cash to buy all the mortgage debt I can possibly find. (Also, buy CNBC.)

Step Five: Every six month, IPO a different Apple division. Spin-offs, you know, outperform.

Step Six: Use proceeds to pay off the Fed.

Step Seven: Distribute the rest to Bank of Eddy shareholders minus, of course, my $10 billion fee.

Step Eight: Relax at pool.

So…who’s with me?

The Yen’s Impact on AFLAC’s Earnings
Posted by Eddy Elfenbein on February 27th, 2013 at 9:55 am

Below I’ve tried to reproduce a chart from AFLAC’s latest 10-K. This shows the impact that the yen/dollar exchange rate is expected to have on AFLAC’s 2013 operating earings.

Here’s a look at the surge in the dollar since October:

Market Up a Bit, Ben’s Speaking Again
Posted by Eddy Elfenbein on February 27th, 2013 at 9:41 am

The market is signaling higher today. Ben Bernanke speaks again before Congress. This time, he heads over to the House of Capitol Hill.

This morning, we learned that durable goods orders fell 5.2% last month which was worse than Wall Street’s forecast of a 4.8% decline. But if we look at nondefense orders excluding aircraft, then durable goods rose by 6.3%. That was well above the Street’s forecast of no growth.

Morning News: February 27, 2013
Posted by Eddy Elfenbein on February 27th, 2013 at 6:54 am

Euro Strengthens as Italian Bonds Fluctuate After Debt Auction

Italian Borrowing Costs Jump But Demand Remains Strong At Crucial Auction

EU Moves Closer To Imposing Caps On Banker Bonuses

India’s Downturn ‘More Or Less Over’

Bernanke Defends Asset Buying as Benefits Outweigh Risks

Austerity Kills Government Jobs as Cuts to Budgets Loom

S.E.C. Nominee Tries to Allay Skepticism

Wall Street Pay Rises, for Those Who Still Have a Job

Home Prices in 20 U.S. Cities Increase by Most Since 2006

Wall Street Junk Kings Selling Debt Poised to Lose Value

JPMorgan Mortgage, Community Units to Lose Up to 19,000 Jobs

AB InBev’s Profit Gains as U.S., Brazil Beer Shipments Rise

Teleworking: The Myth Of Working From Home

Edward Harrison: On Bernanke’s Testimony

John Hempton: Gulfport Energy’s Accounts Payable and Accrued Liabilities

Be sure to follow me on Twitter.

The S&P 500 and Its Earnings
Posted by Eddy Elfenbein on February 26th, 2013 at 4:04 pm

Here’s an update of a chart I run every so often. This is the S&P 500 along with its operating earnings.

There are, however, two changes with this chart. One, this is the first time I’ve had earnings estimates for 2014. Please note that these aren’t my estimates. These are the consensus numbers provided by S&P.

The other change is that I normally scale the two lines at a ratio of 16-to-1. This time, I lowered it to 15-to-1. That’s not a judgment on proper valuation. I simply think it makes the chart look better.

I’m still surprised that Wall Street expects earnings growth to reaccelerate so robustly later this year and into 2014. I certainly hope it happens, but hope isn’t an investment strategy.

The final earnings number for 2012 should be about $96.95. The Street expects $111.22 for 2013 and $125.44 for 2014. Hmmm…not sure about that….