Stocks Pullback on Uncertainty in China
Posted by Eddy Elfenbein on November 28th, 2022 at 12:16 pm

The stock market is down today. I think traders are a little nervous about the uncertain news coming out of China. As I write this, the S&P 500 is off by about 0.8%. There doesn’t seem to be a major theme to today’s trading. High Beta is down more than Low Vol, and Value is down less than Growth. Consumer Staples and Consumer Discretionaries are barely positive while the other sectors are down.

There’s not much in the way of economic news although two Fed members will be speaking later today. This Friday will be Jobs Day. On Wednesday, we’ll get the ADP report along with an update to the GDP report.

We have one Buy List earnings report coming next week when SAIC is due to report. Its fiscal Q3 ended on October 31. Wall Street expects earnings of $1.74 per share. The company has topped earnings for the last nine quarters in a row. The stock is up over 30% for us this year.

This is also the time of year when a lot of companies like to raise their dividends. In the next few weeks, I expect to hear from companies like Zoetis, Carrier Global, Stryker and Abbott Labs.

Morning News: November 28, 2022
Posted by Eddy Elfenbein on November 28th, 2022 at 7:07 am

China’s Covid Contagion

More Venezuelan Oil Unlikely to Reach Markets Soon Despite New Chevron License

Giant Wind Farms Arise Off Scotland, Easing the Pain of Oil’s Decline

Puerto Rico’s Power Failures Worsen After Private Takeover

Exxon Mobil Has a Potash Problem in the Permian Basin

Globalized Supply Chain Brings More-Turbulent Food Prices

Powell to Set Stage for Slowing Fed Rate Hikes Amid Hawkish Tone

There’s a Job-Market Riddle at the Heart of the Coming Recession

Business Travel’s Rebound Is Being Hit by a Slowing Economy

Have the Anticapitalists Reached Harvard Business School?

Why Retailers Are Trying Extra Hard to Woo Holiday Shoppers

Hedge Fund That Beat 99% of Peers Places Contrarian Bet on Meta

FTX Tensions Intensify as Bahamas Blasts Company’s New Chief Ray

Apple to Lose 6 Million iPhone Pros From Tumult at China Plant

Yahoo Takes Minority Stake in Ad Network Taboola

The Lowly Boxcar Can Make Your City a Better Place to Live

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Morning News: November 25, 2022
Posted by Eddy Elfenbein on November 25th, 2022 at 7:04 am

‘Heated’ and ‘Really Ugly’: Europe Fails to Thrash Out Details on Gas Price Cap as Talks Turn Sour

Vietnam’s VinFast Ships First Electric Vehicles to U.S. Customers

Backers of Farmworker Visa Overhaul Make Year-End Push for Immigrant Labor Deal

Billions of Dollars Are at Stake in a Puzzling Holiday Shopping Season

Black Friday Starts With a Toy Glut. Can Shoppers Save Christmas?

If the Price Ended in 99, You Probably Overpaid

High Inflation to Tamp Down Gift Giving

This Holiday Season, the Poor Buckle Under Inflation as the Rich Spend

How to Manage Credit Card Debt When Holiday Shopping

Tech Giant Aims to Cut Ties With Russia

Apple’s Reliance on China Grows Perilous With Chaos in iPhone City

Mega-Companies Are Messing Up America’s Job Market. Again.

Musk Says Twitter Will Relaunch Verified Service Next Week

Crypto Firm FTX Landed in the Bahamas With a Bang, and Now the Bahamas Is Picking Up the Pieces

Binance’s Crypto Rescue Plan Fails to Quell All the Fears of Post-FTX Contagion

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Morning News: November 24, 2022
Posted by Eddy Elfenbein on November 24th, 2022 at 8:00 am

China Recovery Hopes Crushed by Record Covid Outbreak as Lockdowns Spread

Bill Ackman Is Betting Against the Hong Kong Dollar

Credit Suisse Clients Flee to UBS in Asia as Rich Weigh Options

EU Split on Russian Oil Price Cap Level, Talks to Resume Thursday

U.S. Poised to Grant Chevron License to Pump Oil in Venezuela

BOE’s Top Economist Rejects Calls to Cut Interest Paid on Reserves

Binance’s Zhao Flags Possible $1 Billion for Distressed Assets

She Was a Little-Known Crypto Trader. Then FTX Collapsed.

Crypto Firm FTX’s Ownership of a U.S. Bank Raises Questions

Biden Officials to Target Nonbanks for Tougher Oversight

Twitter Exodus Hits Teams Tasked With Regulatory Issues

The Worst Midnight Email From the Boss, Ever

There’s No Fixing Meta’s Metaverse, Scrap It, Start Over

Financial Talking Points for an Awkward Holiday Season

Black Friday Seen Kicking Off a Bumpy Holiday Shopping Season for Retailers

Black Friday Spending Traps: Credit-Card Offers, Tricky Trips and So-So Discounts

Two Films Hit Theaters, but Netflix Remains Committed to Streaming

Why the N.F.L.’s Big Streaming Deal Is Going Into Overtime

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Morning News: November 23, 2022
Posted by Eddy Elfenbein on November 23rd, 2022 at 7:07 am

Global Economy Slows, but Seems Set to Avoid Recession

Western Allies Aim to Agree on Russian Oil Price Cap Wednesday

A $300 Billion Bond Market Holds the Key to Solving the Climate Crisis

ECB Must Narrow Interest-Rate Gap With Fed, OECD Says

Spanish Banks Set to Sign Up to Mortgage Relief Package

US Mortgage Rates Plunge for a Second Week, Hit Two-Month Low

Billions of Dollars at Stake in a Puzzling Holiday Shopping Season

FTX Flipped One Trading Firm’s Risk Obsession. Disaster Followed

Inside Sam Bankman-Fried’s Quest to Win Friends and Influence People

Tesla’s Stock Slump Has Gone Too Far, Morgan Stanley Says

After Swift Return, Iger Faces Disney’s Long-Term Challenges

Videogame Companies Brace for Lackluster Holiday Season

Big Shareholder Signals Opposition to News-Fox Combination

Dubuque? We Don’t Fly There Anymore. Airlines Say Goodbye to Regional Airports.

Printer of King Charles III Banknotes Plunges on Profit Warning

Sam Bankman-Fried Ran FTX Like ‘Personal Fiefdom’ As Firm Spent $300 Million on Luxury Real Estate

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CWS Market Review – November 22, 2022
Posted by Eddy Elfenbein on November 22nd, 2022 at 7:08 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

Bob Iger Returns to Disney

The big story on Wall Street, at least not involving the letters FT or X, is that Bob Chapek has been fired as the top mouse at Disney (DIS). The company said that Bob Iger would be returning. So they’re changing Bobs. This is especially interesting news to us because Disney had been a Buy List stock.

We ditched Disney at the end of last year and that appeared to be a shrewd move on our part. The stock was down about 40% for the year until last week. After the news of Iger returning, shares of Disney rose as much as 9.99% in Monday’s trading.

Pro-tip: If the news of you leaving your job causes the value of the company to increase instantly by $16 billion, perhaps it wasn’t meant to be.

Disney was a tough purchase for us because we got many of the big things right. We thought that Disney’s streaming service would be a hit, and in the initial months, it proved to be much better than expected.

We added Disney at the end of 2018 at $109.65 per share. The earnings reports were quite good. By April, shares of Disney got to $142 and by November, the stock was over $153. I felt vindicated. I was suddenly a genius!

Then came Covid and the game completely changed. Within a few days, shares of Disney plunged to $80. Sadly, I was no longer a genius. Our entire profit had been wiped out in a few weeks. The whole world got locked down and that included Disney World.

I remember that in an interview, I described Disney as a company that seemed to be tailor-made to be harmed by Covid. It’s actually rather remarkable. Disney’s business is movies, sports and theme parks. If that’s not enough, they also have a cruise line. Everything Covid wrecked is where Disney stood. This is also when Bob Chapek took over.

But then it appeared that Covid would be a big help for Disney. Everyone cooped up in their homes could just stream their way to Disney’s catalog. On top of that, the government and the Fed were throwing tons of money Wall Street’s way, so of course Disney would benefit.

Shares of Disney soared. Less than a year after hitting $80, Disney got to $200! Once again, I was a genius.

Oddly, Chapek seems to have improved in recent months. Over the summer, the company had a solid earnings report. Profits were up and Disney was becoming a major rival to Netflix. The board even extended his contract. Everything seemed great at the Mouse House.

That is, until Disney’s last earnings report which was a disaster. The theme park business was ugly. The streaming business was ugly. ESPN was ugly. Everything everywhere all at once turned ugly.

The streaming service lost $1.5 billion. In one day, Disney’s stock fell 13%. That was its worst day since 9/11. It seemed like Wall Street got blindsided.

Despite the losses, Chapek was very optimistic for the business. So much so that it damaged his credibility. (Lesson: people dislike spin more than the actual bad news being spun.) This was especially tough on Disney because the theme park business has gotten much better. Also, activist hedge funds have been putting pressure on the company.

I didn’t realize it at the time, but the earnings report appears to have been the catalyst that set the board in motion. Now Iger has been hired to be Disney’s CEO through the end of 2024. Bear in mind that Chapek was Iger’s handpicked choice to follow him.

Chapek made several missteps and his relationship with Iger turned cold. Disney also found itself in the middle of several high-profile political arguments. I wonder how much of this was an Iger-led coup. His prints may be near the dagger.

Chapek’s major business decision was to put Disney’s streaming business front and center. The business also includes Hulu and ESPN+. Chapek named his protégé, Kareem Daniel, head of a Disney’s Media and Entertainment Division. Iger didn’t waste any time firing Mr. Daniel on Monday.

In this case, we were ahead of the game. We decided to get rid of Disney at the end of last year when the stock was at $154.89. While that was down from Disney’s high, it turned out to be a very good exit price. The stock was recently as low as $86 per share.

Now I’m not sure if I was a genius or not. In three years, we made 45% in our Disney investment. We got in at a bad time and then waited too long to get out. Still, we got out.

Overall, I’m not sure if changing the person at the top is enough to help Disney. The problems are deep and the entertainment landscape is changing quickly. That’s a common myth, that a change in leadership can revive a company. Sometimes it can, but the problems are often very complex.

The broader lesson on Disney is that we did our homework, and we were vindicated. Still, the story changed, and we were smart enough to cut ties. It wasn’t a massive win or a massive failure. We made money and we moved on. On Wall Street, that’s good enough.

In the near-term, Iger’s re-installation at the top will be a morale boost; but for now, I’m going watch Disney’s stock as a spectator.

Stock Focus: IDEX Corp.

This week, I want to focus on IDEX Corp. (IEX) which is another one of those boring mid-cap industrial stocks that seem to get little attention. The corporate name is derived from “innovation, diversity and excellence.” IDEX is based near Chicago, and it currently has a market cap of about $18 billion.

IDEX is not to be confused with Ideanomics which has IDEX as its ticker, or IDEXX Laboratories.

IDEX is a highly decentralized organization. The company owns 45 largely unconnected businesses. It might be more convenient to list what businesses they’re not in. IDEX makes things like fluidic systems and optics systems and also fire and rescue equipment. Not so sexy, is it?

Still, IDEX’s performance is worthy of respect. Since 1990, the stock is up 120-fold. IDEX now has 8,000 employees and manufacturing operations in more than 20 countries. The company is divided into three main units: Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety / Diversified Products.

The company is having a very good year. Last month, IDEX reported Q3 earnings of $2.14 per share. That beat the Street by 14 cents per share, and it was up 20% over last year. The CEO said, “In the third quarter, we achieved record sales, double digit organic growth across all three of our segments and solid operating margin performance driving record EPS and strong free cash flow generation.”

The company also raised its guidance. IDEX said it expects to make between $1.92 and $1.97 for Q4. That implies full-year earnings of $8.04 to $8.09. If that’s right, it would be an increase of 17% to 18% over last year.

As a conservative estimate, I’d say IDEX can make $8.50 per share next year and $9 per share in 2024. That would give the stock a forward P/E of around 26. That’s high but not unreasonably. Unfortunately, the shares have gained 33% over the last five months. Alas, we can’t invest in a rearview mirror.

CWS Earns Its Fifth Star

We had very good news this week. Morningstar awarded CWS, our exchange-traded fund, its fifth star. This is a big deal.

We got it for our three-year and five-year performance, plus our three-year risk-adjusted performance. The ETF is based on our Buy List.

Here’s the press release from AdvisorShares:

BETHESDA, Md., Nov. 22, 2022 /PRNewswire/ — AdvisorShares announced that the AdvisorShares Focused Equity ETF (Ticker: CWS) has received a Five-Star Morningstar Rating™. CWS earned five stars for its overall (out of 535 funds), five stars for its three-year (out of 535 funds) and five stars for its five-year (out of 494 funds) risk-adjusted returns in Morningstar’s Mid-Cap Growth category, as of October 31, 2022.

The AdvisorShares Focused Equity ETF bases its investment strategy on Eddy Elfenbein’s popular Crossing Wall Street “Buy List.” Elfenbein’s Buy List has published annually since 2006 and carries a wide following. The ETF applies a buy-and-hold strategy: it invests in the stocks of well-run companies that have a history of marketplace dominance, rising sales and earnings, reasonable value, and a record of rising dividends.

Elfenbein believes that a disciplined buy-and-hold strategy is ideal for riding out market storms. CWS strives to buy the highest-quality stocks at the lowest possible prices. By focusing on value, CWS aims to reduce its risk to broad-based market drops. A commitment to value also aids long-term capital appreciation.

CWS also has an innovative fulcrum fee structure where the management fee is directly tied to the ETF’s performance.

Past performance is not indicative of future results. For standardized and month-end performance and more information about CWS, please visit advisorshares.com/etfs/cws.

AdvisorShares regularly hosts live webinars featuring portfolio managers and strategists, including Mr. Elfenbein and other leading industry experts. You may learn more and register at the AdvisorShares Event Center for upcoming event sessions and educational insights.

Here’s our recent performance. We’re the black line. The S&P 500 ETF is the blue line.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

P.S. If you want to learn more about the stocks on our Buy List, please sign up for our premium service. It’s $20 per month, or $200 per an entire year.

Morning News: November 22, 2022
Posted by Eddy Elfenbein on November 22nd, 2022 at 7:05 am

Ukraine War Continues to Slow Global Growth, New Report Says

Europe’s Wind Industry Is Stumbling When It’s Needed Most

OPEC+ Eyes Output Increase Ahead of Restrictions on Russian Oil

World’s Most-Crucial Fuel Heads for Shortage Touching Everything

How Bad Will Housing Get? The Chill Gripping a Once-Hot Market Offers a Test

Investor Home Purchases Drop 30% as Rising Rates, High Prices Cool Housing Market

Inflation Won’t Win Thanksgiving: Here’s NPR’s Plan to Help You Save on a Meal

Key Freight Rail Union Rejects Deal, Increasing Strike Risk

ECB Must Narrow Interest-Rate Gap With Fed, OECD Says

US Is Focused on Regulating Private Equity Like Never Before

Credit Suisse’s Future Hinges on Overcoming a Fraught Past

FTX Crypto Customers Worry They Will Never See Their Money Again

Crypto Lender Sued for Blocking 2021 Withdrawals by Wealthy Investors

A Huge Merger’s Collapse Breaks a Pattern of Consolidation in Publishing

What Elon Musk Is Doing to Twitter Is What He Did at Tesla and SpaceX

Elon Musk’s 2022 Wealth Loss Exceeds $100 Billion for First Time

Walt Disney CFO, Others Brought Concerns to Board Over Bob Chapek

How One of the Country’s Most Storied C.E.O.s Destroyed His Legacy

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Bob Iger Returns to Disney
Posted by Eddy Elfenbein on November 21st, 2022 at 11:39 am

This is a fairly slow day on Wall Street and the start of a week that should also be pretty slow. The market is down a little bit; so far, not too much. For such a tepid day, there’s a big gap between high beta and low vol. In other words, the riskier stocks are down big today while many of the conservative stocks are holding up well. Our Buy List is also having a good day. Many of the big energy stocks are down by 3% or more.

The big news is that Bob Iger is coming back to Disney to replace Bob Chapek. Disney has been run by Chapek since February 2020, and the stock has not done well. Over that time, the S&P 500 is up 28% and Disney is down 25%. Disney is up 9% today.

Morning News: November 21, 2022
Posted by Eddy Elfenbein on November 21st, 2022 at 7:04 am

Younger Chinese Are Spurning Factory Jobs that Power the Economy

U.S.-Europe Trade Booms as Old Allies Draw Closer

Stressed-Out Americans Plan to Buy Fewer Christmas Gifts, Donate Less to Charity

Goldman Sachs Strategists Say Bear Market Will Last in 2023

Fund Managers Are Turning Ever More Pessimistic on the US Dollar

Inside a Crypto Nemesis’ Campaign to Rein In the Industry

The Federal Reserve Is Surely Not the Cause of Silicon Valley’s Swinging Ax

Tech Layoffs Send H-1B Visa Holders Scrambling for New Jobs

Can Big Tech Get Bigger? Microsoft Presses Governments to Say Yes

Disney Shares Soar on Iger Return as CEO After Shock Ouster

Merck to Buy Imago for $1.35 Billion to Gain Bone Marrow Drugs

Elon Musk Is Running Twitter Like A Failing Newspaper Business

How Colleges and Sports-Betting Companies ‘Caesarized’ Campus Life

Carvana Faces Cash Crunch From High Debt, Rising Interest Rates

Beyond Meat Is Struggling, and the Plant-Based Meat Industry Worries

Shein’s Cotton Tied to Chinese Region Accused of Forced Labor

Jewelry Counterfeits: The Age-Old Problem Just Keeps Growing

Shaking Off the World’s Worries, Jewelry Focuses on Growth

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Morning News: November 18, 2022
Posted by Eddy Elfenbein on November 18th, 2022 at 7:03 am

Will Taxing the Windfall Profits of Oil Giants Fix Countries’ Economies?

A Nation in the Crosshairs of Climate Change Is Ready to Get Rich on Oil

What Is ‘Friendshoring’?

What If Deglobalization Is Good for Emerging Markets?

‘Do You Really Want to Rebuild at 80?’ Rethinking Where to Retire.

Qatar Bans Alcohol Sales at World Cup Stadiums in Abrupt U-Turn

ECB May Have to Restrict Growth to Control Inflation, Lagarde Says

Inflation and Unemployment Both Make You Miserable, but Maybe Not Equally

BofA Sees Bear Rally Fizzling Out Even as Equity Inflows Surge

Musk’s ‘Hardcore’ Ultimatum Sparks Exodus, Leaving Twitter at Risk

Tech Companies Were Thriving, Now They’re Laying Off Thousands. Here’s Why.

New Chief Calls FTX’s Corporate Control a ‘Complete Failure’

Is This the End Game for Crypto?

An iPhone Factory Needs Workers. The Chinese Government Wants to Help.

GM Has a New Business: Fixing Tesla EVs

Masayoshi Son Now Owes SoftBank $4.7 Billion on Side Deals

Elizabeth Holmes’s Fraud Sentence Will Send a Message One Way or Another

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