• Wells Fargo Raises Dividend By 14%
    Posted by on January 22nd, 2013 at 4:26 pm

    After the close, Wells Fargo ($WFC) announced that it’s raising its quarterly dividend from 22 cents to 25 cents per share. The bank will now pay out $1 for the whole year. Going by today’s close, that’s a yield of 2.85%.

    Wells Fargo & Company (WFC) today announced a quarterly common stock dividend of $.25 per share, an increase of three cents, or 14 percent, per share from the prior quarter. The dividend is payable March 1, 2013, to stockholders of record on February 1, 2013, as approved today by the Wells Fargo board of directors. Wells Fargo has approximately 5.3 billion shares outstanding.

    This dividend increase for the first quarter of 2013 was part of the company’s 2012 Capital Plan that the Federal Reserve did not object to in March, 2012. Wells Fargo submitted its 2013 Capital Plan on January 4, 2013, and it is currently under review by the Federal Reserve.

    “The dividend increase approved by our board today was included in our 2012 Capital Plan and reflected the confidence we have in our company’s performance,” Chairman and CEO John Stumpf said. “We remain committed to returning more capital to our shareholders. We requested an increase in capital distributions in our 2013 Capital Plan as compared to our 2012 plan, subject to review and non-objection by the Federal Reserve Board.”

    The Fed still needs to sign off on these dividend increases for many banks. Wells will have no trouble covering this dividend. If the earnings projections for this year are correct, Wells is passing on just 27% of its profits in the form of dividends.

  • Apple In Terms of Google
    Posted by on January 22nd, 2013 at 1:26 pm

    I admit this chart doesn’t mean much of anything but I was just curious to see it. This chart shows the price of Apple divided by the share price of Google. In other words, Apple in terms of Google.

    image1300

    Apple has about three times as many shares outstanding as Google.

  • Earnings Season Numbers
    Posted by on January 22nd, 2013 at 12:46 pm

    It’s still early but here are some numbers about this earnings season. The current consensus is for the the S&P 500 to earn $25.18 which is an increase of 6.1% over the Q4 from 2011.

    For all of 2012, the S&P 500 is expected to earn $98.85. That’s only a slight increase over the $96.44 from 2011. For 2013, the current consensus is for the index to earn $112.49.

    The current divisor for the S&P 500 is about 8.93 billion, so just multiply that to any of the figures I’ve given above and you can see the total dollar amount.

  • How Closely Tied Are Stocks and the Economy?
    Posted by on January 22nd, 2013 at 11:33 am

    Not as much as you’d think.

    Here’s a look at the annual nominal change in GDP (running along the bottom) with the change in the S&P 500 (running vertically).

    fredgraph01222013

    I didn’t run a regression, but just by eyeballing the results, the correlation looks pretty weak. This shouldn’t be too surprising. For one, the stock market is concerned with corporate profits, not the overall economy. Secondly, the stock market usually runs about six to nine months ahead of the economy. Finally, of course we know that the market can simply leave the realm of fair value entirely.

  • Yes, Now Investors Are Bullish
    Posted by on January 22nd, 2013 at 10:48 am

    What happens after a 3.8-year-old bull market?

    Bloomberg: Investors Are Most Optimistic on Stocks in 3 1/2 Years

    International investors are the most bullish on stocks in at least 3 1/2 years, with close to two- thirds planning to raise their holdings of equities during the next six months, according to a Bloomberg survey.

    As the global financial and business elite gather in Davos for their annual forum, 53 percent of respondents to the Bloomberg Global Poll also say equities will offer the highest return in the next year. That’s a 17 percentage point jump from the last poll in November and the most since the quarterly survey of investors, analysts and traders who subscribe to Bloomberg began in July 2009.

    Behind the enthusiasm for shares: growing confidence in the U.S. economy and ebbing concerns about Europe. America is in its best shape in two years, according to the poll, with a majority of the 921 surveyed on Jan. 17 describing the economy as improving. In a sign the euro-area’s three-year debt crisis is easing, only 45 percent said the region’s economy is still deteriorating, down from seven in 10 two months ago.

    “There does appear to be some cautious optimism that things are slowly being resolved,” Ben Kelly, an equity analyst at Louis Capital Markets in London and a poll participant, said in an e-mail. “There are some positive shoots that people are grabbing on to.”

    I think the underlying story is that people are finally getting fed up with the low yields in bonds and they’re starting to leave. This is part of what I’ve talked about recently as fear is slowing melting away from this market.

  • S&P 500 Comes Within 1% of 1,500
    Posted by on January 22nd, 2013 at 10:37 am

    The stock market is holding on to some small gains this morning ahead of some major earnings announcements today. At one point, the S&P 500 got as high as 1,486.34. That’s just 1% away from 1,500.

    On Friday, the $VIX plunged down to 12.26 during the day, though it’s back over 13 today. I’ve backed-tested the numbers and found that 13 is the magic number for the VIX; the stock market has performed much better below that number than above it.

    One of our former Buy List stocks, Johnson & Johnson ($JNJ), reported earnings above Wall Street’s consensus, but the company guided below analysts’ forecasts for the year. The Street had been expecting $5.49 per share but JNJ said EPS will range between $5.35 and $5.45 for 2013. As much as I like the company, I think shares of JNJ are a bit overpriced here.

  • Morning News: January 22, 2013
    Posted by on January 22nd, 2013 at 6:29 am

    Markets Tumbling, Yen Soaring After Historic Move By The Bank of Japan

    Euro Area Grapples With ESM Rules as Legacy Assets Loom

    German Investor Confidence Increases to 2 1/2-Year High

    Spain Escapes Aid But Doubts Remain

    UK Credit Rating Under Threat As Borrowing Rises Again

    Greece’s New Loan Payout Cleared by Euro Area Signals Optimism

    U.N. Agency Warns of Rising Unemployment

    Prophesies Made in Davos Don’t Always Come True

    With Tax Advantages Looking Shaky, Private Equity Seeks a New Path

    Profits at $1 Trillion Meet Valuations as S&P 500 Rallies

    Atari’s U.S. Division Files for Bankruptcy, Hoping for a Sale

    GM’s Girsky Says Major Cost Cuts Still Needed At Opel

    Early Sales Tempered With Caution at Sundance

    Jeff Carter: Microeconomic Mondays-Perfect Competition, Producer Surplus

    Joshua Brown: New Secular Bull: Yes or No?

    Be sure to follow me on Twitter.

  • Morning News: January 21, 2013
    Posted by on January 21st, 2013 at 6:35 am

    Euro Ministers Set to Clash Over Terms of Channeling Aid

    In Davos, Atmosphere for Bankers Improves

    France Lifts Doubt Over Dutchman As New Eurogroup Head

    Best Facebook Analyst Jobless Amid Kazakh Brokerage Cull

    The China Miracle: A Rising Wealth Gap

    An Overture From China Is Yet to Win Hollywood

    JPMorgan Embraces Offshore Yuan as Trading Doubles

    Dell Close To $22 Billion Leveraged Buyout Amid Decline In PC Market

    $11.2 Billion Thai Bid Poised to Win Singapore Conglomerate

    Huawei Pledges Openness To Woo Critics

    What Went Wrong at Boeing: My Two Cents

    Unusual Roots for Firm in Caterpillar Scandal

    Finance Least-Trusted Industry for Third Year in Edelman Survey

    Cullen Roche: Black Rock: The 2013 Macro View

    Roger Nusbaum: The Big Picture for the Week of January 20, 2013

    Be sure to follow me on Twitter.

  • RIP: Stan “The Man” Musial
    Posted by on January 20th, 2013 at 1:27 pm

    Musial had 3,630 career hits; 1,815 came at home and 1,815 came on the road.

  • Cramer Was Right
    Posted by on January 18th, 2013 at 1:48 pm

    The Federal Reserve released the full transcripts of their meetings from 2007 today. While the minutes are released a few weeks after each meeting, the public can’t see the whole transcript for until five years have passed. That’s why we’re getting 2007 today.

    In August of 2007, Jim Cramer made news with his famous “they know nothing rant” on CNBC. While he was broadly mocked for his outburst, Zachary Shrier makes a good point — Cramer was right. The Fed was clueless. The one from August 7th is particularly damaging,

    Transcript:

    I have talked to the heads of almost every one of these firms in the last 72 hours and he has NO IDEA what it’s like out there. NONE! And Bill Poole, he has NO IDEA what it’s like out there. My people have been in this game for 25 years and they’re LOSING THEIR JOBS and these firms are gonna GO OUT OF BUSINESS and it’s nuts. They’re NUTS! They know NOTHING! This is a different kinda market. And the Fed is ASLEEP. Bill Poole is a shame, he’s SHAMEUL! He oughta GO, and READ the Accredited Home document, at least I READ the darn thing.

    Here’s Dennis Lockhart speaking during the meeting of August 7, 2007:

    In the past few days, I have had substantive conversations with some well-positioned credit market observers, including managers of large investment portfolios, suggesting that the skittishness of financial markets is not likely to abate until later this fall. They have suggested that the choppiness in financial markets will be the rule in the near term and, very important, that the threshold for what constitutes a shock is now much lower than usual. I believe that the correct policy posture is to let the markets work through the changes in risk appetite and pricing that are under way, but the market observations of one of my more strident conversational counterparts—and that is not Jim Cramer [laughter]—are worth sharing. This party sees problems in the subprime structured debt market spreading to the CLO leveraged-loan market and, in a knock-on effect, to repo and commercial paper markets as well as to investment-grade corporate credit. This party points to nonprice rationing, commercial paper rollover risk, and general CDO contagion caused by the damaged credibility of rating agencies and contraction of collateral values. This party argues that treating the widening of credit spreads as normalization ignores substantial subsurface potential dislocations as evidenced by the collapse of American Home Mortgage Corporation. All that said, another counterpart noted a large pool of money now on the sidelines that is ready to provide financing for reasonable deals if prices fall low enough. Importantly, a large portion of this money comes from reliable long-term sources of investment, pension funds and insurance companies. Notwithstanding some descriptive rhetoric, this is not the credit crunch of the late 1980s, when the traditional financial intermediaries were strained for capital. The traditional investors are still out there with substantial liquidity, and they are just temporarily on the sidelines for understandable reasons and, barring further shocks, should return to the markets in force later this fall. The dislocations in the financial markets call for a posture of vigilant monitoring of developments but nothing more for now.