• Morning News: December 13, 2012
    Posted by on December 13th, 2012 at 7:48 am

    Berlusconi Says Return Hinges on Incumbent

    SNB Maintains Ceiling as European Woes Weigh on Franc

    U.K. Government Lifts Ban on Shale Gas Fracking

    Qatar Fund, Canary Wharf Plan $1.6 Billion London Project

    Talks on Telecommunications Treaty Falter

    Investors Stay Calm, if Cautious, as Stalemate Simmers

    Fed Ties Rates To Jobs Recovery, Adds To Stimulus

    Home Seizures Rise as Banks Adjust to Foreclosure Flow

    Khosla Ventures Hires Condoleezza Rice as Adviser

    Clearwire Buyout by Sprint Seen Best For Owners

    Airline Profit Outlook Raised 63% by IATA on Capacity Cut

    Buffett Expands Buyback to Pay Up to 120% of Book Value

    Obama’s Bet on GM Hangs on New Pickup Boosting Share Price

    Amazon Wins EU E-Book Pricing Battle With Apple

    Roger Nusbaum: 12/12/12

    Walter Kurtz: Fed Targets More Treasury Purchases. So Why The Sell-off in Bonds?

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  • Today’s Fed Statement
    Posted by on December 12th, 2012 at 12:53 pm

    Here’s today’s Fed statement:

    Information received since the Federal Open Market Committee met in October suggests that economic activity and employment have continued to expand at a moderate pace in recent months, apart from weather-related disruptions. Although the unemployment rate has declined somewhat since the summer, it remains elevated. Household spending has continued to advance, and the housing sector has shown further signs of improvement, but growth in business fixed investment has slowed. 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 remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant 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 will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially 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, in January, will resume 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. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.

    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. The Committee views these thresholds as consistent with its earlier date-based guidance. 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; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed the asset purchase program and the characterization of the conditions under which an exceptionally low range for the federal funds rate will be appropriate.

  • Nicholas Financial = $14.12
    Posted by 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 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 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 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 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 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 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 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.