• Tuesdays Have Been the Big Winner
    Posted by on May 24th, 2012 at 6:11 am

    Here’s a look at the stock market’s return by day of the week since April 15, 2011. If we took all the Mondays and put them together, the S&P 500 has lost 8.23%. But Tuesdays have been the big winner. The S&P 500 has gained 20.05% on the second day of the week.

    On Wednesdays, the index has been down 7.72%. On Thursdays, it’s made a small gain of 3.66%. Then on Fridays, the S&P 500 has lost 5.23%.

  • The Cyclical Sell-Off
    Posted by on May 23rd, 2012 at 11:04 am

    Here’s another view of how badly cyclical stocks have underperformed since early February. The gold line is the S&P 500 while the black line is the Morgan Stanley Cyclical Index.

    The non-cylical part of the market hasn’t been damaged too badly.

  • Moody’s Raises Ford to Investment Grade
    Posted by on May 23rd, 2012 at 10:31 am

    First Fitch raised Ford‘s ($F) debt to investment grade, now Moody’s has followed.

    The upgrade allows Ford to enjoy lower borrowing costs and expands the number of potential buyers for its bonds.

    It also represents a symbolic win for Ford, which nearly collapsed six years ago before mortgaging most of its assets to borrow $23.5 billion to finance a restructuring. Ford continued to use the Blue Oval icon and the other assets. The icon is stamped on the grill of Ford’s cars and trucks.

    (…)

    Moody’s cited Ford’s improved lineup of cars and trucks, limited use of incentives to spur sales, and much lower break-even point in North America for its decision.

    In 2009, Ford could break even in North America if it sold 3.4 million cars and trucks. Now, that level has dropped 45 percent to 1.8 million in sales, according to Moody’s.

    “We concluded that the improvements Ford has made are likely to be lasting,” said Moody’s analyst Bruce Clark.

    Ford wants to cut its automotive debt to $10 billion by the middle of the decade as well as reduce the risk posed by its pension obligations.

    Ford’s automotive debt was $13.7 billion in the first quarter. Last month, Ford said it would offer lump-sum pension buyouts to current white-collar retirees, a move that may lower its U.S. pension obligation by one-third.

  • Nigel Farge: Greece Should Leave the Euro
    Posted by on May 23rd, 2012 at 8:43 am

  • 100 Million Americans Without Jobs
    Posted by on May 23rd, 2012 at 7:41 am

    The national unemployment rate gets lots of attention, and lately more attention has been paid to the workforce participation rate since more Americans have given up looking for a job, but we can also see that an astounding 100 million Americans don’t have jobs.

    Specifically, these are people who are part of the civilian over-16 non-institutional population who are either unemployed or not part of the workforce. According to the April jobs report, the number of jobless American stood at 100.9 million.

    That’s an all-time record and it’s an increase of 26.2 million over the last 12 years. It’s as if we absorbed the entire adult population of Canada and not a single person had a job.

    The numbers are staggering. The jobs-to-population ratio peaked 12 years ago. If we were to have the same ratio today, we would need 15.3 million more jobs, or 23.7 million fewer people.

    (Note: The chart above is the Civilian Over-16 Non-Institutional Population minus the seasonally adjusted Civilian Workforce.)

  • Morning News: May 23, 2012
    Posted by on May 23rd, 2012 at 7:14 am

    U.S. Stock Futures Slide; CBO Warns Of Possible Recession

    Germany Sells 2-Year, 0% Bonds Amid Greek Anxiety

    Regulators, Investors Turn Up Heat Over Facebook IPO

    Burberry Plans Retail Space Expansion As Profit Grows

    US Stock Futures Drop Ahead Of Europe Summit

    Lenovo 4th Quarter Profit Up 59%; Outpaces Industry Growth

    Toll Brothers Swings To 2Q Profit On Fewer Writedowns, More Deliveries

    Oil Boom Strikes Kansas

    Euro Drops to 21-month Low as Break Up Risks Mount

    Guessing Game Begins Over Next Treasury Chief

    The Reformed Broker: It’s Worse Than We Thought….

    David Merkel: Little Things are Important

  • “It’s Like Buying $1 For $1.98”
    Posted by on May 22nd, 2012 at 7:30 pm

    Rodrigo Campos of Reuters writes:

    Investor confidence in the shares has been damaged after Reuters reported lead underwriter Morgan Stanley cut its revenue forecasts for Facebook in the days before the offering, in part because of comments from Facebook on mobile usage.

    After pricing at $38, far more than the first estimate of $28 the company gave investors, shares have been sliding – at one point as much as 31 percent from the $45 peak hit shortly after it started trading Friday.

    “Facebook right now is going for far more than what it’s worth, it’s like buying $1 for $1.98, it just doesn’t make sense at this price,” said Eddy Elfenbein, widely followed blogger and editor at Crossing Wall Street.

    Starmine’s analysis of Google Inc’s value puts that stock at $680, assuming a growth rate of 10.1 percent for the next 10 years. That makes the Internet giant undervalued at $599 a share.

    “Just from basic modeling the stock should be around $17 to $20 dollars, and that is with a lot of variables,” Elfenbein said. “I would call that an ideal price. I would be interested in buying and I think that is a good deal for investors.”

  • Medtronic’s Earnings Call
    Posted by on May 22nd, 2012 at 3:48 pm

    From Seeking Alpha:

    Let me conclude by providing our initial fiscal year 2013 revenue outlook and earnings per share guidance. While we believe our markets have improved modestly, we estimate market growth remains in the low single digits. Based on this, as well as the expected growth from recent product launches, we believe that constant currency revenue growth of 2% to 4% is reasonable for FY ’13 and would reflect improvement from our organic growth in FY ’12. While we cannot predict the impact of currency movements, to give you a sense of the FX impact and the exchange rates were to remain similar to yesterday for the remainder of the fiscal year, then our FY ’13 revenue will be negatively affected by approximately $330 million to $337 million, including a negative $100 million to $120 million impact in Q1.

    Turning to guidance on the bottom line. Based on expected constant currency revenue growth of 2% to 4%, we believe it is reasonable to model earnings per share in the range of $3.62 to $3.70, which implies FY ’13 earnings per share growth of 5% to 7%. While we do not provide quarterly guidance, we would point out that the current consensus reflects Q1 earnings per share growth of 10%, which is outside our issued guidance, and therefore we would not be surprised to see some modest shifts — modest model shift a couple of pennies from Q1 to Q4. As in the past, my comments and guidance do not include any unusual charges or gains that might occur during the fiscal year, nor do they include the impact of the noncash charge for convertible debt interest expense.

  • Zuckerberg Has Lost $7 Billion in Four Days
    Posted by on May 22nd, 2012 at 2:23 pm

    Hey Zuck, congrats on your wedding! I hate to disturb your honeymoon, but your stock’s honeymoon is seriously over.

    Measuring from Friday’s high to today’s low, you’re out $7 billion. LOLZ.

    Anywho…have a great rest of the honeymoon!

  • Are Sweaty Brokers More Ethical?
    Posted by on May 22nd, 2012 at 10:52 am

    From Reuters:

    If you want to know how ethical your broker is, give them a moral dilemma and see how much they sweat before deciding what to do.

    It’s quite a jump from the laboratory to real-world decisions about asset management but British researchers have found that gut feeling can override rational thought when people are faced with financial offers that look unfair.
    Even when we could benefit, a physical response like sweating can make people reject a financial proposition they consider to be unjust. The key is how tuned in they are to their own bodies.

    Researchers from the University of Exeter, the Medical Research Council Cognition and Brain Sciences Unit and the University of Cambridge, gave 51 people a series of offers based on dividing 10 pounds ($16) between two people. They found that although an offer to split the money 50:50 was mostly accepted, an offer of less than a ‘fair share’ was often rejected, even though rejecting it left them with nothing.

    The game, a version of a well-known psychological test called the Ultimatum Game, showed gut reactions, especially made under time pressure with incomplete information, can lead to decisions that are irrational from a purely economic perspective.

    The researchers measured how much participants sweated through their fingertips and how much their heart rate changed.

    Clinical psychologist Barney Dunn, who led the study, told Reuters that participants were also tested on how accurately they could monitor their physical responses by counting their own heartbeats. Those who were most accurate were more prone to having their bodies dictate their decisions in the game.

    “It’s a bizarre finding but it’s very robust,” said Dunn.