Archive for 2006
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Weak Employment Report
Eddy Elfenbein, July 7th, 2006 at 9:15 amThe highly anticipated jobs report came out today. Last month, the economy created 121,000 nonfarm payrolls which is 64,000 less than what economists were expecting.
The May payroll number was revised higher to 92,000 from 75,000. The April number was pared back to 112,000 from 126,000. The unemployment rate stayed the same at 4.6%. How will this affect the market? It’s hard to say just yet. According to the futures market, Wall Street thinks there’s a 63% chance of another rate hike coming. -
Manscaping Comes to CNBC
Eddy Elfenbein, July 6th, 2006 at 1:46 pmCNBC’s segment on the marketing of Philips Norelco’s Bodygroom Shaver. I think Melissa Francis handles it gracefully.
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Upcoming IPOs
Eddy Elfenbein, July 6th, 2006 at 10:14 amBusiness Week looks at five upcoming IPOs to “approach with caution.” My favorite is BioVex, a small biotech company:
The company, which is being led to market by Janney Montgomery Scott and Stifel Nicolaus, is also developing a vaccine for genital herpes, but it has not yet begun the long clinical-trials process. At this point, BioVex has no product revenues—it has received funds from “potential collaborative partners.”
One other thing that might make an investor think twice: According to BioVex’s SEC filing, the company’s “independent accountants have expressed substantial doubt about our ability to continue as a going concern.” -
Expeditors Aims for 15% Growth
Eddy Elfenbein, July 6th, 2006 at 9:58 amExpeditors International of Washington (EXPD) is our best-performing stock on the Buy List this year. Since January, shares of EXPD are up over 60%. Reuters takes a closer look at the company:
Logistics company Expeditors International of Washington Inc. is aiming for long-term annual growth through taking business from competitors and fueled by robust expansion of global trade, the company’s top executives said on Wednesday.
“We’re going to stick to our core business, continue seeking opportunities to take market share and open new offices,” Chief Executive Officer Peter Rose told Reuters in an interview at Expeditors headquarters in Seattle.
Rose co-founded Expeditors in 1981 with $350,000. In 2005 the company, which specializes in ocean and air freight forwarding, reported revenue of $3.9 billion and net profit of $218.6 million. That was up from $3.32 billion revenue and net income of $156.1 million in 2004.
Chief Financial Officer Jordan Gates said Expeditors does not provide a short-term outlook, but usually “shoots for annual growth of 15 percent.”
“That remains the long-term goal,” he said.
Since its founding Expeditors has experienced single-digit growth only twice Rose said: in 1991 when the first Gulf War was fought and in 2003 when the Iraq War began.
Much of the company’s growth has been fueled by growing global trade, in particular trade from Asia to North America as U.S. manufacturing has shifted overseas.
Expeditors now has 180 offices worldwide, including 33 in China, and plans to open 50 to 100 more around the world over the next five years, Rose said. -
The North Koreans Shoot Down the Dow
Eddy Elfenbein, July 5th, 2006 at 2:17 pmThe North Korean missile launch has rattled the markets. The launch was a dud but it managed to hit all the major indexes today. The bond market is also trading lower.
Once again, I’m surprised by the strength of the energy sector. The Dow Jones Oil and Gas Index (^DJUSEN) is now up to 483. Just three weeks ago, the index closed at 421.72. Oil is back over $75 a barrel.
On our Buy List, Expeditors (EXPD) is feeling the most pain. The stock was downgraded by Stephens. Bed Bath & Beyond (BBBY) continues to baffle me. The stock reached a new 52-week low today despite its decent earnings report from two weeks ago. Many of the retailers are weak today. As strange as BBBY, Home Depot (HD) is getting ridiculous. The stock also made a new 52-week low, and it’s going for close to 11 times next year’s earnings. -
Earnings Reports
Eddy Elfenbein, July 5th, 2006 at 11:18 amThirteen of our Buy List stocks ended their quarter in June. Here’s when those stocks are due to report earnings, and Wall Street’s current estimate:
Harley-Davidson……….17-Jul………$0.91
UnitedHealth……………19-Jul………$0.68
Danaher………………….20-Jul………$0.78
Golden West……………20-Jul………$1.29
AFLAC……………………..25-Jul………$0.71
Fiserv……………………..25-Jul………$0.60
Varian……………………..26-Jul………$0.43
Expeditors……………….1-Aug………$0.26
Sysco…………………….14-Aug………$0.42
Brown & Brown………….TBA………..$0.29
Fair Isaac………………….TBA………..$0.53
Respironics……………….TBA………..$0.39
SEI Investments………..TBA………..$0.55 -
Rosneft’s IPO: “A Sale of Stolen Goods”
Eddy Elfenbein, July 5th, 2006 at 10:55 amThe lawyer representing, Mikhail Khordorkovsky, the founder of Yukos, is claiming that Rosneft’s IPO is a sale of stolen goods. It’s hard to disagree with him.
Yukos was essentially looted by the Kremlin and turned over to Rosneft. George Soros agrees and he think the IPO should be blocked:“I think that Russia is working as a monopoly supplier and it is essential for Europe to have a coordinated energy policy to be able to stand up as equal partners in negotiating with Russia,” Soros said.
The IPO is scheduled for next week.
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Instant FOMC Statement
Eddy Elfenbein, June 30th, 2006 at 1:22 pmPaul Kedrosky has built a Fed press release generator. Every time you click the photo Bernanke, you get new words of wisdom from the FOMC.
Here’s a sample:The Federal Open Market Committee decided to increase its target for the federal funds rate by 50 basis points to 5 3/4 percent.
The Committee used to think that a more restrictive than ever stance of monetary policy, coupled with baffling underlying growth in high-beta stocks, is providing cautionary support to economic activity. However, the whizzy change of geopolitical tensions has increased softwood prices, moderated Mad Money ratings, and damaged debt markets. These developments, along with the neutral stance of monetary policy and ongoing whizzy change in high-beta stocks, should foster decreased economic stability over time.
Although the extent of that decline remains uncertain, the Committee perceives that over the thirty-three seconds the upside and downside risks to the attainment of sustainable growth are roughly equal. The Committee believes that, taken together, the balance of risks to achieving its goals is weighted toward mild growth for the foreseeable future.Hey, why not?
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Wow!
Eddy Elfenbein, June 29th, 2006 at 4:06 pmWe didn’t have a 2% up day in over 2-1/2 years. Today we had our second 2%+ day of the last two weeks! How’s that for volatility?
Expeditors (EXPD) jumped nearly $4 a share, or 7.7% to another all-time high. SEI Investments (SEIC) was up 4.1%, also a new all-time high. -
The Fed Raises Rates
Eddy Elfenbein, June 29th, 2006 at 3:03 pmAnd the market loves it.
Here’s the Fed’s statement:
The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 5-1/4 percent.
Recent indicators suggest that economic growth is moderating from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.
Readings on core inflation have been elevated in recent months. Ongoing productivity gains have held down the rise in unit labor costs, and inflation expectations remain contained. However, the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures.
Although the moderation in the growth of aggregate demand should help to limit inflation pressures over time, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information. In any event, the Committee will respond to changes in economic prospects as needed to support the attainment of its objectives.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Jeffrey M. Lacker; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen.
In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 6-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and Dallas.
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