Archive for April, 2011

  • The Small-Cap Surge
    , April 4th, 2011 at 10:42 am

    I said that one of the effects of the Fed’s QE2 program is that it would cause investors to favor riskier assets. For example, they would favor stocks over bonds; and within stocks, they would favor riskier sectors like small-caps.

    On Friday, the S&P Small-Cap 600 ($SML) broke 450 for the first time ever. In July 2007, the index reach an all-time intra-day high of 445.82.

    The Russell 2000 ($RUT) broke above 850 which is just shy of its July 2007 high of 856.48. If the Nasdaq had kept pace with the Russell 2000, it would be over 7,300 today.

  • 3-Month T-Bill Yield Plunges
    , April 4th, 2011 at 10:16 am

    The yield on the three-month Treasury bill was already extremely low, but it just got even lower. The yield has been as low as 0.035% today.

    Roughly speaking, that means that for every $1 million you lend the U.S. government, they’ll pay you about 96 cents per day for your trouble.

    As a general rule, a wide yield curve is very good for stocks.

  • Ford Knocks Off GM for #1 Spot in US
    , April 4th, 2011 at 8:16 am

    Ford ($F) is now the top-selling carmaker in the U.S.

    Ford outsold GM last month to become America’s most popular automaker, according to figures released April 1.

    Traditionally the second-placed brand in the US, Ford leapfrogged GM to sell 212,295 vehicles last month, over 5,000 more than GM and an impressive raise of 16 percent.

    The last time GM – which includes brands such as Chevrolet, Buick and GMC – ceded top spot to Ford was in February 2010, and before that in 1998, according to Automotive News.

    In total, GM sold 206,621 cars during March, an increase of ten percent which the automaker said was thanks to demand for the new Chevrolet Cruze compact sedan.

    Despite predictions that March would see the first sales fall in more than seven months, US consumers bought more vehicles than the same period in 2010, pushing sales up by 17 percent – suggesting that the market wasn’t as jittery as predicted about oil prices, ongoing unrest in the Middle East and the Japanese earthquake.

    Here are the numbers. The shares look to open today at a six-week high.

  • Morning News: April 4, 2011
    , April 4th, 2011 at 7:18 am

    Euro Zone Feb PPI Jumps as ECB Rate Hike Looms

    Business Confidence Sags in Japan

    South Korean Won Up On Offshore Buying; BOK Intervention Suspected

    Fed Answers Brazil-China-Germany Axis With U.S. Growth

    US Stock Futures Up Slightly As Oil Rises Above $108

    Wall Street Trading Revenue Seen Falling 4th Straight Quarter

    Nasdaq’s Greifeld May Inherit NYSE Floor He Sought to Bury

    Vivendi to Buy Vodafone’s Stake in SFR for $11.3 Billion

    Decks Clear for April Launch of Glencore Mega-Float

    Minmetals Resources Bids $6.5 Billion for Equinox Minerals

    Solvay to Buy Rhodia for $4.8 Billion

    BP Sells Aluminum Group for $680 Million

    Joshua Brown: Frontier Markets as the Safety Trade?

    Howard Lindzon: Give Me Biotech not Adsense

    James Altucher: 10 Reasons You Need to Quit Your Job

  • Barron’s on Abbott Labs
    , April 2nd, 2011 at 8:28 am

    Barron’s is sweet on yet another Buy List stock. In this weekend’s issue, Michael Santolli highlights Abbott Labs ($ABT):

    Abbott Laboratories is a decidedly above-average company trading at a below-average price, a health-care leader that consistently has rewarded shareholders’ patience and taken good care of investors’ capital over many decades.

    At a recent price near 49, down from a 2010 peak above 53, Abbott (ticker: ABT) is among the more compelling values in a stock market being carried toward three-year highs by riskier, more cyclical names.

    Abbott, with superior historical growth, a well-balanced revenue mix and powerful core health-care franchises, merits a substantial premium over pure pharmaceutical companies, which face regulatory pressures and patent expirations that will hurt key products.

    Yet at 10.7 times forecast 2011 profits of $4.59 a share, up from $4.17 in 2010, Abbott’s price/earnings ratio is only about 1½ multiple points above both Merck’s (MRK) and Pfizer’s (PFE), and about 1½ points lower than similarly balanced Johnson & Johnson’s (JNJ).

    (…)

    This year, the company will focus more on building cash than making acquisitions. Abbott boosted its dividend in February for the 39th straight year, to an annual $1.92 a share, taking its yield near 4%. Given that yield, plus Abbott’s demonstrated ability to raise earnings at a low-double-digit clip, the stock should deliver upside of 25% or better over the next two years–even if it doesn’t win the enhanced valuation it deserves.

  • April Ain’t the Cruelest Month
    , April 2nd, 2011 at 8:17 am

    From Gary Alexander:

    The market’s best month begins on Friday – no fooling. April is the best-performing month in market history, rising by an average 2% since 1950 (as measured by the Dow Jones Industrials).

    The story gets even better in recent years. Over the last 50 years, the Dow has gained an average 2.02% in April (#2 is December – up only 1.51%). Over the last 20 years, the Dow has averaged 2.65% gains in April – 85 basis points above December’s second-best 1.80%. And over the last five years, April has grown every year, netting an average gain of 4.25% in the Dow and S&P.

    As spring flowers unfold, so do stocks: April 1999 was the first month to gain over 1000 Dow points. Then, the Dow gained 856 points two years later, in April 2001 and 708 points in April 2007. The broader market indexes have done even better: In April 2009, the Russell 2000 rose by an astonishing 15.3% (double the Dow’s gain) and in April 2001, NASDAQ rose 15%.

    The best month ever, in percent terms, was April of 1933 (FDR’s first full month in office) at +40.2%. Since 1950, we’ve seen 42 rising Aprils and 19 downers, including a 3.8% drop in 2005, but we haven’t seen a real stinker since April 1970 (-9%), but how about April of 2011?

  • New High for the Buy List
    , April 1st, 2011 at 7:29 pm

    Today was another strong day for our Buy List. We gained 0.77% to the S&P 500’s 0.50%. We’re now up 8.46% for the year which is a new high while the S&P 500 is up 5.95% for the year.

    The S&P 500 closed at its highest level since the market broke six weeks ago. All we need is one small push and the index can close at it highest mark in 33 months.

    Several of our stocks broke out to new 52-week highs today: Deluxe ($DLX), Leucadia National ($LUK), Moog ($MOG-A), Reynolds American ($RAI) and Oracle ($ORCL). I’m very glad to see Oracle above $34.

    I was also pleased to see AFLAC ($AFL) close at $53.50 today which is its highest close in several sessions. The stock has made back much of what it lost since the earthquake although it still has a way to go. Let’s hope today is a good omen for Q2.

  • Investing on the First Day of the Month
    , April 1st, 2011 at 2:56 pm

    The S&P 500 has risen on the first trading day of the month for 19 of the last 24 months — and today looks like it will be another “up” for the index.

    How well does the market perform on the first day of the month?

    Let’s put it this way: Since 1996, the S&P 500’s return on the first day of the month has outpaced the rest of the month combined…by far…even though the days in the rest of the month outnumber first days by a ratio of 20-to-1.

    The total gain for the 183 first days of the month is 76.49%. The gain for the other 3,657 days comes to just 21.97%.

  • “Picking Up Speed”
    , April 1st, 2011 at 11:23 am

    David Leonhardt writes at the New York Times, “Job growth is picking up speed, reaching 216,000 in March.”

    This is technically correct. The economy created 216,000 jobs in March compared with 194,000 in February. In other words, the economy created 11.3% more jobs in March than in February.

    However Leonhardt neglects to mention that March has 10.7% more days than February does.

  • Introducing Gmail Motion
    , April 1st, 2011 at 10:31 am