Archive for May, 2011

• Soaring Oil Blasts the Trade Deficit
  Eddy Elfenbein, May 11th, 2011 at 10:19 am

  The trade numbers are out for March, and higher oil prices are widening out the trade deficit. Today’s trade report shows that exports rose by 4.6% in March to $172.7 billion. That’s the biggest gain since March 1994.

  The trade gap rose 6 percent to $48.2 billion, the biggest since June, from $45.4 billion in February, the Commerce Department reported today in Washington. The median forecast of 72 economists surveyed by Bloomberg News projected it would widen to $47 billion. Sales abroad climbed by the most in 17 years.

  Crude oil costs that surged above $100 a barrel for the first time in more than a year and a 9.4 percent drop in the dollar will probably keep driving up the cost of imports. At the same time, the weaker currency is making American goods more competitive to customers in emerging markets from Argentina to China, benefiting manufacturers like United Technologies Corp. (UTX) and Caterpillar Inc. (CAT).

  The original report for Q1 GDP growth was 1.8%. Today’s report indicates that an upcoming revision may be slightly lower.

  Four years ago, I looked at the impact of the euro on U.S. equity markets. The lesson is that a weaker euro is very good for our stocks. The biggest beneficiaries of a weak euro were tech, industrials and consumer discretionaries.

• Morning News: May 11, 2011
  Eddy Elfenbein, May 11th, 2011 at 7:32 am

  Merkel to Back Draghi as Trichet’s ECB Successor

  Bank of England Signals Rate Increase This Year Amid Inflation

  EU Slows Drive for More Greek Aid

  Hong Kong Stocks Drop on China’s Inflation, Retail Sales Data

  Gold, Silver Up On EU Worries, Short Covering

  Crude Oil Futures Halt Two-Day Advance on Chinese Inflation, European Debt

  US Stock Futures Gain Ground As Commodities Extend Rebound

  Federal Retreat on Bigger Loans Rattles Housing

  Toyota Profit Drops 77% on Strong Yen, Sluggish Japan Sales

  Why The Microsoft-Skype Deal Has Big Implications For The Stock Market

  AIG Offering Near Low End of Range

  Danish Brewer Carlsberg’s Operating Profit Jumps 38%

  Leon Black’s Apollo Agrees to Purchase ‘Idol’ Owner CKX for $509 Million

  Howard Lindzon: Things that Make me say WOW!

  Joshua Brown: Media: Commodity Cool-Off?

  ETF Risk and the Natural History of a New Idea

• The Plunge In Short-Term Yields
  Eddy Elfenbein, May 10th, 2011 at 10:03 pm

  Over the past few weeks, the yields for short-term Treasuries have plunged. The yields are basically near 0%. It’s one thing to have very low yields for 1-month T-bills, but now you’re not getting much for socking you’re money away from 12 months.

  To give you an idea of how low interest rates are, if you lend Uncle Sam $1 million for one day at one basis point, you get about 28 cents for your troubles.

  Check out the plunge in yields:

  

  And don’t pin this on the Federal Reserve. Most of the QE2 buying has been in the middle of the yield curve.

  Personally, I had been expecting the Fed to raise rates sooner than most people had expected. Apparently, Mr. Market disagrees and expects rates to stay low for a while longer.

• NASDAQ Close to 10-1/2 Year High
  Eddy Elfenbein, May 10th, 2011 at 4:23 pm

  While the S&P 500 is still below its high from October 2007, that NASDAQ Composite ($COMPQ) closed today just inches from its highest close since December 12, 2000.

  Thanks to the news that Microsoft ($MSFT) is buying Skype for $8.5 billion, the NASDAQ closed today at 2,871.89 which is just 1.65 below the close from April 29, 2011.

  

• Sysco Looking to Make Deals
  Eddy Elfenbein, May 10th, 2011 at 10:54 am

  Thanks to yesterday’s huge move from Sysco ($SYY), our Buy List gained 1.04% yesterday compared with 0.45% for the S&P 500. For the year, the Buy List is up 11.67% to the S&P 500’s 7.05%.

  Sysco got as high as $32.76 yesterday but closed at $31.57. I was surprised by the magnitude of yesterday’s move, but sometimes the best stock to buy is the one you already own. Sysco also said that they’re looking to make acquisitions going forward.

  “We are also committed to looking for acquisition opportunities both in and beyond the core,” DeLaney said on a conference call today. “We are doing this mainly through building a pipeline of high-quality potential domestic acquisitions and also by looking at adjacencies and new geographies.”

  Sysco, which controls almost one-fifth of the restaurant- distribution industry’s more than $200 billion in sales, may look to Western Europe for growth as people there eat out more, said Jack Russo, an analyst at Edward Jones. Sysco has completed at least seven acquisitions in the past five years, the latest being the purchase of Nebraskan distributor Lincoln Poultry & Egg Co. last year.

  Our Buy List continues to do well today. Both Jos. A. Bank ($JOSB) and Wright Express ($WXS) are at new 52-week highs.

• Morning News: May 10, 2011
  Eddy Elfenbein, May 10th, 2011 at 7:30 am

  Merkel Says No Aid Decisions Until Greek Assessment Reports

  Unease About Greece Grows as S.&P. Downgrades Its Debt Again

  ECB’s Bini Smaghi-Debt Restructuring Would Be Suicide

  Yuan Forwards Rise for Second Day as Reference Rate Set Higher

  U.S., Chinese Firms Sign Solar-Power Pact

  Chinese Exports Hit Record for April

  Australia Shrinks Spending to Combat Mining-Fueled Inflation

  Crop Damage From Weather Growing as Cost of Grains Advances

  Oil Inventories Increase to Near a Two-Year High in Survey

  U.S. Gasoline Extends Gains as Mississippi River Threatens Refineries

  Bernanke’s QE2 Averts Deflation, Spurs Rally, Expands Credit

  Treasuries Hold Loss Before Debt Auctions; Gross Increases Bet on Decline

  Microsoft in Talks to Acquire Skype for $8.5 Billion

  Hertz Makes New Dollar Thrifty Bid of $2.1 Billion

  Joshua Brown: MicroSkype

  Howard Lindzon: Megatrends…Mobile, Social, Cloud, Global and REINVESTMENT

• StockTwits Partners With CNN
  Eddy Elfenbein, May 9th, 2011 at 3:12 pm

  Howard Lindzon, the Grand Poobah of StockTwits, had this announcement on his blog this morning:

  The team at Stocktwits has been relentless about our mission of ‘Real Ideas. Real Investors. Real Time‘ since we started in the fall of 2008. We believed that people would share ideas, their trades, market and life experiences, moods, wins AND losses. They have.

  We believed that if people shared, they would get heard. Today, our community will be heard a little further once again.

  StockTwits is pleased to announce a content partnership with CNNMoney!

  CNNMoney will feature editorial content from The StockTwits Blog Network, link directly to individual blogs and implement an advertising revenue share program.

  This is a complementary relationship all the way around.

  For the bloggers, it provides an opportunity to increase brand exposure and blog traffic while monetizing content.

  For CNNMoney, it provides access to an incredible variety of fresh, high quality content penned daily by real market pros.

  For StockTwits, it extends further our global platform from which curated real time, actionable market focused ideas emanate.

  For the Stocktwits community, the stream’s reach gets wider, and we believe… smarter and more efficient.

  The StockTwits Blog Network brings together the smartest market pros on the real time web and provides a platform for them from which they can build brand by sharing in depth actionable ideas.

  CNNMoney is the online home of Fortune, Money and serves as CNN.com’s exclusive business site. It attracts more than 13 million unique visitors per month on average (Comscore).

  Exciting times.

• More “Bernanke Warns”
  Eddy Elfenbein, May 9th, 2011 at 1:28 pm

  These are from the past few weeks.

  Bernanke warns that regulators must avoid burdensome rules when enacting financial reform

  Bernanke warns: US deficit ‘not sustainable’

  Bernanke warns of inflation risks

  Stocks fall as Bernanke warns about oil prices

  Bernanke warns of catastrophe if debt limit not raised

  Bernanke warns against steep U.S. budget cuts
  
  Bernanke Warns on Debt-Limit ‘Chaos’

  Ben Bernanke warns US of risks from weak house prices and ailing banks

• S&P 500 to Hit Record Earnings
  Eddy Elfenbein, May 9th, 2011 at 12:54 pm

  We’re already nearly halfway through the second quarter and it looks like we’re going make record earnings for the S&P 500.

  In Q2 of 2007, the S&P 500 made $24.06. Wall Street currently expects the S&P 500 to make $24.21 this quarter. The stock market, however, is still a long way from its record high close of 1,565.15 from October 9, 2007.

  Wall Street expects the S&P 500 to make $98.55 this year and $112.06 next year.

  

• Sysco Soars
  Eddy Elfenbein, May 9th, 2011 at 10:13 am

  Wow! I felt pretty sure that Sysco ($SYY) was going to report good earnings today but I had no idea the market would be so pleased. The stock has surged as much as 11.4% today.