Archive for 2011

  • Morning News: June 23, 2011
    , June 23rd, 2011 at 8:05 am

    Derivatives Cloud the Possible Fallout From a Greek Default

    Selling $50 Billion in Greek Assets Is Herculean Task

    Group of 20 Agrees on Steps to Mitigate Food Price Swings

    Biggest Banks May Get Boost From Basel

    High-Speed Rail Poised to Alter China

    Chinese PMI Is On The Verge Of Contraction

    Bernanke Leaves Door Open to Further Easing

    S.E.C. Approves New Reporting Requirements for Hedge Funds

    London Stock Exchange Bid on Knife Edge as TMX Battle Heats Up

    Hulu Seen at 50 Times Earnings in Sale Seeking Netflix Multiple

    Lennar Net Slides 65% on Lower Home Deliveries

    Nissan CEO: Aiming For 10% U.S. Market Share, Seek To Buy Stake In Avtovaz

    Brian Shannon: Stock Trading Ideas for 6/23/11

    Josh Brown: Pitching RIM to Warren Buffett

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  • Bed Bath & Beyond Raises Full-Year Forecast
    , June 22nd, 2011 at 4:35 pm

    Wowie! Bed Bath & Beyond ($BBBY) just had an outstanding earnings report for their fiscal Q1.

    Let’s go over the numbers. For Q1, they earned 72 cents per share. When the last earnings report came out, they told us to expect earnings to range between 58 cents and 61 cents per share. I knew that was low and in last week’s CWS Market Review, I said I was expecting modest earnings of around 63 cents per share.

    Turns out, I wasn’t optimistic enough. The shares are up about 2% after hours.

    I also said that I was looking forward to Q2 guidance of 80 to 85 cents per share. They gave us guidance of 77 cents to 82 cents per share. So I was still in the ballpark.

    This was a great earnings report. The best news of all is that the company also revised their full-year forecast higher. The numbers here aren’t as clear. At the start of the year, BBBY told us to expect an earnings increase for the entire year of 10% to 15%. For 2010, they earned $3.07 which came to $3.38 to $3.53 per share.

    Now BBBY has upped that full-year forecast to 15% to 20%. That translates to a range of $3.53 to $3.68 per share.

    Bed Bath & Beyond Inc. today reported net earnings of $.72 per diluted share ($180.6 million) in the fiscal first quarter ended May 28, 2011, an increase of approximately 38% versus net earnings of $.52 per diluted share ($137.6 million) in the same quarter a year ago. Net sales for the fiscal first quarter of 2011 were approximately $2.110 billion, an increase of approximately 9.7% from net sales of approximately $1.923 billion reported in the fiscal first quarter of 2010. Comparable store sales in the fiscal first quarter of 2011 increased by approximately 7.0%, compared with an increase of approximately 8.4% in last year’s fiscal first quarter.

    During the fiscal first quarter of 2011, the Company repurchased approximately $245 million of its common stock representing approximately 4.8 million shares. This included the completion of the $1 billion share repurchase program authorized in 2007. As of May 28, 2011, the balance remaining of the share repurchase program authorized in December 2010 was approximately $1.892 billion dollars.

    The Company is now modeling net earnings per diluted share to be approximately $.77 to $.82 for the fiscal second quarter of 2011 and to increase by approximately 15% to 20% for all of fiscal 2011.

    Here’s a look at BBBY’s quarterly numbers for the past few years:

    Quarter Sales Gross Profit Operating Profit Net Profit EPS
    May-99 $356,633 $146,214 $28,015 $17,883 $0.06
    Aug-99 $451,715 $185,570 $53,580 $33,247 $0.12
    Nov-00 $480,145 $196,784 $50,607 $31,707 $0.11
    Feb-00 $569,012 $238,233 $77,138 $48,392 $0.17
    May-00 $459,163 $187,293 $36,339 $23,364 $0.08
    Aug-00 $589,381 $241,284 $70,009 $43,578 $0.15
    Nov-01 $602,004 $246,080 $64,592 $40,665 $0.14
    Feb-01 $746,107 $311,802 $101,898 $64,315 $0.22
    May-01 $575,833 $234,959 $45,602 $30,007 $0.10
    Aug-01 $713,636 $291,342 $84,672 $53,954 $0.18
    Nov-02 $759,438 $311,030 $83,749 $52,964 $0.18
    Feb-02 $879,055 $370,235 $132,077 $82,674 $0.28
    May-02 $776,798 $318,362 $72,701 $46,299 $0.15
    Aug-02 $903,044 $370,335 $119,687 $75,459 $0.25
    Nov-03 $936,030 $386,224 $119,228 $75,112 $0.25
    Feb-03 $1,049,292 $443,626 $168,441 $105,309 $0.35
    May-03 $893,868 $367,180 $90,450 $57,508 $0.19
    Aug-03 $1,111,445 $459,145 $155,867 $97,208 $0.32
    Nov-04 $1,174,740 $486,987 $161,459 $100,506 $0.33
    Feb-04 $1,297,928 $563,352 $231,567 $144,248 $0.47
    May-04 $1,100,917 $456,774 $128,707 $82,049 $0.27
    Aug-04 $1,273,960 $530,829 $189,108 $120,008 $0.39
    Nov-05 $1,305,155 $548,152 $190,978 $121,927 $0.40
    Feb-05 $1,467,646 $650,546 $283,621 $180,980 $0.59
    May-05 $1,244,421 $520,781 $150,884 $98,903 $0.33
    Aug-05 $1,431,182 $601,784 $217,877 $141,402 $0.47
    Nov-06 $1,448,680 $615,363 $205,493 $134,620 $0.45
    Feb-06 $1,685,279 $747,820 $304,917 $197,922 $0.67
    May-06 $1,395,963 $590,098 $148,750 $100,431 $0.35
    Aug-06 $1,607,239 $678,249 $219,622 $145,535 $0.51
    Nov-07 $1,619,240 $704,073 $211,134 $142,436 $0.50
    Feb-07 $1,994,987 $862,982 $309,895 $205,842 $0.72
    May-07 $1,553,293 $646,109 $154,391 $104,647 $0.38
    Aug-07 $1,767,716 $732,158 $211,037 $147,008 $0.55
    Nov-08 $1,794,747 $747,866 $203,152 $138,232 $0.52
    Feb-08 $1,933,186 $799,098 $259,442 $172,921 $0.66
    May-08 $1,648,491 $656,000 $118,819 $76,777 $0.30
    Aug-08 $1,853,892 $739,321 $187,421 $119,268 $0.46
    Nov-08 $1,782,683 $692,857 $136,374 $87,700 $0.34
    Feb-09 $1,923,274 $785,058 $231,282 $141,378 $0.55
    May-09 $1,694,340 $666,818 $142,304 $87,172 $0.34
    Aug-09 $1,914,909 $773,393 $222,031 $135,531 $0.52
    Nov-09 $1,975,465 $812,412 $245,611 $151,288 $0.58
    Feb-10 $2,244,079 $955,496 $370,741 $226,042 $0.86
    May-10 $1,923,051 $775,036 $225,394 $137,553 $0.52
    Aug-10 $2,136,730 $874,918 $296,902 $181,755 $0.70
    Nov-10 $2,193,755 $896,508 $305,110 $188,574 $0.74
    Feb-11 $2,504,967 $1,076,467 $461,052 $283,451 $1.12
    May-11 $2,109,951 $857,572 $288,948 $180,578 $0.72

  • The Fed’s Projections
    , June 22nd, 2011 at 2:19 pm

    Here are the new economic projections from the Fed.

  • Bernanke LIVE!
    , June 22nd, 2011 at 2:15 pm


    Live TV : Ustream

  • Today’s Fed Statement
    , June 22nd, 2011 at 12:29 pm

    Here it is:

    Information received since the Federal Open Market Committee met in April indicates that the economic recovery is continuing at a moderate pace, though somewhat more slowly than the Committee had expected. Also, recent labor market indicators have been weaker than anticipated. The slower pace of the recovery reflects in part factors that are likely to be temporary, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Inflation has picked up in recent months, mainly reflecting higher prices for some commodities and imported goods, as well as the recent supply chain disruptions. However, longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The unemployment rate remains elevated; however, the Committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline toward levels that the Committee judges to be consistent with its dual mandate. Inflation has moved up recently, but the Committee anticipates that inflation will subside to levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

    To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee continues to anticipate that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The Committee will complete its purchases of $600 billion of longer-term Treasury securities by the end of this month and will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

    The Committee will monitor the economic outlook and financial developments and will act as needed to best foster maximum employment and price stability.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.

  • Lagging Financials
    , June 22nd, 2011 at 8:48 am

    Here’s a good look at the relative performance of financial stocks. This chart shows the Financial Sector ETF ($XLF) compared with the S&P 500.

    We already know that financial stocks got crushed during the financial crisis, but look at what’s happened since April of last year. Financial stocks climbed during the initial part of the rally but have been noticeably subdued over the past year. It seems as if they’ve grown even weaker this year.

  • Can We Make It Five Straight Up Days?
    , June 22nd, 2011 at 8:34 am

    Eh…probably not, but you never know. The U.S. stock market is looking to open lower today even though the Prime Minister of Greece survived his no-confidence vote today.

    The main of focus of today’s trading will be the Federal Reserve’s meeting. The policy statement will come out at 12:30 and Ben Bernanke’s press conference will be at 2:15 pm. Most likely, this will be a non-event.

    What’s interesting is that Bernanke’s latest comments have been directed to Congress. He wants the U.S. to clean up its fiscal mess, but not just yet; otherwise it could spoil any possible recovery. Specifically, Bernanke has said that Congressional negotiators shouldn’t use the debt limit debate as a bargaining chip to force spending cuts.

    JPMorgan Chase ($JPM) said that it reached a deal with the SEC yesterday to pay a $153.6 million fine to settle charges that they misled investors.

    In March and April 2007, as the housing market teetered toward collapse, J.P. Morgan senior management pressed the salespeople responsible for Squared CDO 2007-1, a complex “collateralized debt obligation” of derivatives linked to the mortgage market, to avoid permanent losses, the Securities and Exchange Commission said.

    The bank was already looking at a $40 million mark-to-market loss, but decided to press forward with a marketing pitch to institutional clients instead of shutting down the deal, the SEC said, in an effort to avoid greater losses.

    Let’s add some perspective: JPM has nearly four billion shares outstanding so this fine works out to less than four cents per share. Just the news of the resolution of the issue helped the stock gain 43 cents per share yesterday.

    The real danger is how much the bank is exposed to future lawsuits.

  • Morning News: June 22, 2011
    , June 22nd, 2011 at 7:13 am

    European Stock-Index Futures Fluctuate; Philips, H&M May Move

    Greek Banks Feel Hostage to Debt Crisis

    France Warns of Hunger as Farm Ministers Meet

    China Expects Inflation to Keep Climbing for a While

    Murban Crude Oil Declines Amid Signs of Extra Saudi Cargo Supply

    Betting on Fannie, Freddie

    The Entire Fate Of The Debt Ceiling Could Come Down To The Next Three Days

    J.P. Morgan Knew Portfolio Had Losses, SEC Says

    MetLife Pushes Reverse Mortgages as Wells Fargo, BofA Retreat

    Philips Sees Weak Demand for Lighting, Consumer Electronics

    Walgreen Net Up 30% But Express Scripts Loss Weighs

    Adobe’s Sales Exceed Estimates on Rebound From Japan Quake

    Keynesian Dismisses Crowding Out

    James Altucher: The Best Trader In the World Worked for Bernie Madoff

    Epicurean Dealmaker: The Blind Men and the Elephant

    Stone Street: Happy First Day of Summer, or: The Relationship Between Consumer Spending & Gas Prices

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  • Bounce!
    , June 21st, 2011 at 3:42 pm

    Probably the widest gap between what I was taught in business school and what I’ve seen in the real world is technical analysis. Every study says it’s garbage. All the respectable folks say that you’re seeing trends that really don’t exist.

    I’m a skeptic, too. Still, when we bounce off the 200-DMA so clearly, it makes me wonder:

  • Ford Up on Good Sales News
    , June 21st, 2011 at 12:06 pm

    Good news for Ford ($F) today:

    This morning, a few marginally positive words from a top executive, along with the broader rally in the stock market, are driving Ford’s shares 4% higher. General Motors, Toyota and Honda are all up about 1%.

    Earlier today, Mark Fields, Ford’s head of North and South America operations, said June was “off to a good start,” according to Reuters. He thinks this month will meet May’s weak sales figures or perhaps top them.

    Given all the Slow Patch chatter, Mr. Fields comments might give the economic doomsters some pause. The move in Ford’s shares also underscores how negative sentiment has become. Merely saying that things will be slightly better than horrible seems to spark intense buying pressure.