Archive for January, 2012

• Q4 GDP = 2.8%
  Eddy Elfenbein, January 27th, 2012 at 10:01 am

  We had yet another uninspiring GDP report. The government said the economy grew by 2.8% in the last three months of the year. This was below economists’ expectations of 3% growth. Breaking out the decimals, GDP came very close to being rounded down to 2.7%.

  Taking a step back, the numbers are truly depressing. For all of 2011, the economy grew in real terms by just 1.7%. In four years, we’ve grown by a grand total of 0.8%.

  The U.S. economy grew less in real terms from 2000 through 2011 than it did from 1996 to 2000. Four years’ growth beat eleven years’.

  The economy grew less in the last 30 years than in the 23 years before that, and it grew by less in the last 38 years than in the 26 years before that.

  

• Good Earnings from Moog, Not So Good from Ford
  Eddy Elfenbein, January 27th, 2012 at 8:53 am

  More earnings news for our Buy List. This morning, Moog ($MOG-A) reported earnings of 80 cents per share. That’s six cents more than estimates. Moog reiterated its full-year guidance of $3.31 per share. Note that Moog’s fiscal year ends in September.

  “We are off to a great start for fiscal 2012,” said John Scannell, CEO. “Our first quarter sales are up nicely and earnings per share were better than our forecast. Sales in four of our five segments were up in the quarter as were profits. It is a great foundation for a year in which we anticipate we will deliver record sales and a 12% increase in earnings per share over fiscal 2011.”

  Ford ($F) reported earnings of 20 cents per share which was five cents below estimates.

  Ford earned $13.6 billion in the fourth quarter, due to a decision to move deferred tax assets back onto its books. Without that change, the company’s pretax operating profit totaled $1.1 billion, or 20 cents per share, missing analysts’ forecasts of 25 cents.

  The company lost money in Europe and Asia in the fourth quarter. But its North American operating profit rose 33 percent to $889 million.
  “The quarter was really driven by North America,” Chief Financial Officer Lewis Booth said.

  Booth also said November flooding in Thailand, which affected its parts suppliers, had a greater impact than the company expected. Ford lost 34,000 units of production in Thailand and in South Africa, which relies on Thai-made parts. He said the company also saw higher costs for steel and other commodities. Ford spent $2.3 billion more on commodities in 2011 than the prior year, or $100 million more than it had forecast.

  Europe’s debt crisis weighed on car sales in that region.

  For the full year, the U.S.-based company made $20.2 billion, or $4.94 per share. Without the accounting gain, it earned $8.76 billion, or $1.51 per share, its highest operating profit since 1999. Full year revenue rose 13 percent to $136.3 billion.

  The shares look like they’re going to open about 5% lower this morning.

• Morning News: January 27, 2012
  Eddy Elfenbein, January 27th, 2012 at 5:55 am

  Incredible Shrinking Bankers at Davos Humbler as Austerity Hits

  Greece Solution ‘Open’ as Debt Talks Resume

  Monti Takes on Italy Bureaucracy in Policy Push

  At Euro Talks, a Calm Arm-Twister From the U.S.

  Spain Unemployment Rate Hits 22%

  NYSE-Deutsche Boerse Would Pose ‘Serious’ Problems, EU Says

  Japan Prices Fall, Mild Deflation to Persist

  Oil Heads for First Weekly Gain in Three; Total Sees $100 Brent Support

  Waning Support for Wind and Solar

  Samsung’s Chips Gain, but Smartphones Feel Pressure

  UniCredit Investors Reap Top Return in Offer

  Amgen Agrees to Purchase Micromet for $1.16 Billion to Gain Leukemia Drug

  For $2 a Star, an Online Retailer Gets 5-Star Product Reviews

  In Punishing Year for Hedge Funds, Biggest One Thrived

  Jeff Carter: Where Are All The New Traders Going to Come From?

  Howard Lindzon: Google is Great….Apple is Magnificent…The ELEVEN Year Highs in The Nasdaq… and Momentum Monday!

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• TJX Companies
  Eddy Elfenbein, January 26th, 2012 at 11:48 am

  TJX ($TJX) is trading at a new all-time high this morning. Check out the stock’s long-term track record. Even before looking at dividends, that stock has averaged more than 20% per year for 20 years.

  

  The stock soared nearly tenfold in the mid-1990s. Since then, the growth rate has moderated but the stock has averaged 12% to 15% per year. That’s a remarkable track record.

• Morning News: January 26, 2012
  Eddy Elfenbein, January 26th, 2012 at 9:28 am

  Banks Hoarding ECB Cash May Double Company Defaults

  Italy Sells Maximum Target Amount at Bond Sale

  Greek Debt Talks to Resume as Policy Makers Squabble

  Bernanke Moves Fed On With 2% Inflation Goal

  New Housing Task Force Will Zero In on Wall St.

  Foreclosure-Related Properties Decline to 20% of Home Purchases in U.S.

  Higher Oil Prices Boost Conoco’s Profit by 66%

  Hyundai’s Net Profit Rises 38%

  Netflix Returns To Growth Even As Earnings Fall

  Logitech Shares and Profit Plunge

  Nintendo Sees First Annual Loss, Cuts 3DS Forecast

  As I.P.O. Looms, Facebook Halts Clearing of Trades

  Container Lines Steam Slower to Restore Profit

  Airline ‘Teaser Fares’ Vanish as U.S. Rule Spurs Tax Disclosures

  Joshua Brown: Whither the Wirehouse?

  Jeff Miller: The Fed Role in the Economy: Now Bigger. Now Better?

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• Today By the Numbers
  Eddy Elfenbein, January 25th, 2012 at 5:51 pm

  Here’s a breakdown of how the Buy List did today:

  Symbol	Company	Today	YTD
  AFL	AFLAC	0.18%	13.64%
  BBBY	Bed Bath & Beyond	0.13%	8.56%
  CA	CA Technologies	9.68%	23.79%
  BCR	C.R. Bard	1.81%	9.37%
  DTV	DIRECTV	1.53%	3.93%
  FISV	Fiserv	0.76%	7.93%
  F	Ford Motor	0.86%	20.17%
  HRS	Harris Corporation	0.75%	7.77%
  HCBK	Hudson City Bancorp	1.97%	15.84%
  JNJ	Johnson & Johnson	0.32%	-0.56%
  JOSB	Jos. A. Bank Clothiers	1.66%	0.66%
  JPM	JP Morgan Chase	-0.16%	13.08%
  MDT	Medtronic	1.60%	4.47%
  MOG-A	Moog	-0.14%	-0.39%
  NICK	Nicholas Financial	-0.54%	0.08%
  ORCL	Oracle	0.00%	11.15%
  RAI	Reynolds American	1.51%	-2.66%
  SYK	Stryker	4.00%	10.76%
  SYY	Sysco	0.46%	3.75%
  WXS	Wright Express	0.36%	3.68%
  	Complete Buy List	1.36%	7.75%

• Good Day for Us!
  Eddy Elfenbein, January 25th, 2012 at 2:16 pm

  The S&P 500 just broke 1,322 which is another six-month high.

  Thanks to big moves from Stryker ($SYK) and Hudson City ($HCBK), this is a huge day for our Buy List. Of course, the best gain of all comes from CA Technologies ($CA) which has been up as much as 14.76% today. Hudson City got as high as $7.46 and Stryker got up to $55.17.

  As of 2 pm, the S&P 500 is up 0.51% and our Buy List is up 1.21%.

  For the year, we’re up 7.59% while the S&P 500 is up 5.00%.

• The Five-Year Treasury Is Back Below 0.8%
  Eddy Elfenbein, January 25th, 2012 at 1:05 pm

  Thanks to today’s news from the Fed, the yield on the 5-year Treasury is back near an all-time low.

  

• Fed Votes 9-1 to Keep Rates the Same
  Eddy Elfenbein, January 25th, 2012 at 12:29 pm

  The Fed expects rates to stay low until at least late-2014. Here’s today’s Fed statement:

  Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global growth. While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed. Inflation has been subdued in recent months, and longer-term inflation expectations have remained stable.

  Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth over coming quarters to be modest and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that over coming quarters, inflation will run at levels at or below those consistent with the Committee’s dual mandate.

  To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates 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 at least through late 2014.

  The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.

  Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who preferred to omit the description of the time period over which economic conditions are likely to warrant exceptionally low levels of the federal funds rate.

• Stryker Rallies on Earnings
  Eddy Elfenbein, January 25th, 2012 at 12:25 pm

  There’s one more earnings report to mention. After the bell yesterday, Stryker ($SYK) reported fourth-quarter earnings of $1.02 per share which was inline with Wall Street’s forecast. For the year, Stryker earned $3.72 per share. Previously, Stryker told us to expect full-year earnings between $3.72 and $3.74 per share.

  Changes in product mix and volume increases helped drive revenue. Stryker said sales in its MedSurg segment climbed 11 percent to $857 million due to higher shipments of emergency medical and surgical equipment and surgical navigation systems, among other items.

  The Kalamazoo, Mich., company earned $401 million, or $1.05 per share, in the three months that ended Dec. 31. That compares with net income of $295 million, or 74 cents per share, in the 2010 quarter. Adjusted earnings, which exclude one-time items, totaled $1.02 per share in the latest period.

  Stryker reiterated its forecast for 2012 of “double digit” earnings growth. That implies earnings of $4.09 per share for 2012 so Stryker is currently going for about 13.3 times this year’s earnings. The stock has been up as much as 3.97% today.