Archive for August, 2012
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Morning News: August 15, 2012
Eddy Elfenbein, August 15th, 2012 at 7:39 amEU Banking Plans Asks ECB to Share Power, Documents Show
No Longer Stagnating, Euro Zone Contracts
China’s Wen Says Economy Still Under Pressure
Retail Sales in U.S. Jumped More Than Forecast
British Bank in $340 Million Settlement for Laundering
Standard Chartered Faces Fed Probes After N.Y. Deal
Lloyds Sells $1.6 Billion Private-Equity Assets to Coller
Paulson Steps Up Gold Bet to 44% of Firm’s Equity Assets
Carlyle Group to Buy Getty Images For $3.3 Billion
Home Depot Net Rises 12% Despite Sales Pressure
270 Million Facebook Shares About To Be Set Free
Staples 2Q Profit Falls, Sales Slow In N. America
Wells Fargo Settles Mortgage-Crisis Case for $6.5 Million
Jeff Carter: Mayor Bloomberg, Money and Politics
Gary Shilling: We Are Either In Or Entering A Recession
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A Housing Boom?
Eddy Elfenbein, August 14th, 2012 at 10:51 amIs there a housing boom afoot? Well, the simple answer is no. But there has been some modestly good news, and combined with some very cheap prices in housing-related stocks, that’s added up to a nice rally in the sector.
Check out this chart:
Lennar ($LEN, red line) has added some impressive gains. Our Bed Bath & Beyond ($BBBY, orange line) has also been a strong performer. I also included Lowe’s ($LOW, black line) in order to contrast it with Home Depot ($HD, blue line). Just because two companies appear similar doesn’t mean the stocks will perform the same way.
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A Housing Boom?
Eddy Elfenbein, August 14th, 2012 at 10:51 amIs there a housing boom afoot? Well, the simple answer is no. But there has been some modestly good news, and combined with some very cheap prices in housing-related stocks, that’s added up to a nice rally in the sector.
Check out this chart:
Lennar ($LEN, red line) has added some impressive gains. Our Bed Bath & Beyond ($BBBY, orange line) has also been a strong performer. I also included Lowe’s ($LOW, black line) in order to contrast it with Home Depot ($HD, blue line). Just because two companies appear similar doesn’t mean the stocks will perform the same way.
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A Housing Boom?
Eddy Elfenbein, August 14th, 2012 at 10:51 amIs there a housing boom afoot? Well, the simple answer is no. But there has been some modestly good news, and combined with some very cheap prices in housing-related stocks, that’s added up to a nice rally in the sector.
Check out this chart:
Lennar ($LEN, red line) has added some impressive gains. Our Bed Bath & Beyond ($BBBY, orange line) has also been a strong performer. I also included Lowe’s ($LOW, black line) in order to contrast it with Home Depot ($HD, blue line). Just because two companies appear similar doesn’t mean the stocks will perform the same way.
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The S&P 500 Breaks 1,410
Eddy Elfenbein, August 14th, 2012 at 10:29 amThe stock market is up a little bit today thanks to some good economic news. The Commerce Department said that retail sales for July rose by 0.8%. That topped Wall Street’s estimate which was at 0.3%. The down note in the report is that retail sales for June were revised down to a drop of 0.7%. Bloomberg noted that there was strength across the board—all 13 categories of retail sales increased last month.
Once clue that the high-end of the market is doing well is that Saks ($SAKS) reiterated its sales forecast for the rest of this year. That’s a notable sign of confidence given the company’s rather weak Q2 earnings report.
The Labor Department reported that wholesale inflation rose by 0.3% last month. What’s interesting is that energy costs dropped by 0.4%. That’s the fourth monthly drop in a row. Remember that the lower prices at the pump often (but not always) translate to more cash in the pockets of consumers. Tomorrow we’ll get the report on consumer inflation.
The economic report this morning showed that business inventories increased by 0.1% in June. I don’t think there’s a major takeaway from this report (June is rather dated now) but it’s interesting that companies are keeping a tight lease on production. No one wants to churn out a bunch of stuff only to have it sit on a shelf in a warehouse. That costs money so companies are still a bit weary of shifting production into high gear.
The S&P 500 broke 1,410 this morning. If that holds up, it will be our highest close since early April. The closing high was 1,419.04. If (when) we take that out, it will be the highest close in more than four years.
The Buy List is doing fairly well this morning. I see that JPMorgan Chase ($JPM) got as high as $37.64 today. That’s very close to a post-Whale high. I must sound like a broken record about Ford ($F) but I think the stock is very cheap. On August 2, share of Ford got as low as $8.82. That’s truly amazing. Ford is finally showing some strength as it’s up over $9.50 today.
I’m also holding out hope for Harris ($HRS). The stock has rallied for nine days in a row but it’s down slightly today.
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Morning News: August 14, 2012
Eddy Elfenbein, August 14th, 2012 at 7:51 amEuro-Area Economy Contracted In Second Quarter On Spain
Hedge Funds Have $74 Billion As Europe Fire Sale Delayed
Currency Flows Reversing China To Colombia As Trade Slows
German Small Businesses Reflect Country’s Strength
Carlyle, China PE Firms Bid $3.5 billion for Focus Media
Greece Completes Largest Debt Sale in Two Years
Obama Announces Meat Purchase To Help Farmers Through Drought
Home Depot Profit Tops Estimates As Customer Spend More
Knight $440 Million Loss Sealed By New Rules On Canceling Trades
Groupon Tumbles After Sales of Daily Deals Miss Estimates
Ford Says Fiesta Vital To Lineup Despite Sales Slump
Deloitte CEO Defends Firm’s Standard Chartered Work
Pragmatic Capitalism: Q2 Earnings Surprises Masked Weaker Revenues
Howard Lindzon: How to Invest for Losses and Misery…and ‘Active’ vs. ‘Passive’
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VIX On Pace for 5-Year Low
Eddy Elfenbein, August 13th, 2012 at 3:15 pmThe Volatility Index ($VIX) is on pace for its lowest close since June 19, 2007.
So is a low VIX good for stocks? A few years ago, I looked at the numbers and found that a very low VIX does provide some benefit for the market:
To the extent there’s a tipping point, it seems to be a VIX of 13. Above 13, the S&P shows an annualized return of 3.0%, below 13 it jumps to 14.1%. However, 13 is a very low VIX reading; it’s been below 13 about 18% of the time.
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“I’m an Outspoken Defender of the Truth”
Eddy Elfenbein, August 13th, 2012 at 1:57 pmJessica Pressler spent 122 minutes with Jamie Dimon and lived to tell the tale. Here are some highlights:
“Everyone is talking about the culture, the culture, and all that, and it’s just not true,” Dimon says. “Most bankers are decent, honorable people. We’re wrapped up in all this crap right now. We made a mistake. We’re sorry. It doesn’t detract from all the good things we’ve done. I am not responsible for the financial crisis,” he adds. “I hate to tell you. We were a port of safety in the storm. I find it unbelievable that that is the general theme—that you have to walk in a room and act like you are responsible for things you are not responsible for.”
He’s staring into the middle distance as he says all of this, as if addressing an invisible, unpersuadable audience. But when I ask if this episode has made him regret being such an outspoken defender of the banking industry, he looks at me point blank. “I’m an outspoken defender of the truth,” he corrects me. “Everyone is afraid of retaliation and retribution. We recently had an event with a hundred small bankers here, and 85 percent of them said they can’t challenge the regulation because of the potential retribution. That’s a terrible thing. Okay? This is not the Soviet Union. This is the United States of America. That’s what I remember. Guess what,” he says, almost shouting now. “It’s a free. Fucking. Country.”
I still think Dimon ought to resign but he is a piece of work.
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Buy List Earnings Calendar
Eddy Elfenbein, August 13th, 2012 at 1:45 pm
Eddy Elfenbein is a Washington, DC-based speaker, portfolio manager and editor of the blog Crossing Wall Street. His