Archive for October, 2013

• Morning News: October 2, 2013
  Eddy Elfenbein, October 2nd, 2013 at 6:55 am

  Déjà vu for the ECB

  China Faces Steep Climb to Exploit Its Shale Riches

  How Oil Reforms Could Trigger Mexico’s Biggest Economic Boom In A Century

  Sweden Faces its Own Shutdown: Cause? Jellyfish

  Crude Oil Trades Near Two-Month Lows Ahead of Inventory Data

  Treasury Taking Final Steps to Avoid Default

  Dollar Seen as Shutdown Loser as Growth Hit Spurs QE

  Businesses Are Feeling Effect of Partial Government Shutdown

  Auto Sales Fall in September

  SAP Ventures Raises $650 Million Fund as IPOs Increase

  Icahn Pushes Apple CEO for $150 Billion Share Buyback

  New York to Sue Wells Fargo Over Mortgage Settlement

  The Popular ‘Risk Parity’ Asset Allocation Strategy Has 2 Fundamental Flaws

  The Reformed Broker: The Forward Earnings Outlook With Brian Gilmartin

  Pragmatic Capitalism: Government Shuts Down – Markets Rally?

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• Dividends Rose 14.64% in Q3
  Eddy Elfenbein, October 1st, 2013 at 3:56 pm

  Dividends had another good quarter for Q3. The S&P 500 paid out 14.64% more in dividends than in last year’s Q3.

  So far, dividends are running 14.14% ahead of last year’s pace. Q4, however, will be a tough comp because of the rush to payout dividends last year ahead of higher taxes. Still, the payout for Q3 of this year nearly topped last year’s Q4.

  Before we’re done, the dividends paid out in 2013 will probably be more than 50% higher than what was paid out in 2010. That’s remarkable.

  The dividend payout ratio for the last four quarters is now just over 33%. Except for the depths of the financial crisis, that’s the highest ratio in more than 10 years. (During the financial crisis, the ratio climbed not due to higher dividends but to plunging earnings.)

  I’ve mentioned this before, but I’m amazed at how steady the market’s dividend yield has been over the last decade. It’s largely hovered between 1.7% and 2.3%. The yield spiked over 4% during the financial crisis, but settled back near 2%.

  Despite the fancy metrics people used, all you needed to do was take the amount of dividends paid out in the last year and multiply by 50. That would have gotten you a very good estimate of where the S&P 500 would be.

  Here’s a log chart of the S&P 500 (blue line, left scale) along with its dividends (black line, right scale). I scaled the two lines by a log difference of 1.7 which is just over 50. In other words, whenever the lines cross, the dividend yield is 2%.

  

• Strong Mid-Cap Outperformance
  Eddy Elfenbein, October 1st, 2013 at 10:29 am

  Here’s something unusual. Mid-cap stocks are strongly outperforming small- and large-caps today. Mid-caps usually fall in the middle of the two, as you would expect.

  I can’t remember another time when the middies were so far from the pack. Perhaps the index is unduly influenced by a few sectors that are up today.

  

• September ISM = 56.2
  Eddy Elfenbein, October 1st, 2013 at 10:07 am

  Good morning and welcome to anarchy! Well, not complete anarchy, but we do have a partial government shutdown. I’m not sure how long this will last but it’s unpleasant to watch our dysfunctional political process.

  On to today’s market. We had a good read for today’s ISM. The number came in at 56.2. Any number above 50 indicates an expansion. Below 50 is a contraction. This is the third month in a row that the ISM has topped 55.

  Two academics have a method for calculating the odds of a recession. The latest update was this morning, but that’s off of July’s data. In any event, they peg the odds of a recession at 1.34%.

  Shares of AFLAC ($AFL) are having a good day. The stock was upgraded by FBR Capital. They also raised their price target to $70 per share. AFL has been as high as $63.30 today. The 52-week high is $63.63.

  Ford ($F) just reported another strong month for sales. Last month was their best month in seven years.

  The biggest sales driver was the continuing boom in pickup truck sales, with the F-Series trucks posting a fifth consecutive month of more than 60,000 sales.

  The redone Fusion mid-size sedan also continued its strong year with sales up 62% to 19,972, while the Fiesta subcompact was up 29% to 5,043 — and Ford said these cars were building sales in markets where Ford has been week in the past.

  “We’re particularly encouraged by the strength of the Fusion and Fiesta, especially in coastal markets,” said Ken Czubay, U.S. sales head, in a statement.

  Ford said Fusion retail sales were up 59% in the West and 26% in the Southeast, while Fiesta is up 41% in the West.

  Continuing to show signs of life for the nearly moribund Lincoln brand, the new MKZ sedan sold 2,874, up 12%, adding a fifth monthly best, Ford said.

  The stock is back above $17 this morning. Look for another good earnings report later this month.

• Morning News: October 1, 2013
  Eddy Elfenbein, October 1st, 2013 at 6:50 am

  Euro Zone Factory Growth Eases But Strong Demand Enables Price Hikes

  Abe Orders Japan’s First Sales-Tax Increase Since ’97

  Vatican Bank Discloses Annual Earnings Report for First Time

  The Federal Government Shuts Down For The First Time In 17 Years

  U.S. Stock-Index Futures Advance as Government Shutdown Begins

  The One Word Missing From All Those Obamacare Ads

  Google Moves Nearer to Search Deal with EU

  Twitter’s ‘Stealth IPO’ Shines Spotlight on JOBS Act’s Effects

  Ikea to Sell $9,200 Solar-Panel Kits in All U.K. Stores

  Buffett’s Berkshire Set To Get Nearly $2.15 Billion Of Goldman Stock

  JPMorgan Insider Helps Justice Department in Probe

  Sugar Industry Highlights Conflicts Over Trade Pacts and Land

  Do NFL Underdogs Consistently Beat the Spread?

  Joshua Brown: 10 Terms Investment Pros Use to Raise Money

  Credit Writedowns: QE: Exit-path Implications for Collateral Chains

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