Archive for December, 2014

• Morning News: December 4, 2014
  Eddy Elfenbein, December 4th, 2014 at 7:08 am

  Bank of England Keeps Rates on Hold at Record Low

  British Government Proposes a ‘Google Tax’

  Putin Vows to Punish Speculators Pushing Down Ruble’s Value

  Fed’s Beige Book: Hiring Picks Up Broadly, but Wage Growth Is Muted

  Obama Offers Candor, Insights in Q&A With Top CEOs

  ADP Says Companies in U.S. Added 208,000 Workers in November

  Shareholders Meeting Spotlights the New Microsoft

  Intel to Invest $1.6 Billion in China Factory

  Executives at Samsung Unit Relieved From Posts

  Sears 3Q Loss Widens as Retailer Reshapes Itself

  SoftBank Invests $250 Million in Uber Competitor GrabTaxi

  Best Buy to Sell China Business, Focus on North America

  Booyah! Activist Investor Hurls Purple Prose at Jim Cramer

  Credit Writedowns: How Might a China Slowdown Affect the World?

  Yes, the American Consumer is Back, Epilogue

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• Stryker Raises Dividend 13%
  Eddy Elfenbein, December 3rd, 2014 at 4:34 pm

  Stryker ($SYK) announced today that they’re raising their quarterly dividend by 13%. The payout will rise from 30.5 to 34.5 cents per share. The dividend is payable on January 30, 2015, to shareholders of record at the close of business on December 31, 2014. Based on today’s close and the new dividend, shares of SYK now yield 1.46%.

• Morning News: December 3, 2014
  Eddy Elfenbein, December 3rd, 2014 at 6:53 am

  Another Chart Piling Pressure on ECB: Producer Prices Slide Most in a Year

  Rouble Sinks to New Lows as Russia’s Problems Mount

  Australia Enters Income Recession, Dollar Dives as Economy Stalls

  Oil-Price Drop Adds New Element to Middle East Tensions

  Income Gap Shrinks in Chile, for Better or Worse

  US Federal Reserve’s Dudley Says Oil Price Drop a Net Benefit For U.S.

  Business Chiefs to Press Obama Over Tax Stalemate

  GM, Chrysler, Honda U.S. Sales Rise in November

  Bezos H’app’y With Washington Post Purchase

  IBM Signs $1.25 Billion WPP Cloud Deal and Says More Coming

  Hershey Explores Removing High-Fructose Corn Syrup

  Takata Rejects U.S. Demand for Nationwide Air-Bag Recall

  Hackers Pirate Sony Films and Leak Studio Salaries

  Epicurean Dealmaker: Show Me the Money

  Howard Lindzon: Predictions for 2015 …Continued…Web Video and Financial Web

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• There’s No Such Thing as Being Market Neutral
  Eddy Elfenbein, December 2nd, 2014 at 1:07 pm

  One of the important truths about investing is that there’s no such thing as truly being “market neutral.” Any investment takes some sort of angle on the market. Even doing nothing and having your money sit in the bank is, ironically, playing some market.

  This year, actively managed funds are having their worst year against the market in 30 years. Lipper reports that 85% of actively managed large-cap funds are lagging their benchmark.

  But that’s not due to managers being bad at their jobs. At least, that’s not the only reason. What we don’t often hear is that the relative performance of active managers is very strongly correlated with the relative performance of small-cap stocks (yes, even among large-cap funds). Actively managed funds tend to be over-weighted with small-cap stocks. When small-caps soar, active managers look smart. But when they break down, they don’t look so good.

  But it doesn’t end there. The relative performance of small-caps is semi-strongly correlated with the U.S. dollar. When the dollar rises, small-caps lag. Putting it all together, actively managed funds are having a bad year partially related to the dollar’s rally. That, in turn, is related to efforts in Japan and Europe to weaken their currencies.

  Everything’s related to everything else.

• 10 Straight Rallies for ESRX
  Eddy Elfenbein, December 2nd, 2014 at 12:26 pm

  The stock market is gaining ground today after yesterday’s plunge. Of course, by plunge, I mean a very modest decline. But given this market’s hyper-low volatility, yesterday’s drop of 0.68% was the S&P 500’s worst daily decline since October 22.

  Stryker (SYK) has been in the news lately as it seems they’re ready to strike for Smith & Nephew (SNN). I knew some kind of deal was coming, but I wasn’t sure what it would be. Shares of SNN gapped up to $37 per share last week, but have since slid back. Meanwhile, SYK is up to a new 52-week high. Expect to see a dividend increase soon.

  Ford (F) reported another blah month for sales for November. Again, I’m not worried since consumers are holding back waiting for the new line of trucks to hit. The stock is holding up well and is closing in on $16 per share.

  Shares of Express Scripts (ESRX) have closed higher for ten straight days, and they’re up again today.

  This morning, the Census Bureau reported that October construction spending rose 1.1%. Despite the increase, this is one data series that’s not even close to its pre-crash high.

• Morning News: December 2, 2014
  Eddy Elfenbein, December 2nd, 2014 at 7:03 am

  Banks May Be Allowed to Up Stake in Troubled Projects: RBI Governor Raghuram Rajan

  RBA Holds As Abenomics Downgraded

  Decision on South Stream Can Be Taken Only By Both Russia and EU

  Saudi-Venezuela OPEC Split Plays Out Behind Closed Doors

  Gold Falls With Silver After Rally Yesterday as Dollar Climbs

  Boehner Seeks Republican Support For Plan to Avoid Government Shutdown

  Interest in Obamacare Exchanges for Small Business Still Languishing

  The Dollar Comes Back Bid

  Amazon Plans Debt Offering; Moody’s Cuts Outlook

  Amazon Robots Speed Customer Orders But May Lead to Fewer Workers

  Wal-Mart Is Facing Fierce Competition

  Japan’s Otsuka Agrees to Buy Avanir Pharma for $3.54 Billion

  Cypress Semiconductor to Buy Spansion for $1.6 Billion

  Roger Nusbaum: AdvisorShares Weekly Market Review

  Jeff Carter: Where Are The Hysterics Now?

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• 21 Trading Days Left
  Eddy Elfenbein, December 1st, 2014 at 10:19 pm

  Our Buy List suddenly decided to wake up!

  There are only 21 trading days left this year, but our Buy List has narrowed its deficit considerably against the rest of the market. I doubt will be able to catch the market before the end of year, but it could be close. This year will most likely break our streak of beating the market for seven straight years. The last two days have been especially good for our relative performance since we don’t have any energy stocks.

  Through Monday, our Buy List is up 9.67% on the year compared with a gain of 11.10% for the S&P 500. That’s a deficit of 1.43%. In late-September, the deficit was 5.20%, so you can see how much we’ve closed the gap. Take a look at this chart. This assumes that the Buy List is a $1 million portfolio (red line) starting on January 1.

  

  If you include dividends, our Buy List is up 11.14% while the S&P 500 is up 13.20%.

• Federal Debt Appears to be Stabilizing
  Eddy Elfenbein, December 1st, 2014 at 10:41 am

  These kinds of posts always seem to upset some people so I’ll add a number of qualifiers.

  The latest data suggests that U.S. federal debt appears to be stabilizing. By U.S. debt, I mean federal government debt held by the public as a percent of GDP.

  The figure for Q3 was 72.8% of GDP which is down from 74.0% for Q1. It’s also 0.6% above the number for Q1 of 2013.

  The measure of debt basically doubled in five years, so some leveling off is good to see. According to the projections by the CBO, debt held by the public should stabilize around 70% to 75% of GDP. So far, the data suggests that this forecast is largely accurate.

  The problem is that it won’t last long. Within 10 years, the debt is projected to grow again. CBO projections aren’t always accurate but that’s because we’re able to take actions now to prevent good or bad news in the future.

  I want to see more data before I’m ready to say this with more certainty, but it appears that our debt is no longer growing.

• November ISM = 58.7
  Eddy Elfenbein, December 1st, 2014 at 10:14 am

  The November ISM report fell slightly to 58.7 from 59.0. in October. ISM has been 49.5 or better for 65 straight months.

• OPECalypse
  Eddy Elfenbein, December 1st, 2014 at 10:09 am

  Welcome back. I hope everyone had a nice Thanksgiving.

  We’re now in December which is traditionally the best month for the market. The S&P 500 has gained ground during the last six Decembers.

  Friday was one of the more unusual days in recent market history. The reason was that the price for oil crashed. West Texas crude dropped from $73.47 per barrel to $65.99 in one day. Remember that oil was going for $107 in June. Oil is down again today.

  Oil and other energy stocks dropped as well. Other commodities such as silver, copper and natural gas were also down sharply. Last week, OPEC decided against slowing production to halt oil’s slide. That’s a big deal. There’s a lot of speculation that OPEC doesn’t mind seeing oil drop for the time being since it will hurt U.S. shale production. The question is, how long will OPEC stand by and watch this? Some of the OPEC are certainly not happy.