Archive for February, 2015

• A New Inflation-Adjusted High?
  Eddy Elfenbein, February 12th, 2015 at 4:14 pm

  The S&P 500 may have closed at an all-time inflation-adjusted high today. The problem is we can’t say for sure until the CPI data for February comes out in about five weeks.

  Here’s how it works. The S&P 500 made its all-time inflation-adjusted high on March 23, 2000 at 2,099.30 (1,527.35 nominal). That’s actually one day before the nominal high. That figure is as of the last CPI data point which is for December 31, 2014.

  The CPI for December was 234.812. Here’s the catch: The CPI has been falling lately thanks to lower oil. As a result, the all-time inflation-adjusted high has been falling as well.

  Today’s close was 2,088.48. That’s 0.52% below the inflation-adjusted high. So the question is, have prices deflated that much so far this year? I don’t know. The January CPI comes out in two weeks.

  The blue line is the CPI (not seasonally adjusted). I added the red dot as the tipping point. If the blue line has trended down BELOW the red dot, then today’s close is an all-time inflation-adjusted high. If the blue line has trended above the red dot, then we’re still short of it.

  

• Updated S&P 500 Dividend Aristocrats
  Eddy Elfenbein, February 12th, 2015 at 2:42 pm

  Here’s an updated list of the S&P 500 Dividend Aristocrats. These are companies that have raised their dividend for 25 years in a row. This list is a great place to find high-quality stocks and you’ll notice a few current Buy List stocks along with some former members. I’ve included each stock, the ticker symbol, when the dividend streak started and the current yield.

  That’s quite impressive that a company can increase its dividend every year for a quarter of a century. There’s an ETF which follows this: ProShares S&P 500 Dividend Aristocrats ($NOBL).

  The S&P 500 Dividend Aristocrats had a big change this year as Diebold ($DBD) is no longer a member. After 60 straight dividend increases, they weren’t able to do it again. Energen ($EGN) also got booted when they ended their streak last year. Bemis ($BMS) and Family Dollar ($FDO) left due to acquisitions. Sigma-Aldrich ($SIAL) is in the process of being bought out as well, but they’re still on the list for now.

  Company	Symbol	Streak Began	Yield
  3M Company	MMM	1959	2.49%
  AFLAC Inc	AFL	1983	2.52%
  AbbVie Inc	ABBV	2013	3.46%
  Abbott Laboratories	ABT	1973	2.14%
  Air Products & Chemicals	APD	1983	2.05%
  Archer-Daniels-Midland	ADM	1976	2.39%
  AT&T	T	1985	5.47%
  Automatic Data Processing	ADP	1975	2.26%
  CR Bard	BCR	1972	0.51%
  Becton, Dickinson	BDX	1972	1.69%
  Brown-Forman Corp B	BF.B	1985	1.55%
  Cardinal Health	CAH	1989	1.59%
  Chubb Corp	CB	1966	1.97%
  Chevron Corp	CVX	1988	3.89%
  Cincinnati Financial	CINF	1961	3.55%
  Cintas Corp	CTAS	1984	1.05%
  Clorox Co	CLX	1978	2.74%
  Coca-Cola	KO	1963	2.88%
  Colgate-Palmolive	CL	1964	2.07%
  Consolidated Edison	ED	1975	3.94%
  Dover Corp	DOV	1956	2.22%
  Ecolab Inc	ECL	1986	1.21%
  Emerson Electric	EMR	1957	3.26%
  Exxon Mobil Corp	XOM	1983	3.05%
  Franklin Resources	BEN	1982	1.12%
  Genuine Parts	GPC	1957	2.39%
  Grainger, WW	GWW	1972	1.82%
  HCP	HCP	1986	5.31%
  Hormel Foods	HRL	1967	1.85%
  Illinois Tool Works	ITW	1964	2.01%
  Johnson & Johnson	JNJ	1963	2.79%
  Kimberly-Clark	KMB	1973	3.07%
  Leggett & Platt	LEG	1972	2.83%
  Lowe’s Cos Inc	LOW	1963	1.29%
  McCormick	MKC	1987	2.16%
  McDonald’s	MCD	1977	3.61%
  McGraw-Hill Financial	MHFI	1974	1.22%
  Medtronic	MDT	1978	1.64%
  Nucor	NUE	1974	3.12%
  PPG Industries Inc	PPG	1973	1.17%
  PepsiCo	PEP	1973	2.61%
  Pentair Ltd	PNR	1977	1.98%
  Procter & Gamble	PG	1957	3.00%
  Sherwin-Williams	SHW	1981	0.79%
  Sigma-Aldrich Corp	SIAL	1976	0.67%
  Stanley Black & Decker	SWK	1968	2.15%
  Sysco	SYY	1971	3.08%
  T Rowe Price	TROW	1987	2.14%
  Target Corporation	TGT	1968	2.72%
  VF Corporation	VFC	1973	1.83%
  Walmart	WMT	1975	2.22%
  Walgreen Company	WBA	1976	1.70%

  AbbVie ($ABBV) is on the list because it was spun-off by Abbott Labs ($ABT).

• Morning News: February 12, 2015
  Eddy Elfenbein, February 12th, 2015 at 7:08 am

  Carney Signals Faster U.K. Rate Increases as Economy Strengthens

  Greek PM Tsipras in Brussels as Clock Ticks on EU Bailout

  Ukraine Gets IMF-Led $40 Billion Aid Accord to Avert Default

  Oil Bounces Back to $56 as Dollar Weakens

  IRS Releases Latest Version Of Its Mobile App – And Something’s Missing

  Tim Cook Doesn’t Believe This Made-Up Math Law Will Limit Apple’s Growth

  Icahn Values Apple at More Than $1 Trillion

  Twitter’s Takes First Step to Make Money From Vine

  Cisco Reports Best Revenue Growth for 3 Years

  Tesla: Four Takeaways From Earnings

  Blessing Sees Headwinds as Commerzbank Profit Misses Estimates

  PepsiCo Profit Beats Estimates; $12 Billion Buyback Planned

  Total to Cut Jobs, Sell Assets After Big Loss

  Cullen Roche: Problems With “The Long-Term”

  Howard Lindzon: Apple Passes $700 Billion –Fluke… And…The Death of Distance and The End of Time

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• Morning News: February 11, 2015
  Eddy Elfenbein, February 11th, 2015 at 6:58 am

  Greek Stocks Drop More Than 3% Ahead of Euro Zone’s Emergency Meet

  U.S. Firms in China See Rising Anti-Foreign Sentiment

  Crude’s Pain Is Others’ Gain as Consumer Boost Outweighs Layoffs

  Shifting Goal Posts on Employment May Signal Slower Fed Rate Hikes

  Banks May Have Overplayed Their Hand Fighting Wall Street Regulation

  Tim Cook Doesn’t Believe This Made-Up Math Law Will Limit Apple’s Growth

  Hedge Fund-Backed Investor Puts Himself Up for G.M. Board

  What To Watch For When Tesla Announces Results. Note New Timing For Results And Call

  Yelp Acquires Leading Online Food Ordering Service Eat24

  Coke Says 2015 Will Be a ‘Challenging Year’

  Buy CVS Health After 4Q Revenue, Earnings Beat Expectations

  Wal-Mart says to invest C$340 Million in Canada

  Private Equity Firms in a Frenzied Race to Hire Young Investment Bankers

  Jeff Carter: No Angel Investor or VC Will Sign an NDA

  Pragmatic Capitalism: Problem With “The Long-Term”

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• Qualcomm Rallies on Fine News
  Eddy Elfenbein, February 10th, 2015 at 11:20 am

  Qualcomm ($QCOM) is reacting well to yesterday’s news. The stock briefly broke $70 per share this morning. Until the recent rally, Qualcomm had fallen $20 in six months.

  

• Morning News: February 10, 2015
  Eddy Elfenbein, February 10th, 2015 at 6:57 am

  U.S. Warns G20 Against Using Exchange Rates to Boost Exports

  Greek Negotiators Should Learn a Little From Britain

  China Fines Qualcomm Record $975 Million in Anti-Monopoly Case

  Netflix Offers Streaming Video in Cuba

  Russia Faces Battle Over Billions in Oil Taxes After Crude Slump

  Oil Falls as IEA Warns Stocks May Hit All-time High

  UBS Profit Boosted by Tax Gain

  HSBC Could Face US Legal Action Over Swiss Accounts

  SoftBank Struggles With Burden of Sprint

  Canon to Offer $2.8 Billion Bid for Sweden’s Axis AB to Venture Into Surveillance Products Market

  Huge Solar Farm Opens in California: Enough Energy for 160,000 Homes

  Spain Airports Valued at $9.8 Billion Ahead of Partial Sale

  Roger Nusbaum: Financial Rules For a Simpler, Happier Life

  Jeff Carter: Should Startups Ever Merge?

  Joshua Brown: Lost Shark Tank Pitches

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• Qualcomm to Pay $975 Million Fine
  Eddy Elfenbein, February 9th, 2015 at 4:52 pm

  Earlier today, I noted that Qualcomm ($QCOM) was nearing a final deal with the Chinese government to pay a massive fine to settle charges of “anti-competitive” practices. The stock opened at $68 this morning, nearly hit $69, then slowly slid back to $67 as the day wore on. Still, the stock gained a little over 1% on the day.

  After the close, Qualcomm announced that it has indeed reached a deal with China. The price tag is $975 million. That works out to about 60 cents per share.

  Qualcomm Inc said on Monday it agreed to pay China a fine of $975 million, ending a 14-month government investigation into anti-competitive practices.

  The deal also sees chip-maker Qualcomm lower its royalty rates on patents used in China, the company said in a statement.

  Discussions in Beijing over one of the most contentious cases under China’s 2008 anti-monopoly law had intensified in recent weeks, culminating in meetings between Qualcomm senior executives and National Development and Reform Commission (NDRC) officials on Friday.

  Investors seem relieved. I know I am. The stock is back above $68 in the after-hours market.

• Value Vs. Growth Since 1979
  Eddy Elfenbein, February 9th, 2015 at 2:51 pm

  I’m glad to see that FRED, the St. Louis Fed’s Data Library, has added the Russell indexes to their database. Here’s a look at the Russell 3000 Value Total Return Index divided by its Growth counterpart:

  Value has indeed beaten Growth over the long run but the premium hasn’t been terribly impressive, about 1.3% per year. Since 1988, it’s run about 0.6%. (That’s Value over Growth, not over the entire market.) Perhaps more surprising is how volatile the Value premium has been. In fact, there have been 20-year stretches where Growth has outperformed. We’re currently in a 12-year winning streak for Growth.

  Value does work, but it takes a lot of time.

• Qualcomm to Pay Massive Fine
  Eddy Elfenbein, February 9th, 2015 at 9:08 am

  This has been building for a long time but it appears that Qualcomm ($QCOM) is about to pay the government of China of a massive fine for “anti-competitive practices.”

  There’s not much Qualcomm can do except pay the fine. The stock may rally simply on the news that this matter may finally be resolved. Reuters reports:

  Qualcomm Inc is likely to pay China a record fine of around $1 billion, ending a 14-month government investigation into anti-competitive practices, after the U.S. chipmaker and the regulator made significant progress during talks last week.

  The deal, which may also see Qualcomm lower its royalty rates by around a third on patents used in China, could be announced as soon as Monday, a source said.

  Discussions in Beijing over one of the most contentious cases under China’s 2008 anti-monopoly law have intensified in recent weeks, culminating in meetings between Qualcomm senior executives and National Development and Reform Commission (NDRC) officials on Friday.

  Qualcomm’s fine would be the largest paid by any company in China. The company would also agree to make changes to its licensing practices, though those are not expected to alter its business model.

• RT Must Be Ostracized
  Eddy Elfenbein, February 9th, 2015 at 8:57 am

  I was recently invited to appear on the RT television network to discuss financial markets and the economy. I declined, and I wanted to explain why. RT is not an ordinary news network, as you might think of one. Instead, it’s a propaganda arm of the Russian government, and they peddle the most absurd programming. RT regularly features Holocaust deniers, 9/11 Truthers and tinfoilers of all stripes, and it’s slickly packaged as regular news. I won’t even mention the oleaginous crank Max Keiser.

  But my favorite is Karen Hudes, whom RT has interviewed a few times. RT calls Hudes a World Bank whistleblower, but they neglect to discuss some of her more colorful beliefs. For example, Ms. Hudes believes the world is secretly controlled from the Vatican by Homo Capensis, a large-brained, non-human species. The bishops’ miters hide their elongated skulls.

  To be clear, I have no interest in censoring Hudes, or RT or anyone else. In fact, I share their goal of making their views far better known than they are. One of the neglected arguments for Free Speech is that allows you to shine a light on dumb ideas.

  I recently tweeted this about some of Ms. Hudes’s views. I was glad to see that Edward Lucas, a senior editor at The Economist, obliquely referred to Ms. Hudes at the recent security conference in Munich.

  We need to get back the ability to rebut and to criticize. If RT puts on people – and it does put on people who are Holocaust deniers, who think that 9/11 was an inside job, who believe that [the] Pope is a lizard – I’m not joking, this is true – we should be able to humiliate those channels and those people and the people who put them on, and the producers who put them on and push them out into the media fringes so they are no longer treated as real journalists and real programs but as cranks and propagandists.

  I think we could do a bit more of ostracism. I’m quite happy to say that if anyone puts a CV on my desk, and on that CV I see they worked at RT or Sputnik or one of these things, that CV is going into the bin and not into the intro. We would not have accepted it during the Cold War that people could move from working for Pravda, or Izvestia, or TASS, and then into jobs in Western media. Far too many people see a job at RT as the first stage on a career ladder. It’s not. It’s the last stage on a career ladder. It’s like working as a PR person for a tobacco company, but even worse. And only then would I start looking at regulatory things — and there are things we can do on a regulatory side. We have a regulated media space. In my own country, Ofcom is complaining to RT about its lack of balance. So, there are things we can do but I think those things are the last resort, not the first resort.

  He’s right. We should ostracize RT’s journalists. This should include Alyona Minkovski, a former RT-er who currently hosts HuffPost Live for the Huffington Post.