Archive for April, 2015

  • Six-Month Vs. One-Year Treasuries
    , April 30th, 2015 at 9:25 am

    It’s finally happening. There’s some daylight between the six-month and one-year Treasuries. That signals that the market believes a rate hike is on the way.

  • Initial Jobless Claims Fall to 262,000
    , April 30th, 2015 at 9:10 am

    Last week’s initial jobless claims fell to 262,000. The media is reporting that that’s the lowest number since April 2000, which is correct. But it’s also the second-lowest number since December 1973.

  • Ball Corp. Earns 69 Cents per Share
    , April 30th, 2015 at 8:49 am

    Ball Corp. (BLL) reported Q1 earnings of 69 cents per share. That was 10 cents below estimates, but the results aren’t quite as bad as they sound. Ball beat on the top line ($1.92 billion versus $1.9 billion). The company also lost 16 cents per share due to currency costs. Ball also reiterated that they expect full-year free cash flow of $600 million.

    Ball’s CEO said, “First quarter results were largely impacted by expected headwinds totaling 16 cents per diluted share from foreign currency translation, higher metal premiums in Europe, and start-up costs related to growth capital investments. We continue to invest in our future with ongoing capital projects in North America, Europe and Southeast Asia that will fully ramp up in the second half of 2015 and the first half of 2016.”

    The CFO added, “Operationally, our first quarter results were largely in line with our expectations. While metal premiums and start-up costs will persist in the second quarter, and currency translation will remain a headwind for the balance of the year, our business remains solid.”

  • Morning News: April 30, 2015
    , April 30th, 2015 at 7:16 am

    Euro Area Ends Flirt With Deflation as ECB Pumps Billions in QE

    Russia Lowers Key Rate More Than Forecast to Bolster Economy

    U.K. Banks’ FX-Rigging Charges Hit $1.7 Billion in Quarter

    ‘Man From Toyota’ May Give BOJ’s Stimulus a Reality Check

    Oil Hits New 2015 High… Why It Won’t Last And What To Do About It

    Sony Forecasts Profit to Quadruple This Year With Room for More

    Time Warner Cable Revenue Rises 3.5%

    Viacom Swings to Loss Amid Restructuring

    Anonymous App ‘Secret’ Shutting Down

    Nokia Shares Fall After Networks Profit Suffers

    Shell Beats Profit Expectations, Rules Out Another Mega-Deal

    Starbucks is Selling California Spring Water For $1.95 a Bottle Amid a Historic Drought

    GE Said to Face EU List of Concerns Over Alstom Bid Next Month

    Earnings During the Trading Season

    Cullen Roche: Marginalized Revolutionaries

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  • Today’s Fed Statement
    , April 29th, 2015 at 2:07 pm

    Here’s the surprisingly short FOMC statement:

    Information received since the Federal Open Market Committee met in March suggests that economic growth slowed during the winter months, in part reflecting transitory factors. The pace of job gains moderated, and the unemployment rate remained steady. A range of labor market indicators suggests that underutilization of labor resources was little changed. Growth in household spending declined; households’ real incomes rose strongly, partly reflecting earlier declines in energy prices, and consumer sentiment remains high. Business fixed investment softened, the recovery in the housing sector remained slow, and exports declined. Inflation continued to run below the Committee’s longer-run objective, partly reflecting earlier declines in energy prices and decreasing prices of non-energy imports. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Although growth in output and employment slowed during the first quarter, the Committee continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate. The Committee continues to monitor inflation developments closely.

    To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.

    The Committee is maintaining its existing policy 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. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

    When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. 

    Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Jeffrey M. Lacker; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams.

  • Twitter’s Plunge
    , April 29th, 2015 at 10:41 am

    Almost all companies report their earnings before or after the market’s bell. Very few report during trading.

    Yesterday, somehow, Twitter’s earnings were released before the closing bell. The results were bad and the stock plunged. You really can’t beat the market for spreading information, good or bad.

    The exchange quickly halted trading in the stock but the damage had been done. The stock opened up for normal trading this morning.

    big04292015

    The Nasdaq has said the mistake was their fault. Ironically, the bad results were spread around the world thanks to…Twitter.

  • Q1 GDP = +0.2%
    , April 29th, 2015 at 9:39 am

    I usually look forward to the first estimate of GDP growth, but not this time. I knew the Q1 number was going to be bad and it was.

    The economy grew at a real annualized rate of 0.2% for the first three months of the year. That’s quite poor. Yes, some of it is weather but that can’t explain it all.

  • Morning News: April 29, 2015
    , April 29th, 2015 at 7:06 am

    German 10-Year Yields Reach the Highest Level in Six Weeks

    Sweden Holds Interest Rates Steady, Increases Asset Purchases

    Once Concerned, China Is Quiet About Trans-Pacific Trade Deal

    Russia’s Gazprom Profits Collapse on Low Oil, Weak Ruble

    Alibaba Freezes Hiring as Ma Says Company Needs to Be Efficient

    Twitter’s Fall Means A Buying Opportunity

    Barclays Investment Bank Profit Rises 37% on Cost Cuts, Advisory

    Time Warner Earnings Tops Views

    Lumber Liquidators Is Crashing After Earnings

    American Airlines Flights Delayed by Apple iPad Glitch

    Volkswagen’s Net Profit Rises 19% Amid Recovery in Western Europe’s Car Market

    Deposit Outflows From Greek Banks Slow in March, Credit Shrinks

    Uber Says It Can Deliver Food in NYC in 10 Minutes

    Howard Lindzon: FOMO meets DOMO meets POMO – What that Means for Markets

    Joshua Brown: The Street Loses Faith in Twitter

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  • AFLAC Earned $1.54 per Share
    , April 28th, 2015 at 5:02 pm

    AFLAC (AFL) just reported Q1 operating earnings of $1.54 per share. That also matched Wall Street’s estimate. The strong dollar knocked 13 cents per share off earnings.

    “I want to reiterate that our objective for 2015 is to increase operating earnings per diluted share 2% to 7% on a currency neutral basis. If the yen averages 120 to 125 to the dollar for the second quarter, we would expect earnings in the second quarter to be approximately $1.46 to $1.57 per diluted share. Using that same exchange rate assumption, we would expect full-year reported operating earnings to be about $5.74 to $6.15 per diluted share. In April, we executed a make-whole transaction to enhance our consolidated capital position. As a result of this transaction, we will incur a non-operating charge of approximately $.34 in the second quarter of 2015. However, operating earnings per diluted share for the remainder of 2015 will benefit by approximately $.07 due to a net reduction in interest expense. Challenging financial markets and significantly depressed interest rates make it difficult to invest cash flows at attractive yields. Therefore, we will remain very disciplined in selling first sector products in Japan, which will reduce investable cash flows. As always, we are working very hard to achieve our earnings-per-share objective while also delivering on our promise to policyholders.”

  • Express Scripts Earned $1.10 per Share
    , April 28th, 2015 at 4:15 pm

    After the bell, Express Scripts (ESRX) reported Q1 earnings of $1.10 per share. That matched Wall Street’s consensus. Overall, it was a good quarter.

    “As our industry evolves, and plan sponsors have more business models to choose from, it is increasingly clear that Express Scripts is the best choice to manage America’s pharmacy benefits,” stated George Paz, Chairman and Chief Executive Officer. “At every turn, we add value to healthcare by combining a superior model of patient care with aggressive payer advocacy. Our unique combination of scale, client alignment and unmatched will, consistently creates greater value for patients and payers, while delivering solid results for our shareholders.”

    “Client retention starts with a simple concept: patient care,” said Tim Wentworth, President. “Our model, which surrounds patients with clinically-rooted, data-driven specialized care, is embedded in our innovative solutions that are clearly differentiated and in high demand.”

    Express Scripts also narrowed their full-year guidance by two cents per share at both ends. The old range was $5.35 to $5.49 per share. The new range is $5.37 to 5.47 per share. The new range translates to a growth rate of 10% to 12%. For Q2, which ends on June 30, ESRX expects earnings of $1.39 to $1.43 per share. That’s better than the $1.37 Wall Street had been expecting. The stock is up 3.1% after hours.