Archive for September, 2015

• Morning News: September 25, 2015
  Eddy Elfenbein, September 25th, 2015 at 7:03 am

  Janet Yellen Says Fed Is Likely to Raise Interest Rates This Year

  Oil Prices Pare Gains on Stronger Dollar, Weak Japan Data

  Asian Development Bank to Double Funding to Combat Climate Change

  The Environmental Legacy of the Volkswagen Scandal

  Takeaways For Investors From Durable Goods Orders

  Investors Are Mining For Water, the Next Hot Commodity

  Google Said to Be Under U.S. Antitrust Scrutiny Over Android

  Solving the Amazon Puzzle

  Energy Transfer Equity Is Closing In On A Deal For Williams

  Sharp Pressed to Find Investors in Smartphone Display Business

  Schlumberger Won’t Extend Deadline to Buy Eurasia Drilling Stake

  Is PEP More ‘Diverse’ Than KO?

  Are Millennials Delusional? Half Say They’ll Cover The Cost Of College For Their Kids

  Jeff Carter: Poker, Options and Startup Investing

  Roger Nusbaum: Bear Market Coming? Bear Market Here?

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• Bed Bath & Beyond Earns $1.21 per Share
  Eddy Elfenbein, September 24th, 2015 at 4:43 pm

  For fiscal Q2, Bed Bath & Beyond (BBBY) just reported earnings of $1.21 per share. Sales rose 1.7% to $2.995 billion. In constant currency sales were up 2.2%. Same store sales rose 0.7%, and 1.1% in constant currency.

  The company sees Q3 earnings of $1.14 to $1.21 per share. They’re keeping their full-year guidance of flat to mid-single digits.

  Net earnings per diluted share continue to be modeled to be between a relatively flat and a mid-single digit percentage increase for the fiscal full year. For the third quarter of fiscal 2015, the Company is modeling net earnings per diluted share to be approximately $1.14 to $1.21, compared to $1.23 in the prior year period. This modeled range would result in year-over-year net earnings per share growth of approximately 5% to 11%, after taking into account the impact of certain non-comparable items. Based on the modeled diluted weighted average shares outstanding for the fiscal third quarter of 2015, these non-comparable items, totaling about $0.15, are: the non-recurring favorable credit card fee litigation settlement that occurred in the third quarter of fiscal 2014; the significantly lower net after tax benefits that are planned in the third quarter of fiscal 2015 as compared to fiscal 2014 due to distinct tax events; and a modeled unfavorable foreign currency rate impact in the third quarter of fiscal 2015. Comparable sales are modeled to increase between 1.0% and 3.0% for the third and fourth quarters of fiscal 2015.

  Here are some quarterly financial stats going back a few years.

  Quarter	Sales	Gross Profit	Operating Profit	Net Profit	EPS
  May-99	$356,633	$146,214	$28,015	$17,883	$0.06
  Aug-99	$451,715	$185,570	$53,580	$33,247	$0.12
  Nov-00	$480,145	$196,784	$50,607	$31,707	$0.11
  Feb-00	$569,012	$238,233	$77,138	$48,392	$0.17
  May-00	$459,163	$187,293	$36,339	$23,364	$0.08
  Aug-00	$589,381	$241,284	$70,009	$43,578	$0.15
  Nov-01	$602,004	$246,080	$64,592	$40,665	$0.14
  Feb-01	$746,107	$311,802	$101,898	$64,315	$0.22
  May-01	$575,833	$234,959	$45,602	$30,007	$0.10
  Aug-01	$713,636	$291,342	$84,672	$53,954	$0.18
  Nov-02	$759,438	$311,030	$83,749	$52,964	$0.18
  Feb-02	$879,055	$370,235	$132,077	$82,674	$0.28
  May-02	$776,798	$318,362	$72,701	$46,299	$0.15
  Aug-02	$903,044	$370,335	$119,687	$75,459	$0.25
  Nov-03	$936,030	$386,224	$119,228	$75,112	$0.25
  Feb-03	$1,049,292	$443,626	$168,441	$105,309	$0.35
  May-03	$893,868	$367,180	$90,450	$57,508	$0.19
  Aug-03	$1,111,445	$459,145	$155,867	$97,208	$0.32
  Nov-04	$1,174,740	$486,987	$161,459	$100,506	$0.33
  Feb-04	$1,297,928	$563,352	$231,567	$144,248	$0.47
  May-04	$1,100,917	$456,774	$128,707	$82,049	$0.27
  Aug-04	$1,273,960	$530,829	$189,108	$120,008	$0.39
  Nov-05	$1,305,155	$548,152	$190,978	$121,927	$0.40
  Feb-05	$1,467,646	$650,546	$283,621	$180,980	$0.59
  May-05	$1,244,421	$520,781	$150,884	$98,903	$0.33
  Aug-05	$1,431,182	$601,784	$217,877	$141,402	$0.47
  Nov-06	$1,448,680	$615,363	$205,493	$134,620	$0.45
  Feb-06	$1,685,279	$747,820	$304,917	$197,922	$0.67
  May-06	$1,395,963	$590,098	$148,750	$100,431	$0.35
  Aug-06	$1,607,239	$678,249	$219,622	$145,535	$0.51
  Nov-07	$1,619,240	$704,073	$211,134	$142,436	$0.50
  Feb-07	$1,994,987	$862,982	$309,895	$205,842	$0.72
  May-07	$1,553,293	$646,109	$154,391	$104,647	$0.38
  Aug-07	$1,767,716	$732,158	$211,037	$147,008	$0.55
  Nov-08	$1,794,747	$747,866	$203,152	$138,232	$0.52
  Feb-08	$1,933,186	$799,098	$259,442	$172,921	$0.66
  May-08	$1,648,491	$656,000	$118,819	$76,777	$0.30
  Aug-08	$1,853,892	$739,321	$187,421	$119,268	$0.46
  Nov-08	$1,782,683	$692,857	$136,374	$87,700	$0.34
  Feb-09	$1,923,274	$785,058	$231,282	$141,378	$0.55
  May-09	$1,694,340	$666,818	$142,304	$87,172	$0.34
  Aug-09	$1,914,909	$773,393	$222,031	$135,531	$0.52
  Nov-09	$1,975,465	$812,412	$245,611	$151,288	$0.58
  Feb-10	$2,244,079	$955,496	$370,741	$226,042	$0.86
  May-10	$1,923,051	$775,036	$225,394	$137,553	$0.52
  Aug-10	$2,136,730	$874,918	$296,902	$181,755	$0.70
  Nov-10	$2,193,755	$896,508	$305,110	$188,574	$0.74
  Feb-11	$2,504,967	$1,076,467	$461,052	$283,451	$1.12
  May-11	$2,109,951	$857,572	$288,948	$180,578	$0.72
  Aug-11	$2,314,064	$950,999	$371,636	$229,372	$0.93
  Nov-11	$2,343,561	$958,693	$357,020	$228,544	$0.95
  Feb-12	$2,732,314	$1,163,669	$550,765	$351,043	$1.48
  May-12	$2,218,292	$887,199	$313,398	$206,836	$0.89
  Aug-12	$2,593,015	$1,032,669	$365,137	$224,330	$0.98
  Nov-12	$2,701,801	$1,074,010	$361,649	$232,750	$1.03
  Feb-13	$3,401,477	$1,394,877	$598,034	$373,872	$1.68
  May-13	$2,612,140	$1,032,971	$323,101	$202,490	$0.93
  Aug-13	$2,823,672	$1,113,484	$389,766	$249,304	$1.16
  Nov-13	$2,864,837	$1,121,690	$374,647	$227,197	$1.12
  Feb-14	$3,203,314	$1,297,437	$527,073	$333,299	$1.60
  May-14	$2,656,698	$1,030,885	$300,701	$187,052	$0.93
  Aug-14	$2,944,905	$1,134,045	$368,741	$223,953	$1.17
  Nov-14	$2,942,980	$1,128,974	$352,683	$225,408	$1.23
  Feb-15	$3,336,593	$1,325,875	$532,168	$321,061	$1.80
  May-15	$2,738,495	$1,044,133	$273,269	$158,451	$0.93
  Aug-15	$2,995,469	$1,140,950	$350,194	$201,678	$1.21

• Morning News: September 24, 2015
  Eddy Elfenbein, September 24th, 2015 at 7:13 am

  German Consumers Increasingly Concerned About Economy

  Norway Cuts Rates to Record Low to Save Economy From Oil Slump

  Xi Jinping Hears Tough Complaints of American Business

  We Still Aren’t Sure What Will Cause Janet Yellen to Pull the Trigger

  Gross Tells Fed to `Get Off Zero Now!’ as Economies Run on Empty

  Oil Rebounds Near $48 on Bargain-Hunting After Sharp Fall

  Jack Dreyfus, Wall Street Lion On Main Street’s Side

  After Volkswagen Revelation, Auto Emissions Tests Come Under Global Scrutiny

  Sharp Poised to Miss First-Half Forecast, Cut 2016 Target

  AI Supercomputer Watson Goes West As IBM Courts Tech Hotshots

  Anheuser-Busch InBev Acquires L.A. Craft Beer Maker Golden Road Brewing

  Nomura Loses $493 Million in Monte Paschi Derivatives Settlement

  Wal-Mart Presses Suppliers to Share Benefits of Cheaper Yuan

  Instagram’s Mobile Ad Revenue Will Exceed Google’s

  Cullen Roche: Three Things I Think I Think – Angry Old Guys and Low Risk Young People Edition

  Howard Lindzon: Repeat After Me…You are an Active Investor…The Stock Market is a Game.

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• Morning News: September 23, 2015
  Eddy Elfenbein, September 23rd, 2015 at 7:10 am

  Euro Area Seen on Track for Steady Growth as Orders Accelerate

  European Court Adviser Calls Trans-Atlantic Data-Sharing Pact Insufficient

  China Factory Slump Casts Pall But Europe Pierces Gloom

  The Fed Is a Lot Closer to Its Target Using This Inflation Measure

  NY Regulator Issues First License For Bitcoin Company

  Volkswagen Showdown

  ‘European Detroit’ Fear Grips VW Company Town as Scandal Widens

  Boeing to Sell 300 Jets to China Firms, Set Up China Plant

  Netflix’s Emmy Performance: A Premonition Of Tough Times Ahead?

  Uber to Launch Carpooling Service for Commuters in China

  ConAgra Foods Swings to Loss on Charges Related to Private-Label Business

  Total Cuts Oil Output Target as Prices Expected to Stay Low

  Starbucks Falls Short After Pledging Better Labor Practices

  Jeff Carter: The Bubble is Somewhere Else

  Joshua Brown: Fundamentals Are Only Half The Story

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• Moynihan Wins Vote
  Eddy Elfenbein, September 22nd, 2015 at 11:04 am

  The New York Times report

  Brian T. Moynihan gets to keep his job as both chief executive and chairman of Bank of America after shareholders on Tuesday backed the board’s decision to grant him both titles.

  Roughly 63 percent of the shareholders’ votes cast approved a proposal allowing the board to decide whether its top executive should hold a dual leadership role at the bank.

  Critics said their opposition to the measure was less a judgment on Mr. Moynihan’s stewardship of the bank and more a rejection of the way he and the bank’s board went about combining the chief executive and chairman titles last October. The board unilaterally overturned a shareholder vote in 2009 that required the two roles be separated.

  Tuesday’s vote had become a rallying cry for shareholder activists, who said too many companies like Bank of America had run roughshod over the wishes of their investors. Some of the nation’s largest pensions funds in California, New York and Illinois came out against keeping the jobs together, saying two separate positions would provide more oversight at the bank.

  There should be far more shareholder challenges against management. Consider this fact. Twenty years ago today, shares of Bank of America (BAC) closed at $17. Today, the stock is going for about $15.50. Isn’t that worth shaking up?

• Happy Gann Day!
  Eddy Elfenbein, September 22nd, 2015 at 9:41 am

  Today is September 22, or Gann Day. What’s Gann Day you ask? Six years ago, Randall Forsyth wrote in Barron’s:

  It doesn’t appear on any calendar, but Sept. 22 is known among aficionados of various and arcane market indicators as the day pinpointed by the late technical analyst, W. D. Gann, when markets are more likely to reverse than any other day of the year.

  For some reason, stocks, commodities and currencies have a curious tendency to make major tops or bottoms on this day, as Paul Macrae Montgomery points out in a special study edition of Universal Economics newsletter entitled, “A Date Which Will Live in Infamy.”

  While it is a bit of hyperbole to equate Sept. 22 with FDR’s characterization of the Dec. 7, 1941 attack on Pearl Harbor, the number of huge reversals that took place on or about that date is stunning.

  Montgomery recalls living through the October “massacres” of 1978 and 1979, the crash of 1987, the mini-crash of 1989, the 1997 Asian collapse and the Long-Term Capital Markets plunges, which started to cascade downward in late September. And while gold bullion topped in January 1980, gold stocks made their highs on Sept. 22 of that year, he adds. That date also saw the peak in many oil stocks.

  Looking back farther, on Sept. 22, 1929, the Dow Jones Utility Index became the final major average to make its high before the Great Crash. And in 1873, a panic forced the New York Stock Exchange to shut down, Montgomery further details.

  And who can forget 2008, when markets went into freefall in the days following the collapse of Lehman Brothers? What’s remembered less well now is the market chaos in the subsequent days after the House of Representatives initially rejected legislation that created the Troubled Asset Relief Program.

  Currencies have seen historic changes around this date as well, he adds. The British pound was taken off the gold standard and was devalued a huge 28% on Sept. 21, 1931. Exactly 54 years later, the Group of Five produced the Plaza Accord, which brought a sharp decline in the dollar and expansion of global liquidity. Black Wednesday, when Britain was forced to withdraw from the European Exchange Rate Mechanism, came a few days early on Sept. 16, 1992.

  I also recollect that Treasury note and bond yields made their historic highs in late September, 1981, with shorter maturities hitting 17% and long bonds reaching 15%. That marked the end of a 35-year bear bond market from the end of World War II.

  Why the apparent coincidence of these market upheavals beginning around Sept. 22? Montgomery posits a possible link to the Autumnal Equinox, which takes place Tuesday afternoon in the Northern Hemisphere. And he also observes an increasing incidence of market reversals around the time of Vernal Equinox in the Spring.

  I think it’s all nonsense, but these “facts” are fun. Since that was written, the stock market touched an important low on October 3-4, 2011. Last year, the S&P 500 reached an all-time intra-day high on September 19 and fell sharply until mid-October.

  (Via Gary Alexander at Navellier Market Mail.)

• Morning News: September 22, 2015
  Eddy Elfenbein, September 22nd, 2015 at 7:04 am

  UK Finance Minister Voices Support For China’s Commitment to Reforms

  Hacking Allegations Threaten to Overshadow Xi-Obama Summit

  Goldman Has Come Up With (Yet) Another New Name for ‘Smart Beta’

  How US Biotech Valuations Got Stretched

  Streaming Music Service Deezer Plans IPO to Challenge Spotify, Apple

  Oyster to Exit E-Book Subscription Business

  Pressure Builds on Volkswagen CEO

  Asian Development Bank’s Regional Gloom Deepens

  Big Price Increase for Tuberculosis Drug is Rescinded

  Apple Presses Ahead With Efforts to Create Car, Though Big Issues Remain

  How UBS Spread the Pain of Puerto Rico’s Debt Crisis to Clients

  Win or Lose, Bank of America Vote Shows New Shareholder Muscle

  What If the Richest Person in Every Country Gave All Their Money to the Poor?

  Cullen Roche: The Misguided Interest Rate Obsession

  Roger Nusbaum: Fed Day Resolves Nothing

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• Hillary Crushes Biotechs
  Eddy Elfenbein, September 21st, 2015 at 8:41 pm

  A fairly average day in the market disrupted when Hillary Clinton tweeted this:

  Price gouging like this in the specialty drug market is outrageous. Tomorrow I'll lay out a plan to take it on. -H https://t.co/9Z0Aw7aI6h

  — Hillary Clinton (@HillaryClinton) September 21, 2015

  The market reacted swiftly. Check out the Biotech ETF (IBB):

  

  Don’t feel too bad for biotechs. That ETF is currently at $340. Four years ago, it was going for $94. Biotechs have done incredibly well.

  There are a few points to highlight. The first is that anything can impact your stock. The entire biotech sector was hit just from this one tweet.

  This is also why I’m leery of stop-losses. Stops can be a useful tool, but bear in mind that you can get knocked out of good positions for silly reasons.

  We can also see how one sector can depart from the rest of the market. The overall stock market did fairly well today. Here’s how the ten S&P sectors performed today. See how big the gap is between Health Care and everybody else.

  Financials 1.07%
  Technology 1.00%
  Staples 0.85%
  Discretionary 0.75%
  Energy 0.57%
  Industrials 0.45%
  Utilities 0.43%
  Materials 0.29%
  Telecom 0.26%
  Health Care -1.38%

• 11 Straight Alternating Weeks
  Eddy Elfenbein, September 21st, 2015 at 12:28 pm

  It was a close call, but the S&P 500 closed slightly lower for the week last week. That makes 11 straight “alternating” weeks for the S&P 500.

  

• Morning News: September 21, 2015
  Eddy Elfenbein, September 21st, 2015 at 7:08 am

  China Beige Book Says Pessimism `Thoroughly Divorced From Facts’

  Trading Meat for Tires as Bartering Economy Grows in Greece

  Putin Faces Growing Exodus as Russia’s Banking, Tech Pros Flee

  Crude Oil Moves Lower After The Fed Does Nothing

  Fed Reins In the Dollar

  Oil Speculators Most Bullish in Two Months as OPEC Calls for $80

  Insurance Deals Are Starting to Make Less Sense

  Why You Can’t Trust the Advice You Get from Social Security

  Volkswagen Drops 23% After Admitting Diesel Emissions Cheat

  Bank of America, Funds Lobby Hard to Sway Vote on Moynihan

  Lennar Profit and Revenue Beat Expectations as Home Sales, Prices Rise

  Dialog Shares Slump After $4.6 Billion Deal to Acquire Atmel

  How Warner Bros. Battled Its Way to No. 1 in Video Games

  Howard Lindzon: The Fantasy Sports Boom…It’s For Real

  Jeff Miller: Has the Fed Assumed a Third Mandate?

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