Archive for March, 2016

• Morning News: March 31, 2016
  Eddy Elfenbein, March 31st, 2016 at 7:05 am

  Eurozone Inflation Data Highlights ECB’s Struggle

  China Rating Outlook Cut at S&P on Risk of Slower Rebalancing

  MSCI Says China’s Trading Halts May Keep It Out of Stock Indexes

  What Actually Drives The Price Of Oil

  Sanctions ‘Overreach’ Risks Driving Business From U.S.: Treasury’s Lew

  Inside the Little-Known Japan Firm Helping the FBI Crack IPhones

  GE Files to End Fed Oversight After Shrinking GE Capital

  Drone Startup Airware Raises $30 Million, Adds Cisco’s John Chambers To Board

  Yahoo – Case Study in Why Activist Investors Exist, and Succeed

  Here’s How GlaxoSmithKline’s CEO Thinks Pharma Should Modernize

  Carnival Tops Estimates in Period Marked by Terror, Zika Worries

  Did Johnson & Johnson Hide the Dangers of Baby Powder for Decades?

  MetLife Wins Battle to Remove ‘Too Big to Fail’ Label

  Jeff Miller: No More Junk In My Food

  Howard Lindzon: Pay for Coaching…Not Just Ideas … My Investing Series with JC Parets of All Star Charts

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• Two-Year Yield Falls
  Eddy Elfenbein, March 30th, 2016 at 4:33 pm

  Janet Yellen’s comments yesterday basically acted as a stealth rate cut. It’s interesting to note that the two-year yield has fallen from over 1% two weeks ago to 0.76% today.

  

  That’s helped the stock market recover. The S&P 500 rose for the third straight day. The index closed today at 2,063.95 which is its highest close all year.

  At one point in February, the S&P 500 was down 11% for the year. Now it’s up just under 1% YTD.

• Morning News: March 30, 2016
  Eddy Elfenbein, March 30th, 2016 at 7:05 am

  Latest Plan to Rescue Puerto Rico Is Met With Disdain on Island

  Yellen Spurs Global Stock Rally as Oil Rebounds, Dollar Tumbles

  Lew Defends Sanctions, but Cautions on Overuse

  When It Comes to Saving Money, Millennials Are Killing It

  Harvesting Sunshine More Lucrative Than Crops at Some U.S. Farms

  Apple’s New Challenge: Learning How the U.S. Cracked Its Phone

  Foxconn Offers to Buy Sharp for $3.5 Billion

  Google’s Moonshot Projects Are Turning into a Massive Pain

  In Starwood Deal, Conventional Wisdom Upended

  Norfolk Southern Steps Up Fight Against Canadian Pacific Merger

  McCormick Raises Offer for Premier Foods

  Budweiser Is Having a Ball in Russia

  Can Kellogg Save Cereal by Selling It as a Snack Food?

  Cullen Roche: My Wisdom on Smart Beta & Factor Investing

  Josh Brown: Pedigree

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• The Bull Market in Chicken
  Eddy Elfenbein, March 29th, 2016 at 3:38 pm

  Which is probably better than a chicken market in bull. Check out the recent surge in Tyson’s (TSN) and Hormel (HRL).

  

• Janet Saves the Market
  Eddy Elfenbein, March 29th, 2016 at 2:19 pm

  A rather quiet day of trading got a big boost shortly after noon, thanks to dovish comments from Janet Yellen. Speaking at Economic Club of New York, the Fed Chairwoman said that there’s no rush to raise interest rates.

  “Given the risks to the outlook, I consider it appropriate for the committee to proceed cautiously in adjusting policy, ” Ms. Yellen said. She didn’t give details about the timing of the next rate increase.

  This really isn’t news. She’s reiterated what she said after the last Fed meeting.

  “Although the baseline outlook has changed little on balance since December, global developments pose ongoing risks,” she said. “These risks appear to have contributed to the financial market volatility witnessed both last summer and in recent months. ”

  (…)

  The hits to the economy “have been at least partially offset by downward revisions to market expectations for the federal funds rate that in turn have put downward pressure on longer-term interest rates, including mortgage rates, thereby helping to support spending, ” she said. “For these reasons, I anticipate that the overall fallout for the U.S. economy from global market developments since the start of the year will most likely be limited, although this assessment is subject to considerable uncertainty. ”

  Before the remarks, the S&P 500 was trading around 2,035. The index quickly jumped to 2,045 and then took another step to 2,050. Last Monday, the S&P 500 closed at 2,051.60, which was its highest close this year.

  The dollar dropped and many dividend-friendly stocks were rewarded.

• Crude Oil and the 200-DMA
  Eddy Elfenbein, March 29th, 2016 at 11:28 am

  Crude oil has traded below its 200-day moving average for more than 18 months. That’s a pretty amazing streak. It’s come close to breaking the line, but has failed each time. It happened again last week.

  

  OPEC meets again in April to discuss production cuts. So far, the cartel has announced plans for further meetings to plan more discussions for further possible plans to maybe discuss production cuts. I expect more of the same.

• Ross Just Opened 28 New Stores
  Eddy Elfenbein, March 29th, 2016 at 11:07 am

  Ross Stores (ROST) continues to grow impressively. The discounter opened 28 new stores in February and March.

  Ross Stores recently opened a total of 22 Ross Dress for Less® (“Ross”) and six dd’s DISCOUNTS® stores across 15 different states in February and March. These new locations are part of the Company’s 2016 expansion plans to add approximately 70 Ross and 20 dd’s DISCOUNTS locations throughout the year.

  “These recent openings reflect our ongoing plans to continue building our presence in both existing and newer markets, including the Midwest for Ross, and expansion of dd’s DISCOUNTS,” said Jim Fassio, President and Chief Development Officer. “Ross Dress for Less remains the largest off-price apparel and home fashion chain in the U.S with 1,295 locations in 34 states, the District of Columbia and Guam. We continue to identify plenty of domestic growth opportunities ahead for both Ross and dd’s DISCOUNTS, and believe that over the long term, Ross can grow to 2,000 total locations and dd’s DISCOUNTS can become a chain of 500 stores.”

• When the Storm Passes
  Eddy Elfenbein, March 29th, 2016 at 10:43 am

  Most people realize it when a rainstorm starts but they generally don’t notice it when the rainstorm ends. That’s a reflection of how the mind works, and also how rainstorms work. The rain just slowly tapers off and then it’s gone.

  The same can be said for market drama. Investors are well aware of it when it’s going on, but when it fades away, they don’t see that as an event. Over the last two weeks, the stock market’s volatility has dropped dramatically.

  

  In the chart above, notice how much the spread between the daily high-low range has narrowed. Yesterday was the 10th day in a row where the S&P 500 closed up or down by less than 1%. In fact, four of the last five days, the index changed by less than 0.1%. Now compare that with the start of the year where 1% days were coming more than 50% of the time. We were on track for one of the most volatile years since the 1930s. The Volatility Index peaked over 30 last month. Recently, it dipped below 14 though it’s back over 15 now.

  This is an important generality. The stock market tends to move in two gears—quick and down, and slow and up. This year we went from quick down to quick up. I suspect we’re in for several weeks of quietness.

• Morning News: March 29, 2016
  Eddy Elfenbein, March 29th, 2016 at 7:10 am

  Natural Gas Prices Rise With Demand Expectations

  Existing Home Sales Collapsed In February – Why You Can Rest Easy

  Saudi Land Purchases Fuel Debate Over US Water Rights

  Consumer Spending in U.S. Rose 0.1% in February for Third Month

  Yahoo Sets April 11 Deadline to Submit Preliminary Bids

  As Valeant Struggles, Its Tally Sheet of Scandals Grows

  Samsung Pay Launches in China and Singapore

  Microsoft-Yahoo Deal In Q2?

  Foxconn’s Price Tag for Sharp Likely to Fall by More Than $2 Billion

  TSMC’s $3B Plant Latest Sign Of Growing China Clout In Sensitive Chip Industry

  Johnson & Johnson’s Outlook

  Lululemon Is Going Down

  Banker Accused of $25 Million Fraud Arose From a Gilded Legacy

  Cullen Roche: My “Wisdom” on Robo Advisors

  Roger Nusbaum: Markets Confront Terror & Tragedy

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• Barron’s on Cerner
  Eddy Elfenbein, March 28th, 2016 at 9:40 am

  In this weekend’s Barron’s, Vito J. Racanelli looks at Cerner (CERN) and sees a bargain.

  The market’s love affair with health-care stocks has grown frosty. Since mid-July the sector is the market’s worst performer, down 13%. Shares of Cerner (ticker: CERN), a provider of health-care information technology have fallen even more, losing about a third of their value in the past 12 months to $51.46. The stock isn’t much above where it traded three years ago, and it looks invitingly cheap.

  Cerner hasn’t helped its case by missing revenue expectations in the past few quarters. On Feb. 16, when reporting fourth- quarter results, it tweaked its 2016 sales projection, guiding for a range of $4.9 billion to $5.1 billion, versus a prior forecast of $5 billion. Revenue of $4.4 billion in 2015 was below an earlier projection of $4.8 billion to $5 billion.

  Bookings continue to grow nicely, up 16% in the fourth quarter to $1.35 billion—but again, below the company’s earlier guidance of $1.45 billion to $1.55 billion. The drop in Cerner’s price/earnings ratio to the low 20s from an average P/E above 30 is deserved.

  Nevertheless, the company’s still-robust earnings visibility, a hefty $14.2 billion backlog, and ongoing demand to reduce the country’s rampaging health-care costs suggest that Cerner could turn out to be a quiet winner for long-term-oriented investors.