Archive for November, 2016

• Morning News: November 28, 2016
  Eddy Elfenbein, November 28th, 2016 at 6:45 am

  Oil Slip Sends Dollar, Bond Yields Skidding

  How Iran, Russia Could Derail Oil-Production Deal

  Baker Hughes Shares Set To Rise On GE Deal

  In India, Black Money Makes for Bad Policy

  What Will Italy’s Referendum Mean for the Euro?

  Portuguese Bank Bosses Quit Ahead of $5.4 Billion Rescue

  Turkmenistan, Afghanistan Inaugurate New Rail Link

  Lufthansa Headed for Worst Pilot Strike on Hard-Line Pay Stance

  Samsung to Unveil Shareholder Return Plans Amid Calls To Split Company

  Mobile Looms Larger With Holiday Shoppers

  Actelion and J&J Are in Talks About Takeover of Swiss Drugmaker

  In Europe, Is Uber a Transportation Service or a Digital Platform?

  Nintendo’s New Console May Feed Your Nostalgia, If You Can Get One

  Cullen Roche: Did the Failure of Orthodox Economics Contribute to Trump’s Win?

  Jeff Miller: Are Stocks Ready for Stronger Economic News?

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• Morning News: November 25, 2016
  Eddy Elfenbein, November 25th, 2016 at 7:12 am

  Asia Stocks Post Best Week in Two Months as Weak Yen Buoys Japan

  Oil Tanker Analysts Waiting on OPEC Plot Cuts of Their Own

  Japan’s MHI U.S. Army Vehicle Suspension May Mark Milestone For Defense Exports

  Retailers Vie for Black Friday Dollars

  How Britons Are Chasing Black Friday Bargains Online

  No Credit History? No Problem. Lenders Are Looking at Your Phone Data

  Overtime Rule Is But The Latest Obama Initiative to End in Texas Court

  Lufthansa Grounds Long-Haul Flights as Strike Drags On

  J&J Makes Takeover Approach for Swiss Drugmaker Actelion

  Wells Fargo Asks Court to Force Customers to Arbitration in Fake Accounts Cases

  Perils of Climate Change Could Swamp Coastal Real Estate

  The Most Expensive Spice In The World

  Fake News, Trump and the Pressure on Facebook

  Roger Nusbaum: The Art of Doing Nothing

  Howard Lindzon: Alt Common Sense…Financial Thinking That May Extend Beyond Markets

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• Morning News: November 24, 2016
  Eddy Elfenbein, November 24th, 2016 at 6:30 am

  Austerity Rules Brexit Britain as Hammond Refuses to Splurge

  German Business Confidence Holds at Highest Level Since 2014

  Russia to OPEC: Oil Freeze Is All You Get

  Rupee Sinks to Record as Foreign Funds Dump Indian Assets on Fed

  Latest Fed Discussion Reflects More Confidence in Raising Rates

  U.S. Jobless Claims Rose Last Week From Multidecade Low

  Mortgage Rates’ Rise Catches Home Buyers – and Lenders – Off Guard

  5 Things Retailers and Shoppers Should Expect from Black Friday Weekend

  Chinese Travel Giant Snaps Up Skyscanner

  Lufthansa Pilot Strike Grounds Hundreds of Flights for Second Day

  Deere Shares Leap After Earnings Beat on Pricing, Costs

  Eli Lilly’s Experimental Alzheimer’s Drug Fails in Large Trial

  Jury Awards Wal-Mart Truck Drivers $55 Million in Backpay

  Jeff Carter: The Upstarts Are Coming

  Howard Lindzon: NIRP…I Was Promised Negative Interest Rates from Main Stream Media and All I Got was Trump

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• The Latest Fed Minutes
  Eddy Elfenbein, November 23rd, 2016 at 2:31 pm

  The Federal Reserve just released the minutes from their November 1-2 meeting. Here’s the most important part.

  In their discussion of monetary policy for the period ahead, members judged that the information received since the Committee met in September indicated that the labor market had continued to strengthen and that growth of economic activity had picked up from the modest pace seen in the first half of this year. Although the unemployment rate was little changed in recent months, job gains had been solid. Household spending had been rising moderately but business fixed investment had remained soft. Inflation had increased somewhat since earlier this year but was still below the Committee’s 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation had moved up but remained low; most survey-based measures of longer-term inflation expectations were little changed, on balance, in recent months.

  With respect to the economic outlook and its implications for monetary policy, members continued to expect that, with gradual adjustments in the stance of monetary policy, economic activity would expand at a moderate pace and labor market conditions would strengthen somewhat further. Almost all of them continued to judge that near-term risks to the economic outlook were roughly balanced. Members generally observed that labor market conditions had improved appreciably over the past year, a development that was particularly evident in the solid pace of monthly payroll employment gains and the increase in the labor force participation rate. It was noted that allowing the unemployment rate to modestly undershoot its longer-run normal level could foster the return of inflation to the FOMC’s 2 percent objective over the medium term. A few members, however, were concerned that a sizable undershooting of the longer-run normal unemployment rate could necessitate a steep subsequent rise in policy rates, undermining the Committee’s prior communications about its expectations for a gradually rising policy rate or even posing risks to the economic expansion.

  Members continued to expect inflation to remain low in the near term, but most anticipated that, with gradual adjustments in the stance of monetary policy, inflation would rise to the Committee’s 2 percent objective over the medium term. Some members observed that the increases in inflation and inflation compensation in recent months were welcome, although a couple of them noted that inflation was still running below the Committee’s objective. Against this backdrop and in light of the current shortfall of inflation from 2 percent, members agreed that they would continue to carefully monitor actual and expected progress toward the Committee’s inflation goal.

  After assessing the outlook for economic activity, the labor market, and inflation, as well as the risks around that outlook, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent at this meeting. Members generally agreed that the case for an increase in the policy rate had continued to strengthen. But a majority of members judged that the Committee should, for the time being, await some further evidence of progress toward its objectives of maximum employment and 2 percent inflation before increasing the target range for the federal funds rate. A few members emphasized that a cautious approach to removing accommodation was warranted given the proximity of policy rates to the effective lower bound, as the Committee had more scope to increase policy rates, if necessary, than to reduce them. Two members preferred to raise the target range for the federal funds rate by 25 basis points at this meeting. They saw inflation as close to the 2 percent objective and viewed an increase in the federal funds rate as appropriate at this meeting because they judged that the economy was essentially at maximum employment and that monetary policy was unable to contribute to a permanent further improvement in labor market conditions in these circumstances.

  The Committee agreed that, in determining the timing and size of future adjustments to the target range for the federal funds rate, it would assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment would 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 expected that economic conditions would evolve in a manner that would warrant only gradual increases in the federal funds rate and that the federal funds rate was likely to remain, for some time, below levels that are expected to prevail in the longer run. However, members emphasized that the actual path of the federal funds rate would depend on the economic outlook as informed by incoming data.

• Morning News: November 23, 2016
  Eddy Elfenbein, November 23rd, 2016 at 7:01 am

  Eurozone PMI Survey Shows Stronger-Than-Expected Business Activity

  U.K. Spending Plan, First Since ‘Brexit’ Vote, Is Expected to Shelve Austerity

  Fed Minutes to Be Parsed for Insight on Inflation, Jobs

  Donald Trump Basically Says Conflicts Of Interest Aren’t Illegal If The President Has Them

  Judge Suspends Rule Expanding Overtime for Millions of Workers

  A Blade Strikes Steel, and the Blast Shocks a Nation’s Energy System

  Samsung Offices Raided by South Korean Prosecutors

  Lufthansa Cancels Flights as Pilot Strike Begins

  Dr. Pepper, Pepsi Snap Up Alternative Beverage Makers

  Hewlett Packard Enterprise Misses its Q4 Revenue Expectations But Beats on Profit

  Dollar Tree Gives Upbeat Guidance

  Here’s How Bank Regulators May Harden Sanctions After Wells Fargo Scandal

  Boeing’s Big Push Into Services Should Bolster Revenues And Returns, Reduce Cyclicality

  Q&A With Jack Bogle: ‘We’re in the Middle of a Revolution’

  Josh Brown: Chart o’ the Day: The Big Breakout

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• Russell 2000 Up 13 Days in a Row
  Eddy Elfenbein, November 22nd, 2016 at 11:10 am

  The small-cap Russell 2000 has risen for the last 12 days in a row, and we’re going for #13 today.

  

  From its high in May 2015 to its low in February 2016, the Russell 2000 dropped 27.2%. It’s at a new all-time high.

• New All-Time High
  Eddy Elfenbein, November 22nd, 2016 at 10:46 am

  The stock market broke out to a new all-time high this morning. The S&P 500 is above 2,200. The Dow Jones cracked 19,000.

  

• Looking at Renaissance Technologies
  Eddy Elfenbein, November 22nd, 2016 at 10:05 am

  Katherine Burton has a fascinating article at Bloomberg looking at Renaissance Technologies, the large hedge fund company which runs the Medallion Fund.

  Medallion is open only to Renaissance’s roughly 300 employees, about 90 of whom are Ph.D.s, as well as a select few individuals with deep-rooted connections to the firm.

  The fabled fund, known for its intense secrecy, has produced about $55 billion in profit over the last 28 years, according to data compiled by Bloomberg, making it about $10 billion more profitable than funds run by billionaires Ray Dalio and George Soros. What’s more, it did so in a shorter time and with fewer assets under management. The fund almost never loses money. Its biggest drawdown in one five-year period was half a percent.

  “Renaissance is the commercial version of the Manhattan Project,” says Andrew Lo, a finance professor at MIT’s Sloan School of Management and chairman of AlphaSimplex, a quant research firm. Lo credits Jim Simons, the 78-year-old mathematician who founded Renaissance in 1982, for bringing so many scientists together. “They are the pinnacle of quant investing. No one else is even close.”

  Read the whole thing.

• Hormel Raises Dividend for 51st Year in a Row
  Eddy Elfenbein, November 22nd, 2016 at 9:37 am

  In addition to Hormel’s (HRL) earnings report, the company raised its quarterly dividend for the 51st year in a row. The quarterly payout will rise 17% from 14.5 cents to 17 cents per share. That brings the annual dividend to 68 cents per share. Based on Monday’s close, that works out to a yield of nearly 2% exactly.

• Hormel Foods Earns 45 Cents per Share
  Eddy Elfenbein, November 22nd, 2016 at 9:28 am

  This morning Hormel Foods (HRL) reported fiscal Q4 earnings of 45 cents per share. That matched Wall Street’s estimates. That’s up 22% over last year. Quarterly revenues rose 9% to $2.63 billion which just barely beat estimates.

  “We had a strong finish to fiscal 2016, achieving record earnings for the fourteenth consecutive quarter,” said Jim Snee, president and chief executive officer. “Three of our five business segments delivered sales, volume, and earnings growth, again demonstrating our balanced business model. Refrigerated Foods and Jennie-O Turkey Store both had excellent quarters with growth coming from value-added, branded products and improved market conditions. Grocery Products enjoyed a strong quarter aided by the inclusion of the JUSTIN’S® specialty nut butter business in addition to strong results from SPAM® luncheon meat and SKIPPY® peanut butter,” Snee said.

  “Specialty Foods sales declined, primarily due to the divestiture of Diamond Crystal Brands in May, while sales of MUSCLE MILK® protein products were strong,” mentioned Snee. “Specialty Foods earnings decreased primarily due to increased advertising. Our International segment had a tough quarter as the team continues to work through challenging market conditions in China.”

  For the year, Hormel earned $1.64 per share compared with $1.32 last year. Hormel also gave 2017 guidance of $1.68 to $1.74 per share. Wall Street had been expecting $1.68 per share.