Archive for April, 2017

• New High Today for CR Bard
  Eddy Elfenbein, April 19th, 2017 at 11:01 am

  We added CR Bard (BCR) to the Buy List in 2012 at $85.50. Today, BCR made a new high of $252.38.

  

• HEICO Splits 5-for-4
  Eddy Elfenbein, April 19th, 2017 at 9:11 am

  This morning, shares of HEICO (HEI) split 5-for-4. This means that shareholders now have 25% more shares, and the price will drop about 20%.

  HEICO closed Tuesday at $85.36 per share, so it will open around $68.29 today, give or take, depending on the market. Note also that our Buy Below price has dropped from $90 to $72 per share.

  For track record purposes, I assume the Buy List starts the year as a $1 million portfolio that’s equally divided among the 25 stocks. For HEICO, that meant a position of 518.4705 shares at a starting price of $77.15 per share. With the split, that becomes 648.0881 shares starting at $61.72 per share.

• Signature Bank Earns $2.48 per Share
  Eddy Elfenbein, April 19th, 2017 at 7:43 am

  Signature Bank (SBNY) reported very strong Q1 earnings this morning of $2.15 per share. That’s five cents more than estimates, and it compares with $1.97 per share for last year’s Q1.

  Net interest income rose 8.4%. Total assets increased 15.4% to $40.27 billion. In the last year, total deposits are up 17.2%. Net interest margin was 3.14%.

  “We are pleased to begin 2017 by reporting another quarter of record earnings, driven by strong deposit and loan growth. Our results directly reflect the core values on which this institution was built nearly 16 years ago, to which we have remained steadfast since first opening our doors. The structure upon which Signature Bank was founded is straightforward. We continually execute on our sound and secure business plan that emphasizes a single-point-of-contact approach to relationship banking. All the necessary fundamentals have been put in place to allow us to face challenges that may arise, and we are confident in our abilities to successfully address them,” said Joseph J. DePaolo, Co-founder, President and Chief Executive Officer.

• Morning News: April 19, 2017
  Eddy Elfenbein, April 19th, 2017 at 7:05 am

  I.M.F. Raises 2017 Outlook for Global Economic Growth

  Markets Start to Ponder the $13 Trillion Gorilla in the Room

  Canada: Trump Is Wrong When He Says Dairy Practices Unfair

  U.S. House Panel to Begin Hearings on Tax Reform Next Week

  Steve Ballmer Serves Up a Fascinating Data Trove

  Why Facebook Keeps Beating Every Rival: It’s The Network, Of Course

  Yahoo’s First-Quarter Revenue Jumps 22%

  IBM Posts First Revenue Miss in Five Quarters, Shares Tumble

  Asset Manager BlackRock’s Quarterly Profit Rises 31%

  United Picks a Funny Time to Attract More Passengers

  Malaysia Airlines First to Track Fleet With Satellites

  Disney’s Intergalactic Theme Park Quest to Beat Harry Potter

  Burberry Sales Miss Estimates as New CEO’s Task Gets Tougher

  Roger Nusbaum: “Head-Snapping” Reversals

  Cullen Roche: The Evidence Based Investing Conference

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• March Industrial Production +0.5%
  Eddy Elfenbein, April 18th, 2017 at 10:33 am

  We got some good news on industrial production this morning. For March, IP rose by 0.5%. Industrial production bottomed out a year ago. Prior to that, it had been in an unpleasant downtrend.

  Looking below the surface, however, shows that factory output was down in March. Utilities saw a jump of 8.6%.

• The Doolittle Raid 75 Years On
  Eddy Elfenbein, April 18th, 2017 at 10:15 am

  Seventy-five years ago today marked the daring Doolittle Raid over Tokyo. (This is also the 242nd anniversary of Paul Revere’s ride; “On the 18th of April in ‘75, hardly a man is now alive, who remembers that famous day and year.”)

  The stock market was in rough shape at the time of the raid. Since Pearl Harbor, stocks had been drifting lower, but the ultimate low came on April 28, 1942 when the Dow hit 92.92.

  Within two years, the Dow was up 50%, and it doubled by 1945. By 1955, the Dow was up fivefold, and it doubled again ten years later. The market really didn’t see any pause until 1966 when inflation started to have a major impact. Twenty four years after FDR’s speech, the Dow had advanced close to 1,000% and that’s not counting dividends.

• The Skewed Market
  Eddy Elfenbein, April 18th, 2017 at 9:35 am

  

  The stock market this year has been unusually skewed, meaning that a small number of stocks are making up a large part of the gains. More than half the gain in the S&P 500 this year comes from just 10 stocks. Further, just three stocks — Apple, Facebook and Amazon — make up nearly one-third of the index’s gain YTD.

  The recent strength in tech and internet companies marks a reversal from late last year, when investors piled into banks, industrials and small-cap stocks in the weeks following November’s U.S. elections. They bet that Republican control of Congress and the White House would lead to pro-growth policies.

  But as investors began to lose confidence that the policies would be enacted quickly, these sectors have trailed the S&P 500 in recent months. Instead of focusing on companies that could outperform during faster economic growth, many investors returned to large-cap favorites with a track record for boosting revenue during slower growth periods.

  On our Buy List, four stocks (CERN, AXTA, MCO, SHW) make up 57% of our YTD gain.

• Morning News: April 18, 2017
  Eddy Elfenbein, April 18th, 2017 at 7:11 am

  China’s Economy Grows 6.9%, but Warning Signs Persist

  Saudi Oil Exports Drop to 21-Month Low as Kingdom Sticks to Cuts

  Dollar Off Five-Month Low vs. Yen, Trade Issues Weigh

  Trump’s Unreleased Taxes Threaten Yet Another Campaign Promise

  Don’t Appoint Clones to the Fed

  GOP Targets Trillion-Dollar Tax Breaks for Democratic States

  Netflix Touts U.S. Growth—and the Market Believes It

  Bank of America’s Quarterly Profit Rises 44%

  An American Company Is Buying Britain’s Beloved Weetabix in a $1.8 Billion Deal

  Arconic C.E.O. Ousted After Sending Unauthorized Letter to Hedge Fund

  Cabela’s Sells Banking Assets to Synovus, Clearing Path For Bass Pro Deal

  Silver Lake Raises $15 Billion Fund for New Tech Deals

  Jeff Carter: If You Are An “Older” Person How Do You Find Your Way Into Startups?

  Josh Brown: Cognitive Clownshow

  Cullen Roche: The Evidence Based Investing Conference

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• Best Day in Seven Weeks
  Eddy Elfenbein, April 17th, 2017 at 4:31 pm

  Today was a good day for stocks. It was the best day for the S&P 500 since March.

  

  The S&P 500 Tech sector snapped a 10-day losing streak.

  

• Retail Sales and Inflation
  Eddy Elfenbein, April 17th, 2017 at 10:52 am

  The stock market was closed on Friday for Good Friday but there were two important economic reports I want to highlight.

  The first is that the Commerce Department said that retail sales fell by 0.2% last month. That comes on the heels of a 0.3% drop in February. Economists had been expecting a drop of 0.1%.

  We also want to look at “core” retail sales which ignores cars and gasoline. That’s usually the best measure of consumer spending. Last month, core retail sales rose by 0.5%. The Atlanta Fed now sees Q1 GDP growth of 0.9%.

  But the big surprise was the CPI report. The Labor Department said that consumer prices dropped by 0.3% last month. That was the biggest drop in more than two years.

  The core rate, which excludes food and energy, fell by 0.1%. That’s the biggest monthly fall since 1982.

  

  I said in last week’s newsletter that it would be a big mistake for the Fed to raise interest rates in June. I specifically said that inflation is not a problem. That was just prior to these reports, and it confirms that I was more accurate than I suspected.

  The futures market is currently about 50-50 on a June hike.