Archive for May, 2017

• Painful Day Today
  Eddy Elfenbein, May 17th, 2017 at 12:53 pm

  The stock market is taking a big hit today. To be fair, it’s really not down that much, but the market’s been so tame in recent weeks that any sizable move grabs our attention.

  The S&P 500 is currently down 1.13%. The biggest pain is being felt by the financials. Several of the big banks are off by 3% or more. Today’s like its own unwinding of the Trump Trade.

  We can see that most clearly by looking at the High Beta sector. I like to track the High Beta ETF (SPHB). High Beta got absolutely clobbered in 2015. It came back strongly in 2016, and it really soared after Election Day. Since December, however, it’s gradually lagged the market. Today has been especially rough.

  The defensive names like Hormel and Smucker are holding up well. Some are even in the green. A little bit at least. In the last month, the tech sector has been holding up so much of the market.

• Morning News: May 17, 2017
  Eddy Elfenbein, May 17th, 2017 at 7:23 am

  No More Austerity, Greeks Demand in Nationwide Strike

  China-Hong Kong Bond Trading Scheme Approved by Regulators

  How Scottish Wind Power Beat Trump But Lost the War

  Someone Pass The U.S. Stock Market A Breadth Mint

  Concerns Over Trump Dent Stocks, Dollar

  Here’s What Warren Buffett is Buying and Selling

  Google, Not the Government, Is Building the Future

  With Job Cuts, It’s Ford First

  Twitter Co-Founder Biz Stone To Return To The Struggling Social-Media Service

  With Qdoba On The Chopping Block, Jack In The Box Stock Pops

  Lloyds Bailout Nets U.K. $1.2 Billion as Government Exits

  Digital Security Provider, CrowdStrike, Raises $100 Million

  The Trump-Dimon Love Affair Is Getting Messy

  Michael Batnick: The Right People

  Howard Lindzon: Goodbye Lulu, Hello Zillow

  Jeff Carter: Markets Don’t Lie

  Be sure to follow me on Twitter.

• Federal Realty: Dividend Champ at a New 52-Week Low
  Eddy Elfenbein, May 16th, 2017 at 12:49 pm

  I’m usually not a big fan of stock screens, but one good way to begin a search for overlooked stocks is to gaze at the list of stocks hitting new 52-week lows. Of course, just because a stock is at a low doesn’t mean it’s cheaper than where it should be. It just means that it’s cheaper than where it was.

  Once you’ve found that list of stocks at new lows, then you have to do more digging and see how well-deserved their punishment is. A good next step is to check out the dividend yield. I did this recently and the name Federal Realty, a DC-based REIT, caught my eye.

  This morning, shares of Federal Realty (FRT) dropped to $123.77 per share. That’s a new 52-week low. It’s down from $171.08 a few months ago. FRT pays a quarterly dividend so the yield works out to 3.15%. But here’s the important fact—Federal Realty has increased its dividend for the last 49 years in a row. That’s one of the longest streaks on record. The company also has an investment-grade credit rating.

  Momentum is real on Wall Street so a stock at a new low has a good chance of making even more new lows. But I strongly suspect that a company like Federal Realty will rebound, though I can’t say when.

• April Industrial Production Rose 1%
  Eddy Elfenbein, May 16th, 2017 at 11:35 am

  Some good news for the economy in Q2. This morning, the Federal Reserve said that industrial production rose by 1% last month. That’s the biggest gain in two years. Wall Street had been expecting an increase of 0.4%.

  The industrial sector is slowly getting back on its feet after a pullback during much of 2015.

  The Atlanta Fed’s GDPNow forecast for Q2 is currently at 4.1%. I had thought that was very high, but in light of today’s report, maybe not.

• Morning News: May 16, 2017
  Eddy Elfenbein, May 16th, 2017 at 7:00 am

  As Their Clout Wanes, Saudi Arabia and Russia Extend Oil Production Cuts

  Britain’s Inflation, Fueled By Brexit and Oil, Drives Higher Ahead of Election

  U.S. Home Appliances Shipments Rise 13.7% Year-On-Year in April

  China, Addicted to Bootleg Software, Reels From Ransomware Attack

  Microsoft Faulted Over Ransomware While Shifting Blame to NSA

  Ford Aims to Cut Global Workforce by Roughly 10%

  Sears CEO Battles With Suppliers as Shares Continue Downward Spiral

  Home Depot’s Profit, Comp Sales Beat Amid Strong Housing Market

  BHP Shareholders Want an Oil-Overhaul Claims Activist Investor Elliott

  Japan Urges Toshiba, Western Digital to Get Along as Chip Spat Flares

  Hyundai Whistle-Blower, in Rarity for South Korea, Prompts Recall

  Rich Retirees are Hoarding Cash Out of Fear

  Josh Brown: Everyday Ambient Noise

  Roger Nusbaum: The Denial Trade?

  Be sure to follow me on Twitter.

• Buying opportunity in Tesla?
  Eddy Elfenbein, May 15th, 2017 at 4:37 pm

• Looking for “Diamond in the Rough” Stocks
  Eddy Elfenbein, May 15th, 2017 at 4:30 pm

• Amazon’s Stock Turns 20—What Lessons Can Investors Learn?
  Eddy Elfenbein, May 15th, 2017 at 12:07 pm

  Amazon.com went public 20 years ago today. There was so much demand for Jeff Bezos’s “online bookstore,” as it was then referred to, that the underwriters raised the offering price twice. They settled on $18 per share.

  There was some concern whether an online bookseller could truly compete with industry stalwarts such as Barnes & Noble and Borders. Would people really buy books on the Internet? The idea seemed farcical. But two decades later, Amazon has done pretty well for itself.

  On Friday, the shares closed at $961.35. And that doesn’t include three stock splits totaling 12-for-1. In 1997 terms, one share of Amazon is currently worth $11,536.20.
  advertisement

  In simpler terms, the stock has vaulted 640.9-fold in 20 years. If you had invested $16,000 in Mr. Bezos’s little project, you would now be sitting on a cool $10 million. On average, Amazon’s stock has gained roughly one percent every 11 days for 20 straight years. What’s even more remarkable is that that figure includes the bursting of the tech bubble, when Amazon’s stock plunged 95 percent.

  Read the rest at The Observer…

• Morning News: May 15, 2017
  Eddy Elfenbein, May 15th, 2017 at 6:46 am

  In South Korea, New President Faces a Tangle of Economic Problems

  China’s Growth Dividend for World Economy Shows Signs of Fading

  Behind China’s Silk Road Vision: Cheap Funds, Heavy Debt, Growing Risk

  U.S. Firms Want In on China’s Global `One Belt, One Road’ Spending

  New Wave of Ransomware Threats

  Small Countries’ New Weapon Against Goliaths: Hacking

  Oil Surges 2.5%, Soothes Cyber Nerves

  Lyft and Waymo Reach Deal to Collaborate on Self-Driving Cars

  Tesla’s Solar Roof Pricing Is Cheap Enough to Catch Fire

  Toshiba Set to Strike Back as Western Digital Clash Heats Up

  GM Supplier Relations Improve in North America, Nissan’s Slip

  Sears CEO’s Master Plan to Profit off the Demise of His Stores Is Taking a Turn for the Worst

  Facebook’s Sandberg, Be Nice To Moms – But Who’s Going To Pay Sheryl?

  Ben Carlson: A Good Lesson For Millennial Investors

  Jeff Miller: Should Investors Fear Another Watergate?

  Be sure to follow me on Twitter.

• CPI Rose 0.17% in April
  Eddy Elfenbein, May 12th, 2017 at 1:00 pm

  This morning, the government reported that seasonally-adjusted consumer prices rose 0.17% last month. (Most news sources round up to 0.2%, but I think it’s worth adding another decimal place.)

  This was an interesting report because last month’s report was very unusual. The CPI fell by 0.29% during March. That was the biggest monthly fall since January 2015.

  Even though the April CPI was positive, it was one of the lowest readings in the past year. The year-over-year inflation has fallen for the last two months. It’s down from 2.80% in February to 2.20% for April.

  Now for the “core rate” which excludes food and energy prices. Last month, the seasonally-adjusted core rate fell by 0.12%. That was the steepest drop in 35 years. For April, the seasonally-adjusted core rate rose by just 0.07%. While it’s positive, that’s still the second-lowest monthly rate of the last four years.

  The year-over-year change in the core rate is down to 1.89%. In January, it was at 2.26%.

  Finally, here’s the real Fed funds rate adjusted for core inflation.

  You can see that real interest rates are already going up. There’s no need for the Fed to do more.