Archive for December, 2021

• S&P 500 on Pace for 69th Record High this Year
  Eddy Elfenbein, December 27th, 2021 at 11:41 am

  The stock market hit a low on Boxing Day three years ago. At its intra-day low, the S&P 500 hit 2346.58. We’ve more than doubled that in three years, though I should note that there were some detours along the way.

  

  The market is up yet again today to yet another new all-time high. We’re on pace for our 69th all-time high close of this year. That’s the most new highs of any year except 1995.

  On our Buy List, we have new highs today from AFLAC (AFL) and FactSet (FDS), and Zoetis (ZTS) is close to being a 50% winner this year.

  Tech is up the most today while utilities are up the least. Still, the gap between sectors isn’t terribly wide.

• Morning News: December 27, 2021
  Eddy Elfenbein, December 27th, 2021 at 7:06 am

  Two Decades After Euro, Billions in Old Cash Is Being Hoarded

  Turkey’s Lira Slides Amid Questions Over Currency-Defense Tool

  China Imposes New Curbs on Offshore IPOs From Restricted Sectors

  China to Remove Limits on Foreign Investment in Passenger Car Manufacturing

  Bitcoin Mining Entry Triggers a 6,700% Surge in Tech Stock

  JPMorgan Says Investors Too Bearish, Doesn’t See Stock Selloff

  Record Beef Prices, But Ranchers Aren’t Cashing In

  Political Panic Caused Higher Prices, Not the Fed or the Myth That Is ‘Excess Demand’

  U.S. Holiday Retail Sales Rise 8.5% As Online Shopping Booms -Mastercard

  ‘Bubblicious’ Used Car Prices Are Rising Faster Than Bitcoin

  Elon Musk’s Big Year and the Roadblocks Ahead

  Microsoft Joins GM, Google, Others In Canceling In-Person Participation At CES Due To Rising Omicron Threat

  Whole Foods Shoppers Balk at Paying $9.95 Delivery Fee, Orders Plummet

  Hollywood Tests the Limit of Marquee Names a Single Film Can Hold

  Why Older Women Face Greater Financial Hardship Than Older Men

  How Companies – And Employees – Can Avoid A Burnout Crisis

  The Single-Staircase Radicals Have a Good Point

  Be sure to follow me on Twitter.

• Merry Christmas!
  Eddy Elfenbein, December 25th, 2021 at 6:59 am

  

  I wanted to take this opportunity to wish everyone a Merry Christmas and a happy, healthy and profitable new year.

  This has been an incredible year for us. In April, we unveiled a paid newsletter that’s proved to be very popular. Our Twitter following is growing as well.

  In September, our ETF turned five years old. I want to thank all our shareholders for their trust and confidence in me. On Thursday, we closed at a record high for the trade shares and the NAV and for total assets.

  I also want to thank my tireless editor, Marcia Robertson. She also posts the invaluable morning news links. I also want to acknowledge some of my fellow financial bloggers: Barry Ritholtz, Josh Brown, Cullen Roche, Morgan Housel, Michael Batnick, Howard Lindzon, Ben Carlson, Tadas Viskanta and many, many others for their continued support.

  I’d also like to thank the people who follow and interact with me each day on Twitter.

  Most of all, I want to thank all of my readers for your continued support.

  Let’s hope 2022 brings us more success!

• Morning News: December 24, 2021
  Eddy Elfenbein, December 24th, 2021 at 7:01 am

  How Long Will Europe’s Gas Crisis Last? Traders Have an Answer

  Japan Approves Major Hike in Military Spending, With Taiwan in Mind

  Taiwan, Japan Eye ‘All Round Cooperation’ on Chips

  As Workers Gain Pay Leverage, Nonprofits Can’t Keep Up

  Kraken Exchange CEO Wants You To Borrow Against Your CryptoPunk

  GM, Google, Others Join Retreat from CES Over Rising COVID-19 Cases

  Amazon Reaches Labor Deal, Giving Workers More Power to Organize

  Tesla Puts Brakes on Playing Video Games While Driving

  Toys ‘R’ Us Tries to Come Back, Four Years After Bankruptcy

  Inside A-Rod’s Sprawling Business Empire

  TikTok Tops Google as the Most Visited Website on the Internet

  Crocs to Buy Footwear Brand Heydude for $5 Billion

  Sidewalk Robots Find Foothold on College Campuses

  Buy A Coal Mine, Drive a Gas Guzzler, and Other Uses of Reverse Logic

  Beware the Elf on a Shelf, Privacy Watchdogs Warn

  Be sure to follow me on Twitter.

• Tracking a New All-Time High
  Eddy Elfenbein, December 23rd, 2021 at 1:19 pm

  It’s another good day for the stock market. The S&P 500 is on pace to close at a new all-time high. Within the market, High Beta is continuing its trend over Low Vol for a second day. On our Buy List, we have new highs from Zoetis (ZTS) and FactSet (FDS).

  This morning’s jobless claims report came in at 205,000. That’s unchanged from last week. We’re still near the 52-year low we reached two weeks ago.

  The government also said that personal income rose 0.4% in November while personal spending rose by 0.6%.

• Morning News: December 23, 2021
  Eddy Elfenbein, December 23rd, 2021 at 7:13 am

  Why Even a 40% Tax Break Won’t Move Japan’s Employers to Raise Pay

  China Cements Rare Earths Dominance With New Global Giant

  Manager Who Gained 85% on Distressed Debt Says Beware Evergrande

  Bitcoin Worth $15 Quintillion Is Just Another Day in Crypto

  Global Oil’s Comeback Year Presages More Strength in 2022

  How 2021 Became the Year of ESG Investing

  Beneath a Covid Vaccine Debacle, 30 Years of Government Culpability

  Consumer Spending Expected to Have Slowed in November

  How Shopify Outfoxed Amazon to Become the Everywhere Store

  Air Cargo Disrupts Supply Chain as Goods Spill Out of Warehouses

  Welcome to the Charles Dickens Luxury Apartments

  Want to Buy a Car? You Might Have to Get on a Plane to Claim It.

  Ola’s Dream of World’s Biggest Scooter Factory Hits a Hurdle

  Intel Apologizes in China After Backlash Over Xinjiang Statement

  Spider-Man vs. Omicron

  Be sure to follow me on Twitter.

• Q3 GDP Growth Revised Slightly Higher
  Eddy Elfenbein, December 22nd, 2021 at 11:54 am

  Yesterday, the High Beta stocks got their vengeance on Low Vol. The market was extremely tilted towards the high-fliers. The High Beta Index gained 4.16% while Low Vol was up only 0.13%. I suppose that’s not a big surprise considering the past five weeks.

  Today is much more balanced in early trading. It’s interesting how the S&P 500 has recently bounced off its 100-day moving average.

  On our Buy List, shares of Zoetis (ZTS) are up to a new 52-week high. ZTS is now a 45% winner for us. FactSet (FDS) also made a new high.

  Also this morning, the government revised Q3 GDP growth up to 2.3%. That’s up from the previous report of 2.1%. Q4 is expected to be much stronger. The Atlanta Fed expects Q4 GDP growth of 7.2%.

• Morning News: December 22, 2021
  Eddy Elfenbein, December 22nd, 2021 at 7:04 am

  Omicron Is Turning Europe’s Busy Season Silent

  Europe’s Energy Crunch Continues as Gas and Power Prices Soar

  Turkey’s President Hails Steps to Help Depositors, as Lira Steadies

  Just A Year of Brexit Has Thumped U.K.’s Economy and Businesses

  Booming U.S. Economy Ripples World-Wide

  Wall Street Ends Crazy Year With Existential Angst and Big Bonuses

  Crypto’s Wild 2021 Will Go Down as One for the Ages

  Credit Scores for Car Insurance? Regulators Are Taking Aim

  Lingering Virus, Lasting Inflation: A Fed Official Explains Her Pivot

  Why a Chinese Company Dominates Electric Car Batteries

  ‘Hands Off’: Why Some U.S. Investors Are Pulling Meme Stocks from Brokerages

  Maersk Buys Asian Warehouse Giant LF Logistics for $3.6 Billion

  Self Storage Is the Pandemic’s Hot Property

  If You Find Lego Under the Tree This Year, They Might Be Worth More Than Gold One Day

  CES Insists Tech Conference Will Go On Despite Big-Name Cancellations

  Be sure to follow me on Twitter.

• CWS Market Review – December 21, 2021
  Eddy Elfenbein, December 21st, 2021 at 7:44 pm

  (This is the free version of CWS Market Review. I’m going to unveil our 2022 Buy List this Friday, December 24 in our premium issue. To see the new list, make sure you’re a premium subscriber. You can get the premium newsletter for $20 per month or $200 for the whole year.)

  Oracle to Buy Cerner for $95 per Share

  Great news for our Buy List. This week, Oracle (ORCL) said it’s going to buy Cerner (CERN) for $95 per share. This is a huge win for us.

  Earlier, we knew that the companies had been discussing a potential deal, but that became official yesterday. This will be Oracle’s largest deal ever. The deal is all-cash and it includes Cerner’s debt.

  The story initially broke in the WSJ on Thursday evening. Shares of Cerner had closed at $79.49 that day. The stock soared on Friday and eventually closed at $89.77. That was a gain of nearly 13%.

  It’s even more impressive when you consider that Cerner had been rallying going into the announcement. As recently as December 1, shares of Cerner closed at $70.01 per share. If you include that, then the stock has gained close to 30% in a few weeks.

  If you look closely, you can almost make out when the news broke:

  

  The deal comes to $28.3 billion. While Oracle will pay $95 per share for Cerner, the stock will probably drift around in the low $90s until the deal closes. Once the lawyers get involved, it takes time to get the deal done.

  There are also regulatory hurdles to deal with. There’s also the possibility that the deal will fall through. It’s unlikely, but it does happen. Sometimes shareholders revolt and enough of them can get their way. Until then, shares of Cerner will trade like a low-quality bond that will mature at some point at $95 per share.

  From Bloomberg:

  Oracle Chief Executive Officer Safra Catz said the acquisition should be “immediately accretive to Oracle’s earnings” on an adjusted basis in the first full fiscal year after closing and contribute “substantially more to earnings in the second fiscal year and thereafter.” The transaction is expected to close next year, the companies said.

  Oracle, the second-biggest software maker by revenue, is best known for legacy database products. The company has struggled in recent years to gain ground in cloud computing, in which companies rent data storage and analytic power from large server centers, trailing far behind market leaders such as Amazon.com Inc. and Microsoft Corp.

  The deal for Cerner gives Oracle a huge foothold in technology for the health care industry — a sector expected to spend $15.8 billion on cloud infrastructure and software by 2023, according to market researcher IDC — given Cerner’s robust user base, which includes many of the top U.S. hospital systems. And as Oracle moves more of Cerner’s systems onto its own cloud infrastructure, the company gains an important case study to help future sales.

  This deal caught some people off guard because Cerner’s new CEO started only a few weeks ago. As much as I like Cerner, the stock had not been a terribly strong performer for us this year.

  We added CERN to our Buy List in 2016. Since then, the company has performed well but the stock has been somewhat mediocre. Oracle had also been on our Buy List from 2011 to 2015.

  FactSet Delivers Big Earnings Beat

  This morning, we got an earnings report from FactSet (FDS). This is for its fiscal Q1 which ended in November. FactSet has been one of our best-performing stocks this year with a gain of 44% (including dividends).

  The company reported fiscal Q1 earnings of $3.25 per share. That was up 12.8% over last year and it beat Wall Street’s forecast of $2.99 per share.

  Quarterly revenues rose 9.4% to $424.7 million. Organic sales rose 9.1% to $423.2 million.

  The key stat for FactSet is Annual Subscription Value (ASV) plus professional services. At the end of the quarter, that stood at $1.7 billion which is up from $1.6 billion a year ago.

  Most importantly, the company reaffirmed its expectations for Fiscal 2022:

  • Organic ASV plus professional services is expected to increase in the range of $105 million to $135 million over fiscal 2021.
  • GAAP revenues is expected to be in the range of $1,705 million to $1,720 million.
  • GAAP operating margin is expected to be in the range of 31% to 32%.
  • Adjusted operating margin is expected to be in the range of 32.5% to 33.5%.
  • FactSet’s annual effective tax rate is expected to be in the range of 14.5% to 15.5%.
  • GAAP diluted EPS is expected to be in the range of $11.60 to $11.90. Adjusted diluted EPS is expected to be in the range of $12.00 to $12.30.

  FactSet is also one of the newest members of the S&P 500. The stock gapped down this morning. At one point, shares of FDS were down 4.4%. Cooler heads prevailed and FDS later rallied. The shares were up today by 0.8%.

  

  Nike Had to Cancel 130 Million Orders

  Yesterday, Nike (NKE) reported very good earnings. The sneaker company made 83 cents per share which was 20 cents more than expectations. The stock rallied 6.15% today.

  Despite the earnings beat, Nike has been experiencing weakness in China. Sales in North America have more than made up the difference.

  The reason why I wanted to bring Nike to your attention is this amazing stat. Last quarter, Nike had to cancel 130 million units due to factory closures. The company said that those problems are being worked out.

  Since the beginning of 1990, Nike has gained nearly 33,000%:

  

  The Santa Claus Rally

  Normally, I don’t place a great deal of faith in calendar effects and the stock market. After all, the stock market has been around for a long time. If you slice and dice the data long enough, you’re bound to find an oddball stat.

  Still, I am impressed by the Santa Claus Rally. This is the phenomenon of the market performing well at Christmastime. The numbers are truly remarkable.

  I’ve taken the entire history of the Dow Jones, which dates back from more than 125 years ago, and I’ve found that one-third of the stock market’s entire gain has come between December 22 and January 8.

  Here are the numbers. The Dow has an average annualized gain (excluding dividends) of 7.85% per year. From December 22 to January 8, the Dow has an average gain of 2.82%. While that may not sound like a lot, it’s very large considering the short time span—it’s only about 5% of the year—and that’s an average of 125 years’ worth of data. For the rest of the year, the other 95%, the Dow has gained just 4.89% per year.

  Here’s how the Dow has performed on average during the year:

  

  Thank you, and I want to wish everyone a Merry Christmas and a happy and healthy holiday season. I’ll have more for you in the next issue of CWS Market Review.

  – Eddy

  P.S. Don’t forget to sign up for our premium newsletter.

• FactSet Earns $3.25 per Share
  Eddy Elfenbein, December 21st, 2021 at 11:12 am

  This morning, FactSet (FDS) reported fiscal Q1 earnings of $3.25 per share. That was up 12.8% over last year and it beat Wall Street’s forecast of $2.99 per share. Quarterly revenues rose 9.4% to $424.7 million. Organic sales rose 9.1% to $423.2 million.

  The key stat for FactSet is Annual Subscription Value (ASV) plus professional services. At the end of the quarter, that stood at $1.7 billion which is up from $1.6 billion a year ago.

  FactSet is also one of the newest members of the S&P 500.

  Here are FactSet’s expectations for Fiscal 2022:

  • Organic ASV plus professional services is expected to increase in the range of $105 million to $135 million over fiscal 2021.
  • GAAP revenues is expected to be in the range of $1,705 million to $1,720 million.
  • GAAP operating margin is expected to be in the range of 31% to 32%.
  • Adjusted operating margin is expected to be in the range of 32.5% to 33.5%.
  • FactSet’s annual effective tax rate is expected to be in the range of 14.5% to 15.5%.
  • GAAP diluted EPS is expected to be in the range of $11.60 to $11.90. Adjusted diluted EPS is expected to be in the range of $12.00 to $12.30.