Archive for January, 2022

• Otis Beats for Q4 and Offers 2022 Guidance
  Eddy Elfenbein, January 31st, 2022 at 6:45 am

  This morning, Otis Worldwide (OTIS) said it made Q4 earnings of 72 cents per share. That’s up from 66 cents per share from one year ago. The consensus on Wall Street had been for earnings of 68 cents per share.

  Quarterly net sales were up 2.2% while organic sales rose by 2.8%. Adjusted operating profit margin was 14.6%, and New Equipment orders were up 7.3% in Q4.

  For the year, the elevator folks made $3.01 per share. That’s an increase of 19.4% over last year. Full year net sales increased 12.1% “driven by a 8.9% increase in organic sales and a 3.0% benefit from foreign exchange.”

  “Otis delivered a strong fourth quarter, capping an excellent year as we continued to execute on our long-term strategy and provide innovative solutions and services to our customers. Despite ongoing macro challenges in 2021, we achieved consistent and broad-based organic sales growth and margin expansion, grew our maintenance portfolio at the highest rate in over 10 years and gained share in New Equipment for the second consecutive year. Additionally, our continued robust cash flow generation enabled us to strategically deploy capital to create long-term value for all stakeholders,” said President and CEO Judy Marks. “We are confident this momentum will continue in 2022 and beyond, positioning us to deliver on our financial commitments and advance ESG priorities.”

  Now let’s turn to guidance. For all of 2022, Otis expects earnings to range between $3.20 and $3.30 per share. That’s an increase of 6% to 10% over last year. Wall Street had been expecting $3.29 per share.

  Some more details. Otis also expects free cash flow of $1.6 billion. The company sees full-year net sales of $14.4 to $14.7 billion. That’s up 1% to 3% over last year. Otis sees organic sales rising by 2.5% to 4.5%.

• Morning News: January 31, 2022
  Eddy Elfenbein, January 31st, 2022 at 6:40 am

  China Is Changing Its Coal Use, and It Affects the Whole World

  Europe’s Economy Shows Resilience to a Surge in Coronavirus Infections

  Biden Economic Agenda on Hold as More Americans Hit Hardships

  Fed Nominee Has Focused His Research on Monetary Policy and Poverty

  Then and Now: How This Fed Liftoff Is Nothing Like That of 2015

  Fed’s Tightening Plan Upends Outlook for Treasury’s Bond Sales

  Inflation and Deficits Don’t Dim the Appeal of U.S. Bonds

  Stocks Rebound But Head for Worst January Since 2016

  An Army of Faceless Suits Is Taking Over the $4 Trillion Hedge Fund World

  How Cookie Banners Backfired

  How Facebook Is Morphing Into Meta

  Elliott and Vista Near Deal to Buy Citrix Systems

  Streamers Struggle to Keep Users Who Joined to Watch a Hit

  Global Gaming Company Entain Looks to Compete in Metaverse, Immersive Gambling

  The Rising Human Cost of Sports Betting

  Elon Musk Offered a Florida Teen $5,000 to Delete a Twitter Account Tracking His Jet. It Wasn’t Enough

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• Update on FICO
  Eddy Elfenbein, January 29th, 2022 at 4:31 pm

  I wanted to provide a brief update on FICO (FICO). In the newsletter, I mentioned that on Thursday, FICO reported fiscal Q1 earnings of $3.70 per share. That beat expectations of $3.36 per share.

  FICO also said that it expects full-year earnings of $14.12 per share which was below Wall Street’s forecast of $14.81 per share.

  Here comes the problem. I lowered my Buy Below price on FICO to $450 per share. On Friday, the shares opened at $426.46 and began a fantastic rally from there. I had no idea that FICO would rally like that.

  This is an old lesson that in any portfolio, you never know who the big winners will be.

  On Friday, FICO eventually closed at $493.12 per share. That was a gain of $70.13 per share or 16.58%. In other words, my $450 Buy Below was a wee bit off. I’ll probably adjust that upward soon.

  

• Church & Dwight Earned 64 Cents per Share
  Eddy Elfenbein, January 28th, 2022 at 7:18 pm

  On Friday, Church & Dwight (CHD) reported Q4 earnings of 64 cents per share. That’s up 20.8% from a year ago. Wall Street had been expecting earnings of 60 cents per share.

  For the year, the company made $3.02 per share. That’s up 6.7% from a year ago.

  CEO Matthew Farrell said:

  Our brands once again experienced strong consumption in Q4 2021. In the U.S. we grew consumption in 11 of the 16 categories in which we compete. Five of our brands experienced double digit consumption growth including ARM & HAMMER® Scent Boosters, ARM & HAMMER® Clumping Litter, OXICLEAN® stain fighters, BATISTE® dry shampoo and ZICAM® zinc supplements. Consumption continues to outpace shipments as supply chain disruptions continue. This strong consumption would likely have been higher if not for the ongoing supply chain challenges. This demonstrates the strength of our brands as we gained share on 6 of the 13 power brands in a difficult supply environment. Global online sales grew 12.7% in 2021, and as a percentage of total sales has expanded to 15% for the full year.

  The market liked the report as shares of CHD rallied 4.40% to close at $103.

• Morning News: January 28, 2022
  Eddy Elfenbein, January 28th, 2022 at 7:02 am

  IMF Says China’s Economic Imbalances Have Worsened

  This Chinese Miner Could Kill the Battery Metals Boom

  Wall Street’s Big Bet on Chinese Markets Is Going All Wrong

  For Olympic Sponsors, ‘China Is an Exception’

  Crypto Secrecy Makes DeFi a Financial Felon’s Wonderland

  How Crypto Became the New Subprime

  U.S. Economy Grew 1.7% in 4th Quarter, Capping a Strong Year

  U.S. Employers Confront Highest Labor Costs in 20 Years, Fueling Inflation

  Meme Stock Hangover: A Year After GameStop, Traders Face Gloomier Markets

  Goldman, Google and Just About Every NYC Employer Will Soon Have to Disclose Pay Secrets

  Macy’s Is Betting on Online Shopping and Smaller Neighborhood Stores

  Apple’s Profit Jumps to $34.6 Billion in Holiday Quarter Despite Supply Issues

  Chevron Kicks Off Oil Industry’s Fourth Quarter Results With a Miss

  Marcelo Claure Leaves Masa Son’s Orbit

  Mike Lynch Loses $5 Billion Court Fight With HP Over Autonomy

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• Morning News: January 27, 2022
  Eddy Elfenbein, January 27th, 2022 at 7:04 am

  U.S. and China Rush in Opposite Directions to Save the Global Economy

  Fed Signals Rate Increase in March, Citing Inflation and Strong Job Market

  A Big Change Is Afoot. It’s Not Just a Rate Hike

  Jeremy Grantham Has an Even Scarier Prediction Than His Crash Call

  Bridgewater Sees ‘Much Bigger’ Drop in Stocks Before Fed Blinks

  Robust U.S. Growth Is Expected for Late 2021, but Omicron Looms Now

  It’s Hard to Tell When the Crypto Bubble Will Burst, or If There Is One

  Robinhood Shares Stumble as Trading Frenzy Wanes, Regulators Circle

  UBS Steps Into ‘Gen Z’ Push With $1.4 Billion Wealthfront Buy

  Deutsche Bank Beats Profit Expectations, Restores Dividend

  Apple to Rival Square by Turning iPhones Into Payment Terminals

  Rising Costs, Pandemic Curbs Take a Bite Out of McDonald’s Profit

  Tesla Puts Off New Models To Focus on Boosting Output

  GM Rolls Out $7 Billion Investment Plan to Build Electric Trucks and Batteries

  Americans’ Gas Stoves Are as Bad for Climate as 500,000 Cars

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• Principles for Reducing the Balance Sheet
  Eddy Elfenbein, January 26th, 2022 at 2:19 pm

  The Fed also released a statement of principles for reducing its balance sheet:

  The Federal Open Market Committee agreed that it is appropriate at this time to provide information regarding its planned approach for significantly reducing the size of the Federal Reserve’s balance sheet. All participants agreed on the following elements:

  The Committee views changes in the target range for the federal funds rate as its primary means of adjusting the stance of monetary policy.

  The Committee will determine the timing and pace of reducing the size of the Federal Reserve’s balance sheet so as to promote its maximum employment and price stability goals. The Committee expects that reducing the size of the Federal Reserve’s balance sheet will commence after the process of increasing the target range for the federal funds rate has begun.

  The Committee intends to reduce the Federal Reserve’s securities holdings over time in a predictable manner primarily by adjusting the amounts reinvested of principal payments received from securities held in the System Open Market Account (SOMA).

  Over time, the Committee intends to maintain securities holdings in amounts needed to implement monetary policy efficiently and effectively in its ample reserves regime.

  In the longer run, the Committee intends to hold primarily Treasury securities in the SOMA, thereby minimizing the effect of Federal Reserve holdings on the allocation of credit across sectors of the economy.

  The Committee is prepared to adjust any of the details of its approach to reducing the size of the balance sheet in light of economic and financial developments.

• Today’s Fed Policy Statement
  Eddy Elfenbein, January 26th, 2022 at 2:02 pm

  Here’s today’s statement:

  Indicators of economic activity and employment have continued to strengthen. The sectors most adversely affected by the pandemic have improved in recent months but are being affected by the recent sharp rise in COVID-19 cases. Job gains have been solid in recent months, and the unemployment rate has declined substantially. Supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

  The path of the economy continues to depend on the course of the virus. Progress on vaccinations and an easing of supply constraints are expected to support continued gains in economic activity and employment as well as a reduction in inflation. Risks to the economic outlook remain, including from new variants of the virus.

  The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent. With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate. The Committee decided to continue to reduce the monthly pace of its net asset purchases, bringing them to an end in early March. Beginning in February, the Committee will increase its holdings of Treasury securities by at least $20 billion per month and of agency mortgage‑backed securities by at least $10 billion per month. The Federal Reserve’s ongoing purchases and holdings of securities will continue to foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.

  In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

  Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Esther L. George; Patrick Harker; Loretta J. Mester; and Christopher J. Waller. Patrick Harker voted as an alternate member at this meeting.

• Abbott Earned $1.32 Per Share for Q4
  Eddy Elfenbein, January 26th, 2022 at 9:09 am

  This morning, Abbott Laboratories (ABT) reported Q4 earnings of $1.32 per share. That beat expectations of $1.21. Sales rose 7.2% to $11.5 billion. Of that, Covid testing made up $2.3 billion.

  For the year, Abbott earned $5.21 per share. Abbott has distributed more than 1.4 billion Covid tests since the start of the pandemic.

  “2021 was an outstanding year for Abbott,” said Robert B. Ford, chairman and chief executive officer, Abbott. “We achieved more than 40 percent EPS growth, exceeding the baseline EPS guidance we set at the beginning of last year and, importantly, continued to advance our new product pipeline across the portfolio.”

  For this year, Abbott expects earnings of at least $4.70 per share. That’s based on test sales of $2.5 billion. Wall Street had been expecting $4.78 per share.

• Morning News: January 26, 2022
  Eddy Elfenbein, January 26th, 2022 at 7:00 am

  Russia’s Attempts to Sanction-Proof Its Economy Have Exposed a Weak Spot

  What Happens if Russia Cuts Off Europe’s Natural Gas?

  U.S. to Bolster Europe’s Fuel Supply to Blunt Threat of Russian Cutoff

  Top U.S. Oil States Vie for Carbon Capture Oversight to Speed Up Permits

  I.M.F. Forecasts U.S. & China Slowdowns Will Hold Back Growth

  Market Selloff Is Ultimate Test of What’s Real and What’s Not

  How to Survive When Stocks Behave Badly

  Why the Fed Is Unlikely to Start Raising Rates With a Half-Point Increase

  Goldman, Citi Strategists Say It’s Now Time to Buy Stocks Rout

  EV Battery Maker’s Sales Pitch to the West: We’re Not Chinese

  Commerce Dept. Survey Uncovers ‘Alarming’ Chip Shortages

  Intel Scores Major Win as Court Scraps $1.2 Billion EU Antitrust Fine

  GE’s ‘Simplification’ Is a Work in Progress

  Mark Zuckerberg’s Stablecoin Ambitions Unravel With Diem Sale Talks

  Picasso Heirs Launch NFTs of Unseen Work to Ride Crypto Wave

  McDonald’s Says Will Accept Dogecoin Only If Tesla Takes `Grimacecoin’

  Can Hugo Boss Actually Be Cool?

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