Posts Tagged ‘QCOM’

• CWS Market Review – November 7, 2014
  Eddy Elfenbein, November 7th, 2014 at 7:10 am

  “Experience is the name everyone gives to their mistakes.” – Oscar Wilde

  The stock market rally isn’t showing any signs of slowing down. On Thursday, the S&P rallied to yet another new all-time high. The index finished the day at 2,031.21 for its eleventh daily gain in the last 16 trading sessions. The Dow Jones Industrial Average hit its 21st record close of the year.

  The S&P 500 is now up 9.9% on the year. Of course, nearly every penny of that has come in the last three weeks. On October 15, the S&P 500 was up just 0.76% on the year. I continue to be impressed by the market’s resiliency. On Wednesday, the S&P 500 along with the Dow Industrials, Dow Transports and Dow Utilities all closed at record highs. That hasn’t happened in more than 16 years.

  

  Our Buy List continues to do well, but I have to face the fact that we’re most likely going to underperform the market this year, though not by much. The last time we trailed the market was 2006. Through Thursday, our set-and-forget Buy List is up 6.3% on the year which is about 3.6% points behind the overall market.

  The big news this week was the mid-term elections. The Republicans took over the U.S. Senate and they look to have a generational high in the House. There’s been a lot of “what this means” chatter, most of it is sadly mistaken. I’ll give you my thoughts in a bit. I’ll also highlight the last batch of earnings reports. We had some strong reports from Moog and Cognizant, but Qualcomm was our big dud. I’ll run through the details. I’ll also bring you-up-to-speed on the last economic reports. But first, let’s look at how the shakeup in Washington affects our portfolios.

  What the GOP Wave Means for Investors

  Richard Nixon was once asked what he would do if he weren’t president. Nixon said that he’d probably be down on Wall Street buying stocks. That led one old-time Wall Streeter to say that if Nixon weren’t president he, too, would be buying stocks.

  I live a few blocks from the White House and I’m guessing President Obama didn’t have an enjoyable evening on Tuesday night. The Republicans rolled up some impressive victories. We don’t have all the results in yet, but it appears that the GOP will have 53 seats in the Senate and about 250 seats in the House. The latter figure will be their best showing in 86 years. The Republicans also did quite well at the state and local levels.

  So what does this all mean for the stock market and our portfolios? Honestly, it doesn’t mean much. One of the great myths about the stock market is that it cares about politics. It’s just not so. By politics, I mean the daily back-and-forth between the two major parties. The market is mostly non-partisan although there are some exceptions.

  Let me be clear that the government policy does impact the economy, and by extension, the stock market. But those policy decisions are usually well removed from the standard partisan debate. Of course, what the Federal Reserve does is important, but that’s rarely an election issue. Plus, there’s no reason to think that a change on Capitol Hill will have a great impact on monetary policy.

  Mitch McConnell, the new Senate majority leader, quickly made it clear that there would be no government shutdown; nor would he try to abolish all of Obamacare. The government shutdown is a good example of a partisan effort that riled investors, but even that didn’t last long.

  One issue that may be positive for our Buy List is an attempt by Congress to repeal the medical device tax. This impacts companies like Medtronic, Stryker and CR Bard. Interestingly, all of those stocks did well on Wednesday. This week, I’m also raising some Buy Below prices for our healthcare stocks (details to follow).

  If the American people gave the Radical Marxist Socialist I Hate My Parents party a big majority in Congress, then sure, it would change things. But let’s remember that 89 senators from last session will be returning next year. What we call a big shakeup is when there are 11 new faces. Of course, that’s exactly how the system was designed. The changing passions of the people are supposed to be muted in the halls of government. Contrast that with Wall Street which is nothing but the passion of the people. Or at least, of traders.

  I see too many investors let their political leanings interfere with their investments. That’s a bad move. The stock market has done well under both parties and it’s done poorly under both parties. Trying to build an investing strategy based on politics misses what truly drives the market.

  There are some people who claim that DC gridlock is good for the market because nothing gets done. Perhaps, but that’s a very minor factor. The stock market will continue to be driven by the fundamentals. That’s why I talk so much about earnings. A lousy stock can rally on terrible earnings. Or in the case of Amazon, not much earnings at all. But a company with decent earnings will eventually do well. It just takes some patience.

  Speaking of earnings, let’s look at this earnings season. We’re nearing the end of Q3 earnings season and 80% of companies in the S&P 500 have topped expectations while 61% have topped their sales estimates. Those are good results, but again, these companies are beating reduced estimates.

  Wall Street continues to be buoyed by the Strong Dollar Trade. In Europe, Mario Draghi is increasingly frustrated with the Continent’s sluggish economy. He’s willing to follow more unconventional policies to get the European economy back on its feet. That probably means he won’t mind seeing the euro drift lower. The euro just fell to a two-year low against the dollar. We’re also seeing the same thing in Japan. All of this is propelling the dollar higher.

  

  Investors need to understand the impact of the Strong Dollar Trade because that’s been the dominant theme in the markets. The price of gold seems to be in freefall. (Silver, too.) Energy stocks can’t catch a break. Oil is now below $78 per barrel. That’s down $25 per barrel in four months. Small-caps had a brief outperformance surge last month, but that seems to have passed. I should note that the relative performance of active managers tends to be strongly correlated with the relative performance of the small-cap sectors. Note that the Strong Dollar Trade isn’t necessarily good for the overall market. Rather, it makes its impact felt within the market.

  The economic news was mixed this week. On the plus side, the ISM Manufacturing Index is still holding up well. The ISM for October was 59.0 which is tied for the best in the last three years. The bad news was that Construction Spending dropped 0.4% in September.

  The October jobs report is due out Friday morning. Traditionally, the monthly jobs report has been the most important economic report on the calendar. While it’s still a biggie, I think it’s not quite as important as it used to be. I expect the October report to be a continuation of the trend that’s been in place for several months now, meaning about 200,000 to 250,000 new jobs each month. The ADP report said that the economy created 230,000 private sector jobs last month. Also, the initial claims reports have been quite strong. Now let’s look at some of our recent earnings reports.

  Moog Soars to a New High

  Shortly after I sent out last week’s CWS Market Review, Moog ($MOG-A) reported its fiscal Q4 earnings. The company had a very good quarter. For Q4, Moog earned $1.12 per share which was four cents better than estimates.

  CEO John Scannell said, “Earnings were up and cash flow was very strong. Our financial position allowed us to buy back 4 million shares of stock. In a year with little top-line growth, our employees put in a tremendous effort to deliver on our commitments to both our customers and our investors and I thank them for their hard work and dedication. As we look forward, we are projecting a stronger fiscal ’15 with earnings per share of $4.25, up 21% from fiscal ’14 on sales growth of about 1%.”

  For the fiscal year, Moog earned $3.52 per share which is an increase from $3.26 the year before. Additionally, Moog expects to make $4.25 per share this coming year. The shares have rallied impressively over the past few weeks. I’m raising my Buy Below on Moog to $78 per share.

  Cognizant Rallies 21% in 13 Days

  Our big star this earnings season was Cognizant Technology Solutions ($CTSH). The IT outsourcer raked in 66 cents per share last quarter which was seven cents better than estimates. Quarterly revenues jumped 11.9% to $2.58 billion.

  For Q4, Cognizant sees earnings of at least 63 cents per share. Wall Street had only been expecting 59 cents per share. That would bring full-year earnings to at least $2.57 per share. CTSH also said they expect revenues to range between $2.61 and $2.64 billion. That was above the Street’s forecast of $2.59 billion. When CTSH was hit three months ago, it was due to concerns about their top-line growth.

  “Revenue growth was slightly ahead of our revised forecast and, as expected, non-GAAP operating margins were within our target range of 19-20% as we absorbed the impact of annual wage increases during Q3,” said Karen McLoughlin, Chief Financial Officer. “Our balance sheet remains strong as cash and short term investments increased during the quarter by almost $500 million to $4.6 billion. Later this quarter, we anticipate utilizing $1.7 billion of this cash, in addition to $1 billion of floating rate debt through a syndicated term loan, to fund the previously announced acquisition of TriZetto.”

  

  In the 11 days going into the earnings report, Cognizant rallied 11%. Then it jumped another 8% after the earnings announcement. It’s about time this stock got some love. I’m raising my Buy Below on Cognizant to $55 per share.

  Qualcomm Disappoints

  After IBM, we had been having a great run through earnings season, but Qualcomm ($QCOM) had to trip us up. The chipmaker reported fiscal Q4 earnings of $1.26 per share. That missed consensus by five cents per share. Revenue rose 3% to $6.69 billion which was below consensus estimates of $7.016 billion. The stock was dinged for an 8.6% loss on Thursday.

  Let’s run through some numbers. For this quarter (ending in December), Qualcomm sees EPS ranging between $1.18 and $1.30. Wall Street had been expecting $1.43 per share. They expect sales to range between $6.6 billion and $7.2 billion.

  The big headache for Qualcomm is their conflict with the Chinese government, and there’s not much the company can do. My guess is that the Chinese government will level a big fine on them, and they’ll have to pay it and move on. Qualcomm also disclosed that it’s facing anti-trust investigations by the FTC and by the EU.

  For this current fiscal year (ending September 2015), Qualcomm expects earnings between $5.05 and $5.35 per share, and revenue between $26.8 billion and $28.8 billion. Wall Street had been expecting earnings of $5.58 per share on sales of $28.91 billion.

  Let’s remember that Qualcomm has tons of cash, no debt and strong free cash flow. They’re not going broke anytime soon. Still, this was a painful report. I’m lowering my Buy Below price on Qualcomm to $75 per share.

  DirecTV Is a Buy up to $90 per Share

  DirecTV ($DTV) had another good quarter. The satellite-TV operator earned $1.33 per share for Q3 which was three cents better than estimates. Revenue came in at $8.37 billion which was $60 million better than estimates.

  As I’ve mentioned before, shares of DTV and AT&T are basically joined at the hip. After AT&T’s poor earnings report, its shares fell below $34.90 which is the lower bound of the merger deal.

  Here’s how it works: The merger deal calls for DTV shareholders to get $28.50 in cash, plus 1.905 shares of AT&T if that stock goes below $34.90. In simpler terms, if AT&T hits $34.90 or more, then the merger price for DTV is $95. Recently, AT&T fell as low as $33.10 per share. Fortunately, it’s recovered so that good for DTV. DirecTV remains a good buy up to $90 per share.

  Buy List Updates

  I also want to highlight a few more of our Buy List stocks. CA Technologies ($CA) and eBay ($EBAY) have bounced back impressively since mid-October. Shares of CA are up more than 16% since October 16.

  Bed Bath & Beyond ($BBBY) continues to recover. On Thursday, the stock got as high as $69.98 per share. That’s a seven-month high! This is exactly why I like to stick with strong companies when they hit rough patches. I’m raising my Buy Below on BBBY to $72 per share.

  Also in the retail sector, Ross Stores ($ROST) just touched a new 52-week high. Ross reports earnings later this month. I’m keeping our Buy Below at $83 per share.

  Shares of Microsoft ($MSFT) just closed at a 14-year high. The stock has had an incredible run this year. The stock is now a 30% winner on the year for us. MSFT is a buy up to $50 per share.

  Our healthcare stocks have been doing very well lately. I want to raise a few of our Buy Below prices. This week, I’m raising the Buy Below on Medtronic ($MDT) to $70 per share. I’m lifting CR Bard ($BCR) to $165 per share. I’m raising Stryker ($SYK) to $90 per share. Finally, I’m raising Express Scripts ($ESRX) to $80 per share.

  That’s all for now. Next week should be mostly quiet. Most of the earnings reports are in, but we’ll get a few key economic reports. I’ll be most interested to see the Retail Sales report which comes out on Monday. With gas prices down, that gives consumers more money which they tend to spend quickly. This will also give us a hint of how optimistic shoppers are going into the all-important holiday shopping season. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• CWS Market Review – August 8, 2014
  Eddy Elfenbein, August 8th, 2014 at 7:26 am

  “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch

  After a very subdued June and July, the stock market has suddenly gotten a lot more interesting. The S&P 500 had gone 62 trading days in a row without a daily move, up or down, of more than 1%. That was the longest streak of its kind in nearly 20 years. Then we had three such days within two weeks, and we came very close to a fourth on Tuesday.

  On Thursday, the S&P 500 fell to a two-month low of 1,909.57. In an apparent homage to Black Monday, the index reached its closing high of 1,987.98 on July 24. We’re now down 3.94% from that mark. Last week, the S&P 500 broke below its 50-day moving average last week, and we’re only 2.6% above the 200-DMA. It’s been 21 months since the S&P 500 last closed below its 200-DMA.

  

  There are lots of reasons for the market’s new-found case of anxiety: Ebola, Putin, Hamas, ISIS. From its July low to its August high, the Volatility Index ($VIX) soared 66%. Gold has been creeping up as well. Despite the increase in worrying, the fundamentals of the economy and stock market are sound.

  Last Friday, for example, we had another good jobs report: the U.S. economy created 209,000 net new jobs in July. This is the first time in 17 years that the economy has created more than 200,000 jobs for six months in a row, and I think we can expect a seventh. On Thursday, the Labor Department reported that the four-week moving average of jobless claims fell to an eight-year low. We also learned last week that the ISM Manufacturing Index jumped to 57.1, which is its highest level in more than three years. There are lots of problems in the world, but an imminent recession in the U.S. isn’t one of them.

  We’re nearing the end of second-quarter earnings season, and it’s mostly been a good one. Of the S&P 500 companies that have reported so far, 75% have beaten their earnings expectations, while 65% have beaten on sales. For Q2, the S&P 500 is on track to report earnings growth of 9.4% and sales growth of 4.2%. Despite all the loose talk of a new bubble, valuations haven’t changed much in the past year.

  Our Buy List nearly made it through earnings season without a dud, but Cognizant Technology ($CTSH) had to ruin it for us. On Wednesday, the IT outsourcer beat estimates by four cents per share, but it lowered its sales guidance. Traders didn’t like that at all, and by the closing bell, CTSH lost 12.6%. I’ll have a complete rundown in just a bit (Spoiler Alert: I’m still a Cognizant fan.) I also want to review some Buy List members who may not make it onto next year’s list. We’re still a few months away from making our selections, but I want to share some thoughts with you. But first, let’s look at this newly volatile market.

  What Are the Side Effects of QE?

  Despite the big loss from Cognizant, our Buy List has been outperforming the overall stock market lately. Since we focus on high-quality stocks, we usually outperform the market during “worrying” stretches like we’ve seen recently.

  Through Thursday, our Buy List is trailing the S&P 500 for the year (3.31% for the S&P 500 to -0.32% for us, not including dividends). Part of our underperformance this year is due to the rally being overfed by a lot of low-quality, crappy stocks. Even Janet Yellen recently said, while defending the overall market’s valuation, that “valuation metrics in some sectors do appear substantially stretched, particularly those for smaller firms in the social media and biotechnology industries.”

  She’s absolutely right. Look at a stock like Amazon.com ($AMZN) which is down more than 23% from its high, and it’s still trading at 150 times next year’s earnings (the company will probably lose money this year). Last month, I mentioned the outrageous case of Cynk Technology ($CYNK). The shares are down 97% since then.

  This is a paradox of the market. On one hand, we want to see lower-quality names do well so capital can reach marginal businesses (and borrowers). But we don’t want to see the trend go overboard and cause investors to leave the good stuff behind. That’s partly what happened during the Credit Bubble. I remember how our Buy List trailed the market in 2006 and kept slightly ahead in 2007. But once the Financial Crisis took hold and all those garbage stocks got called out, our Buy List fell far less than the market. We recovered much more quickly as well. Why? Because we never bought the junk, so when the House of Cards tumbled over, our relative performance was outstanding.

  This leads me to one of the big questions on the minds of professional investors: what are the side effects of the Federal Reserve’s unprecedented policies? The Fed has kept short-term interest rates near 0% for a long time. Naturally, any Fed policy will distort the market. I think, too, that some investors view this phenomenon in overly sinister tones, but I tend to view it rather dispassionately. The central bank is powerful, and it’s trying to entice investors to be more confident. That’s not easy to do, and 0% interest rates is a start.

  One side effect is that investors grew too fond of junk bonds. Since the start of July, junk bonds have taken a sharp turn for the worse, and that’s probably a healthy sign. This is an important sector for investors to watch, even if you’re not invested there, because it tells us how the marginal borrower is doing. When junk bonds perform as well as other bonds, or even outperform them, that’s usually an optimistic sign for the economy. It hints that business is going well, and will probably continue to improve. But again, it shouldn’t be used to fund shady operations.

  I’m also concerned that low rates have made share repurchases too easy to resist. I have no problem with companies borrowing money to fund their operations. But I’m concerned that easy credit has allowed too many companies to boost their EPS, not by growing their earnings but by reducing their share count.

  This has also been a lousy year for small-cap stocks, and I can’t help but think it’s related to the Fed’s winding down of QE. Not that smaller companies benefit from the bond buying, but they prosper as the risks have been partly covered by the Fed. Why not, then, go for more aggressive names? But since July 3, the small-cap Russell 2000 is down 7.3%, nearly twice as much as the S&P 500. Investors want more safety, and they’re willing to pay for it.

  What does this mean for us? Investors should focus on higher-quality names, especially dividend payers. Some Buy List stocks I like right now include Ford Motor ($F), which is especially good below $17 per share. Oracle ($ORCL) is a bargain below $40 per share. Ross Stores ($ROST) can’t seem to catch a break, but if you’re able to get it under $65, you got a good deal. Earnings are due out soon. Now let’s take a look at our big flop of this earnings season.

  Cognizant Technology Plunges after Earnings

  On Wednesday, shares of Cognizant Technology Solutions ($CTSH) got nailed for a 12.6% loss. At one point, the shares were down 17% on the day. The interesting part is that their Q2 earnings were quite good. Cognizant earned 66 cents per share, which topped Wall Street’s consensus by four cents per share, and quarterly revenues rose by 16.5% to $2.52 billion.

  What caused traders so much grief wasn’t the earnings; it was Cognizant’s guidance. Actually, it wasn’t the earnings guidance—that was the same. It was their sales guidance that caused so much grief.

  For Q3, Cognizant now expects earnings of at least 63 cents per share. Wall Street had been expecting 65 cents per share. But the company is keeping their full-year guidance at $2.54 per share, which is the same as it’s been. For Q3 sales, Cognizant now expects a range between $2.55 billion and $2.58 billion. Wall Street had been expecting $2.66 billion. For full-year sales, CTSH lowered their growth rate from 16.5% to 14%.

  Cognizant’s CEO Francisco D’Souza said, “Due to weakness at certain clients and longer-than-anticipated sales cycles for certain large integrated deals, we are adopting a more conservative stance for the remainder of the year and revising our 2014 revenue guidance to growth of at least 14% over the prior year, while maintaining our full-year non-GAAP EPS guidance of $2.54.”

  I can hardly say that I’m worried about a company that’s beating earnings and growing its top line by 14%. After Wednesday’s damage, CTSH is going for about 17.5 times this year’s estimate, which is a very good price. To reflect the selloff, I’m lowering my Buy Below on Cognizant to $48 per share.

  Potential Buy List Deletions

  According to the rules of our Buy List, the 20 stocks are locked and sealed for the entire year. No matter how much I want to make a move, I can’t touch any of the stocks until the end of the year. As usual, I only add and delete five stocks.

  Now that we’re in the middle of summer, I want to share some of my preliminary thoughts on which stocks may not be around next year. Please understand that these are early indications, and I may change my mind before December. This also doesn’t mean that I don’t like these stocks at the moment. They’re simply on the short list to be cut next year. Ideally, when I make the change at the end of the year, the decisions shouldn’t come as a big surprise to regular readers.

  At the top of the list is DirecTV ($DTV). It’s here not because it’s done poorly, but because it’s done very well for us. Thanks to the deal with AT&T, it’s not clear how much longer DTV will go on as an independent company. I can’t make any predictions on the AT&T deal falling though, or when it might be completed, but I’d prefer to congratulate DTV, and move on to a new stock. DTV has been a big winner for us.

  Unfortunately, CA Technologies ($CA) has been much weaker than I expected. Quarterly revenues have dropped for nine quarters in a row, and will be probably do so again. We’ve been patient with CA, but the company’s problems run deep. I like the rich dividend, but frankly, not much else.

  Moog ($MOG-A) dropped sharply in February, but recovered very nicely this spring. The recent guidance, however, was not what I was expecting.

  I haven’t given up on McDonald’s ($MCD). The stock is cheap, but the problems for the burger giant are bigger than I expected. I think management realizes this, but turning around a company of this size won’t be easy. I still like MCD, but I want to see signs of improvement.

  Medtronic ($MDT) is a long-time favorite of mine, and the stock has done well for us. My concern is that the Covidien deal is a major undertaking, and the new entity will be quite different from the old Medtronic. I understand why Medtronic wants to do this deal, and it probably makes sense, but it may not be the company we want on our Buy List.

  All 16 of the Buy List stocks with quarters ending in June have new reported earnings. There are only two Buy List stocks that have quarters ending in July, Medtronic ($MDT) and Ross Stores ($ROST). Medtronic is due to report on August 19, and Ross Stores will follow two days later. I’ll have more to say about both stocks next week. Before I go, I also want to lower my Buy Below on Qualcomm to $79 per share. The stock has continued to drift lower after the earnings report. I like QCOM a lot and expect it to recover.

  That’s all for now. Next week will be a fairly slow week for economic reports. I’ll be curious to see Wednesday’s retail sales report. Consumer spending hasn’t been as strong as I’d like to see. On Friday, we’ll get the report on Industrial Production. The last three reports haven’t been that great. I’d like to see some improvement here. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• CWS Market Review – July 25, 2014
  Eddy Elfenbein, July 25th, 2014 at 7:05 am

  “People always call it luck when you’ve acted more sensibly than they have.”
  – Anne Tyler

  Like the honey badger, this stock market just doesn’t care. Was it going to be tripped up by Ukraine? Nope. Gaza? Nope. Fed tapering? Not a chance. The stock market keeps chugging higher. On Thursday, the S&P 500 finished the day at 1,987.98 for its 27th record close this year. Not that long ago, 2,000 for the S&P 500 was a distant hope. Now, it looks like we’ll hit it any day now.

  This week has been all about earnings, earnings and more earnings. So far, the earnings have been pretty good. According to the latest numbers from Bloomberg, 77% of the S&P 500 companies that have reported so far have topped Wall Street’s expectations. Also, 64% have beaten their sales expectations. The S&P 500 is currently on track to deliver Q2 earnings growth of 6.2% and sales growth of 3.3%.

  

  Our Buy List has been very busy this week; we had seven earnings reports. Thanks to good earnings, Ford Motor jumped out to a new 52-week high. Even boring CA Technologies rallied 4.5% after a strong earnings report. I’ll review all of our recent earnings in a just a moment. I’ll also highlight four Buy List earnings reports coming next week. I should mention that weekly jobless claims just dropped to an eight-year low, which bodes well for next week’s jobs report. But first, let’s take a closer look at our mass of earnings reports.

  Surveying the Earnings Parade

  We have a lot to go through, so let’s start with Tuesday’s earnings report from McDonald’s and Microsoft. Unfortunately, the McDonald’s ($MCD) news wasn’t very good. The fast-food joint earned $1.40 for Q2, which was four cents shy of Wall Street’s consensus. In the U.S., same-store sales dropped by 1.5%.

  It’s no secret that MCD has made a lot of missteps. This is particularly painful when we see the outstanding results from Chipotle ($CMG), a company MCD used to own. Simply put, McDonald’s ($MCD) is not in a good way right now. As an investor, I like when companies hit rough patches since there’s a good opportunity to find a bargain. The catch, of course, is that the company has to right itself.

  I think the folks at MCD understand the position they’re in, although I think the reforms may take a while to impact the business. For now, MCD is indeed a cheap stock. The shares got hit by a bunch of downgrades after the earnings report. Going by Thursday’s close, MCD yields 3.4%. Not many blue chips pay that well. The restaurant said that it’s planning to reform itself over the next 18 months. They’d better get cracking. I’m lowering my Buy Below on McDonald’s to $101 per share.

  Except for Nokia, Microsoft Is Looking Good

  Microsoft’s ($MSFT) earnings report was a bit confusing, but after giving it a read, traders decided they like it. After the bell on Tuesday, the software giant reported fiscal Q4 earnings of 55 cents per share. That was five cents below consensus. The shares quickly plunged in the after-hours market.

  Then more details came out, and it turned out that the results weren’t that bad at all. Microsoft’s quarterly revenue rose a healthy 18% to $23.4 billion. The company also pleased investors last week when they announced big job cuts. It’s not that the market is happy about folks losing their jobs, but they’re pleased to see that MSFT is working to streamline operations. Most of those jobs are from Nokia.

  The big problem for Microsoft is that Nokia’s handset business is a money loser. The division could turn into a winner in the long term, but the outlook is rather iffy at the moment. The good news for Microsoft is that their cloud business is going very well. Microsoft remains a good buy up to $48 per share.

  Earnings from CA Technologies and Qualcomm

  On Wednesday, two of our tech stocks reported results, CA Technologies and Qualcomm. I have to admit that I’ve become quite frustrated with CA Technologies ($CA). However, the company earned itself a temporary respite from my doghouse by reporting decent results. For their fiscal Q1, CA earned 65 cents per share, which was five cents better than estimates. Quarterly revenue dropped 2% to $1.069 billion. This was the ninth quarter in a row of falling revenue.

  But the important news was guidance. For fiscal 2015, which ends next March, CA sees revenues falling by 1% to 2%. They also said they expect to see earnings range between $2.42 and $2.49 per share. Apparently this relieved a lot of investors. The shares jumped 4.5% on Thursday to close at $29.64. Even with that rally, we’re still down nearly 12% on the year with CA. The big positive continues to be the 25-cent quarterly dividend. The stock yield now works out to 3.4%. CA remains a buy up to $31 per share.

  Technically, Qualcomm ($QCOM) reported amazing earnings for their fiscal third quarter. The company earned $1.44 per share, which crushed estimates by 22 cents per share. In April, they said they were expecting Q3 earnings to range between $1.15 and $1.25 per share. Well, I guess they beat that!

  The good news and bad news for Qualcomm is China. The country continues to be a great customer, but several companies there “are not fully complying with their contractual obligations.” As a result, the company had weak guidance for the current quarter. For fiscal Q4, Qualcomm sees earnings ranging between $1.20 and $1.35, which is below Wall Street’s consensus of $1.39 per share.

  Thanks to the blow-out earnings Q3 report, Qualcomm raised their full-year EPS range to $5.21 – $5.36, from the earlier range of $5.05 – $5.25. Note that QCOM’s earnings beat was larger than the lower guidance. Nevertheless, traders didn’t like the China news and the shares fell by more than 6% on Thursday. Qualcomm is a buy up to $83 per share.

  Ford Motor Is a Buy up to $19 per Share

  On Thursday, Ford Motor ($F) reported another strong quarter. This is their first one under their new CEO, Mark Fields. I really like what I’m seeing at Ford. Alan Mulally and his team deserve a lot of credit. The company made 40 cents per share for Q2, which beat consensus by four cents per share. This was Ford’s 20th profitable quarter in a row.

  I was also pleased to see Ford stand by its forecast for this year of $7 billion to $8 billion in pre-tax profit. The really good news is that Ford managed to eke out a teeny tiny profit in Europe of $14 million. Of course, $14 million may sound like a lot, but in ROE terms, to an outfit like Ford, it’s peanuts. Still, no one was expecting they’d be at peanuts in Europe this early. Ford is clearly moving in the right direction.

  

  This is a key moment for Ford. They’re introducing a bunch of new vehicles, and that requires a lot of up-front money. Overall, the company is holding the line on costs. One weak spot was South America, where they lost $300 million. Ford earned $2.4 billion in operating profit in North America. That’s a company record. The new Mustang and aluminum F-150 are due later this year, and that could give a nice boost to sales.

  On Thursday, the shares jumped as high as $18.12, which is a three-year high (see above). Ford is a solid buy up to $19 per share.

  CR Bard Beats Low-Balled Expectations

  In April, CR Bard ($BCR) told us to expect Q2 earnings to range between $1.98 and $2.02 per share. Last week, I said I thought they were low-balling us, and sure enough, on Thursday, Bard reported Q2 earnings of $2.06 per share.

  I know companies like to lower the bar on earnings and then try to impress us by topping phony expectations. I don’t blame Bard for playing the game, but I’ll let you know it when I see it.

  Overall, they had a decent quarter. Quarterly sales rose 9% to $827.1 million. Bard’s chairman and CEO, Timothy M. Ring, said, “Once again we exceeded our expectations for revenue growth this quarter. We continue to believe that executing our investment plan will accelerate the sustainable growth rate of the overall portfolio and put us in a position to provide revenue growth in the mid-to-high single digits with attractive returns for shareholders.”

  Now let’s turn to guidance. For Q3, Bard expects earnings to range between $2.07 and $2.11 per share. They shouldn’t have trouble hitting that. Bard also increased their full-year range by five cents at each end. The new range is $8.25 to $8.35 per share.

  If you recall, Bard raised their quarterly dividend last month from 21 to 22 cents per share. They’ve raised their dividend every year since 1972. I rate CR Bard as a buy up to $151 per share.

  Upcoming Buy List Earnings

  We have four earnings reports coming next week. Three of our stocks, AFLAC, Express Scripts and Fiserv, report on Tuesday, July 29. Then DirecTV reports on Thursday, July 31. (Also, earnings from Moog are due out later today. Be sure to check the blog for the latest.)

  Shares of AFLAC ($AFL) have improved recently. The supplemental-insurance company has worked to diversify its investment portfolio. The yen/dollar ratio has been fairly stable since February. The company has performed well, but foreign exchange has taken a big chunk out of earnings. Three months ago, AFLAC said to expect Q2 operating earnings between $1.54 and $1.68 per share. Their full-year guidance was $6.06 to $6.40 per share. Both forecasts are based on a yen/dollar exchange rate between 100 and 105. AFLAC is a buy up to $68 per share.

  In April, Express Scripts ($ESRX) beat earnings by two cents per share, but they lowered their full-year guidance to $4.82 to $4.94. That was a decrease of six cents per share at each end. Express Scripts remains a buy up to $74 per share. That’s a high Buy Below price. I may lower it after the earnings report.

  Fiserv ($FISV) hit another 52-week high this week. This stock has climbed almost non-stop for the last three years. Wall Street expects Q2 earnings of 80 cents per share. Fiserv is a buy up to $64 per share. I may have to raise that soon.

  DirecTV ($DTV) is still our big winner on the year, with a 25% gain. There’s not much to say about DTV since the $95 buyout deal with AT&T. DTV’s volatility has nearly evaporated, and the stock is trading like a zero-coupon bond that matures at $95 at some point. The stock is now almost exactly 10% below its merger price.

  That’s all for now. More earnings to come next week. Wall Street will also have an intense 48 hours between Wednesday and Friday. On Wednesday morning, the government will release its first estimate of Q2 GDP. The Fed also meets, and later that day, the FOMC will release its latest policy statement. Friday is Jobs Day, and we’ll also get a look at the ISM report for July. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• CWS Market Review – April 25, 2014
  Eddy Elfenbein, April 25th, 2014 at 7:10 am

  “Forecasts may tell you a great deal about the forecaster;
  they tell you nothing about the future.” – Warren Buffett

  We’re now in the heart of first-quarter earnings season. For the overall market, the earnings reports have been pretty good, but we have to remember that companies are beating much-reduced expectations.

  Analysts currently project Q1 earnings growth of 0.7% and sales growth of 2.6%. Only a month ago, the consensus was for earnings growth of 1.9% and sales growth of 3%. So far, 40% of companies in the S&P 500 have reported earnings, and an impressive 76% of them have topped earnings expectations, while 53% have beaten sales expectations. That’s not bad, especially considering how much havoc was wreaked in Q1 by the ugly winter weather.

  

  The good news is that the outlook on Wall Street is clearly improving. Thanks to brighter earnings news, the stock market has recovered from its slump earlier this month. The recent six-day rally was the longest since September. On Thursday, the S&P 500 got within 0.7% of its all-time high, and Wall Street really took notice when Apple, the most valuable company in the world, announced strong earnings and an unusual 7-for-1 stock split. (I think they’re bucking to get in the Dow Jones.)

  In this week’s CWS Market Review, I’ll review the recent earnings reports from our Buy List stocks. Microsoft, Qualcomm and CR Bard beat expectations, but Stryker and McDonald’s came in below forecasts. I’ll discuss them in greater detail in a bit, and I have some new Buy Below prices for you. I’ll also highlight more Buy List earnings reports coming our way next week, which include favorites like AFLAC and eBay. But first, let’s take a look at some recent economic news. (Trust me, it’s good.)

  The U.S. Economy Is Slowly Improving

  The Federal Reserve meets again next week, and another taper decision is about as close as you can get to being a sure thing. While some traders may not like the idea of less bond-buying by the Fed, these taperings are a reflection of good economic news.

  Next Friday is a very big day. The Labor Department will release the April jobs report, and there’s a very good chance it will be a strong one. I think the April nonfarm payrolls will top 250,000 jobs which would make it one of best jobs reports in years.

  Why am I so confident? Let’s run down some of the good economic news:

  On Thursday, the Labor Department reported that initial jobless claims rose to 329,000 last week. Despite the rise, those numbers have been very low recently. The four-week moving average of new claims is down to 316,750, which is near the lowest levels of the past seven years. The jobs market is clearly picking up, and that means more consumers.

  Also on Thursday, the Commerce Department reported that orders for durable goods rose by 2.6% in March, and that comes after a 2.1% increase in February. Economists like to look at the demand for “core” capital goods, and that was up 2.2% last month. That was the biggest increase since November, and it’s more evidence that the economy is ramping up from the slow start at the beginning of the year. Excluding transportation, durable-goods orders rose by 2%. That’s the biggest increase in more than a year. This is important because these are “big ticket” items.

  Here’s an interesting economic indicator. Property tax collections are rising at their fastest clip in years. The real-estate bust hit a lot of local governments hard, but during the last three months of 2013, property taxes collected nationally rose to $182.8 billion, an all-time high. For all of 2013, property-tax collections increased by 3%, which was the fastest pace since 2009.

  On Wednesday, we learned that new-home sales plunged 14.5% last month. That probably reflects some lingering effects from the cold winter, but there are many positives impacting the housing market. The number of delinquent loans continues to decline. Also, there are fewer homes with negative equity, and distressed sales are down. These signs are important because housing often has a big impact on the direction of the economy.

  Since the recession, companies have done a good job of cutting costs. That’s good, and profit margins have grown, but you can’t do that forever. At some point, you need to get more shoppers in the doors. Companies have been stockpiling cash, and only now are they beginning to spend it. This week, we learned that Apple reduced its gigantic cash horde. I think 2014 will likely be the best year for economic growth since the recession. The IMF recently said in a report that the U.S. economy is poised to lead global growth this year and next. Now let’s look at some our recent Buy List earnings.

  McDonald’s Disappoints, but It’s a Work in Progress

  Before the opening bell on Tuesday, we got a disappointing earnings report from McDonald’s ($MCD). The fast-food joint earned $1.21 per share for Q1, which was three cents below estimates. Despite the miss, the stock was mostly unchanged. Perhaps that reflects that market’s sour mood for MCD.

  Frankly, McDonald’s is in a difficult position at the moment. The restaurant has made several missteps lately, and we can see that in this earnings report. Sales rose 1.4%, but not as fast as costs, which rose 2.3% (this was due to higher beef prices). Profits dropped 5.2%.

  The situation at McDonald’s is very similar to that at IBM. They’re both iconic brands who have slipped in recent years. The fundamental business is good, but they desperately need to revive themselves. This is what Ford did several years ago, and Microsoft did more recently.

  My take: The outlook for McDonald’s is brighter than at IBM because management realizes the task at hand. The issues at MCD can be resolved, and I think it can be done rather cheaply. Their business in Europe isn’t that bad; it’s in the U.S. that the problems are. Their menu is far too complicated. This will take time to fix. McDonald’s is a good buy up to $102 per share.

  CR Bard Beats by Seven Cents per Share

  After the closing bell on Tuesday, CR Bard ($BCR) reported Q1 earnings of $1.91 per share. That beat estimates by seven cents per share. Previously, Bard had told us to expect earnings between $1.83 and $1.87 per share, so this is an impressive beat. Sales rose 8% to $799.3 million.

  Timothy M. Ring, Bard’s CEO, said, “The financial results in the first quarter reflect a positive start to the year, as we exceeded our expectations for both sales and earnings per share. The organization is focused on executing our strategic investment plan with the objective of improving the long-term growth profile of the business.”

  On the conference call, Bard said to expect Q2 earnings to range between $1.98 and $2.02 per share. I think they’re low-balling us. That’s well below the Street’s consensus of $2.09 per share. On the plus side, Bard reiterated their full-year guidance of $8.20 to $8.30 per share.

  The shares got dinged for a 3.2% loss on Wednesday. Despite the lower guidance, I still like this stock. Bard has increased its dividend every year since 1972, and we can expect another increase in a few months. Due to the recent drop, I’m lowering my Buy Below on CR Bard to $145 per share.

  Qualcomm Beat and Raised Guidance

  Qualcomm ($QCOM) came through for us. On Wednesday, the chip maker said they earned $1.31 per share for their fiscal Q2, which was nine cents better than Wall Street’s consensus. Previously, the company had pegged Q1 earnings to a range of $1.15 to $1.25 per share, so they’re beating their own expectations. Qualcomm also raised their full-year guidance range to $5.05 to $5.25 per share. That’s an increase of five cents at both ends.

  Despite the good earnings, the revenue numbers were pretty weak. QCOM posted its smallest top line increase since 2010. Revenues rose 4% to $6.37 billion, which was $100 million below forecasts. What’s happening is that China Mobile is planning to launch a faster network with 4G, so that’s delaying QCOM’s revenue at the moment.

  Qualcomm also disclosed that it received a Wells notice from the SEC, which is not a formal investigation. The notice recommends that Qualcomm take enforcement action in relation to bribery charges. For its part, Qualcomm maintains that it what it did wasn’t a violation. No matter, the shares dropped 3.5% on Thursday. Don’t be scared, Qualcomm remains a very good buy, but I’m lowering my Buy Below to $83 per share.

  Stryker Missed but Stood by Their Full-Year Guidance

  On Wednesday afternoon, Stryker ($SYK) delivered a rare earnings miss. For Q1, the medical-device company earned $1.06 per share, which was two cents below estimates. Quarterly revenue rose 5.3% to $2.31 billion.

  More importantly, Stryker reiterated their full-year earnings guidance of $4.75 to $4.90 per share, which means it’s going for about 16 times this year’s earnings. That’s not a bad valuation. The stock initially gapped up on Thursday morning. At one point, SYK hit $80.78 per share, but the stock later pulled back and finished the day down by 0.5%. I like Stryker a lot, but I’m lowering my Buy Below to $85 per share.

  Remember, these Buy Below prices aren’t price targets. They’re guidance for current entry.

  Microsoft Beats by Five Cents per Share

  On Thursday, Microsoft ($MSFT) reported fiscal-Q3 earnings of 63 cents per share, which beat estimates by five cents. The software giant did surprisingly well in the cloud space. Microsoft’s CEO Satya Nadella said the earnings “demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world.”

  The turnaround at Microsoft still has a ways to go, but they’re headed in the right direction. It’s odd for me to see Nadella get so much good press when Ballmer only got negative press.

  Today is an important milestone for Microsoft; they’ll complete their $7.2 billion acquisition of Nokia’s handset business. That should help Microsoft in the U.S. mobile market. On Thursday, the shares traded higher in the after-hours market, and the stock is close to hitting another 52-week high. For now, I’m keeping my Buy Below at $43 per share. Microsoft is clearly hitting its stride.

  I’m writing this report early Friday, and both Ford ($F) and Moog ($MOG-A) are due to report earnings later today. Be sure to check the blog for updates.

  Four Earnings Reports for Next Week

  Next week, we have four earnings report due on Tuesday, April 29: AFLAC, eBay, Express Scripts and Fiserv.

  AFLAC ($AFL) had a very good year business-wise in 2013. Unfortunately, the weak yen took a big bite out of their operating earnings. The good news is that the yen has largely stabilized in recent months between 100 and 105 to the dollar.

  AFLAC said that if the yen were to stay at 97.54 to the dollar (its average for last year), then its earnings should range between $6.31 and $6.49 per share for 2014. So the stock is going for less than 10 times this year’s estimate. Currently, Wall Street expects Q1 operating earnings of $1.58 per share, which is 11 cents less than what they earned in last year’s Q1. AFLAC remains a good buy up to $68 per share.

  eBay ($EBAY) finally ended its silly feud with Carl Icahn. The investing legend wanted them to eBay off PayPal, which they’re adamantly opposed to. The good thing about eBay is that the poor winter weather had little impact on their business. In fact, it probably helped them. The current earnings consensus is for 67 cents per share. That’s almost certainly too low. eBay remains a very good buy up to $62 per share.

  Express Scripts ($ESRX) started out the year great for us, but it’s pulled back over the last few weeks. The stock probably got lumped in during the growth-stock rotation. Nevertheless, their business outlook remains very good. For all of 2014, the pharmacy-benefits manager sees earnings ranging between $4.88 and $5 per share. Express Scripts said it is “targeting annual earnings per share growth of 10 per cent to 20 per cent for the next several years.” Not many companies can confidently say that. For Q1, Wall Street expects earnings of $1.01 per share. I’m keeping my Buy Below on ESRX at $83, which is a bit high.

  Fiserv ($FISV) is one of those rare stocks that churns out earnings consistently. Last year was their 28th year in a row of double-digit adjusted earnings growth. For 2014, Fiserv sees EPS ranging between $3.28 and $3.37. Wall Street expects Q1 earnings of 74 cents per share. Fiserv is a good buy up to $60 per share.

  That’s all for now. Next week will be a busy one. Not only do we have more earnings reports, but the Federal Reserve meets on Tuesday and Wednesday. Expect another taper. Also on Wednesday, we’ll get our first look at Q1 GDP. My take: it won’t be a good number, but Q2 will be much better. The April ISM comes out on Thursday, and on Friday, we’ll get the big jobs report. I think this report could be a really good one. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• CWS Market Review – April 4, 2014
  Eddy Elfenbein, April 4th, 2014 at 6:58 am

  “There will be growth in the spring.” – Chauncey Gardiner

  T.S. Eliot famously called April “the cruelest month,” but it’s not so bad for the stock market (Eliot himself was a Lloyd’s Bank employee). Since 1950, the S&P 500 has rallied 44 times in April while losing ground 20 times, and recent Aprils have been especially good. In the last eight years, the S&P 500 has averaged over 3% in April.

  This April has gotten off to a good start as well. On Thursday, the S&P 500 got as high as 1,893.80, which is yet another all-time intra-day high. I’m not much of a fan of the Dow Jones, but I should note that until this week, the Dow 30 had failed to break its high from December 31. Some bears claimed that this lack of “confirmation” was a bad omen. Well, that mark fell as well. On Thursday, the Dow broke 16,600 for the first time ever.

  

  What’s the cause for the recent rally? That’s hard to say exactly, but I suspect that the cooling-off of tensions in Eastern Europe has helped a lot. Investors were also buoyed by some remarks made by Fed Chair Janet Yellen. We also got some decent economic news this week, and there seems to be some optimism for Friday’s jobs report (as usual, I’m writing this before the report comes out.)

  But the next big event for investors is the Q1 earnings season, which starts next week. We already know that crummy weather held back consumers this winter, but it will be interesting to hear what kind of guidance companies have for the spring. In this week’s CWS Market Review, I’ll preview this earnings season. I’ll also focus on two Buy List earnings reports for next week: Bed Bath & Beyond and Wells Fargo. I also have several new Buy Below prices for you. But first, I want to take a look at a question that keeps popping up on Wall Street.

  Are We in Another Bubble?

  There’s been a lot of loose talk lately about how today is similar to the Great Millennium Bubble. A few days ago, the New York Times ran a story titled “In Some Ways, It’s Looking Like 1999 in the Stock Market.”

  Oh, please. This is nonsense. Sure, stock prices have rallied, and yes, valuations are higher, but c’mon, we’re nowhere close to the kind of crazy numbers we saw in the late 90s. Back then, all you needed was a dot-com address, a sock puppet and some clever ads, and presto, investors would throw billions of dollars your way.

  Actually, your company didn’t even need to be that fancy. I’ll give you a good example. General Electric ($GE) is about the bluest blue chip you can find. The stock is currently going for $26.23 per share. That’s half of where it was 14 years ago, yet the company is expected to earn $1.70 per share this year. Compare that to 2000, when GE’s bottom line was $1.27 per share. So profits are up 34% in 14 years (not so good), while the stock price is down by 50%. GE’s Price/Earnings Ratio has dropped from 42 to 15. My point is that people have forgotten what a real bubble looks like.

  To be sure, there are areas of the market looking bubbly. Actually, to be more specific, it’s areas outside the market that look troublesome. Tech companies are paying some hefty prices for start-ups with little or no revenue.

  Last year, Yahoo shelled out $1.1 billion to buy Tumblr. The company has so little revenue that Yahoo isn’t even required to list it in its financial statements. In business jargon, that’s what we like to call “not good.” A few weeks ago, Facebook paid a massive amount, $19 billion, for WhatsApp, a company with 55 employees. I freely admit that I can’t judge the value of enterprise like that, but there seems to be a fear in Silicon Valley of being left behind in this week’s app of the century, so these prices are getting carried away.

  But that’s not the kind of investing we’ve been doing, and our stocks haven’t done many mega-deals lately (though Oracle did a few years ago). My advice is to ignore all the silly bubble talk, and let’s focus on what the numbers say.

  Breaking down Q1 Earnings Season

  Now let’s take at a look at some current numbers and the outlook for Q1 earnings. Last year, the S&P 500 earned $107.30 (that’s the index-adjusted number; to convert to actual dollar amounts, multiple by 8.9 billion). Currently, Wall Street expects the index make $120.04 for this year and $137.20 for 2015. In my opinion, both numbers are too high, but I’ll get to that in a bit.

  For Q1, Wall Street currently expects earnings of $27.60. Those estimates have drifted lower over the past several months. One year ago, the Street had been expecting over $29 for Q1. As a general rule, earnings estimates start high and gradually fall as earnings season gets closer, so don’t be alarmed about the reduced estimates. By the time earnings season arrives, estimates are often too low. This is part of a game the Street likes to play. There’s nothing Wall Street likes better than beating expectations, so companies know how to play the expectations game. The current Q1 estimate of $27.60 works out to an increase of 7.1% over last year’s Q1. That sounds about right. I think we’ll probably be at about $28 by the time all the reports have come in.

  I also want to touch on an important and often-overlooked point, which is dividends. Payouts have been growing impressively for the last few quarters. Dividends for the S&P 500 grew by 15.1% for Q1. Technically, I should say “dividends-per-share,” because the stock market has been helped by a reduced share count, thanks to stock buybacks.

  Over the last three years, dividends are up by 55%. The S&P 500 paid out $34.99 in dividends last year, and I think it will pay out $40 for this year. Going by Thursday’s close, that gives the index a yield of 2.12%. That’s not bad at all, especially in an environment where interest rates are near 0%, and we know they’ll be stuck on the ground for another year.

  Instead of the $120 that Wall Street expects in earnings from the S&P 500, I think $115 is a more reasonable estimate. (I don’t know if it will be more accurate, but I think it’s a safer assumption.) That gives the S&P 500 a forward P/E Ratio of 16.4, which is quite reasonable. Historically, more bull markets are upended by deteriorating fundamentals than by excessive valuations. How far the markets fall, however, is usually determined by valuations. As long as profits continue to grow, the stock market is a good place to be.

  Is the U.S. Stock Market Rigged?

  This week, Wall Street has been buzzing about Sunday’s 60 Minutes segment with Michael Lewis. He was on to discuss his new book, “Flash Boys,” which covers High Frequency Trading. In the interview, Lewis said that the U.S. stock market is “rigged.” I was disappointed to hear him say that. Lewis is a gifted writer, but I’m afraid he drew an overly simplistic narrative for a complicated issue.

  Let me put your fears to rest. The U.S. stock market is not rigged. Individual investors have no reason to fear that a bunch of super computers are ripping them off. There are serious concerns about HFT, but saying that the market is rigged deflects the debate in a pointless direction.

  I wanted cover this topic because it’s made so much news on Wall Street this week, including an acrimonious debate on CNBC, and I’m afraid Lewis’s interview rattled investors. The issue with HFT is an issue we often see: technology is changing the way we do business. Some of the changes are good, and some are bad. Instead of having floor traders, guys who make funny hand signals at each other, the modern market is governed by very fast computers. The HFT guys provide liquidity, and they get paid for it. On balance, that’s much better than the system we used to have.

  I have concerns about HFT causing more numerous and more severe Flash Crashes, and I like to see that addressed. Fortunately, our strategy isn’t based on trading. I change the Buy List just once a year. I guess you could call us Low Frequency Traders. But I want to assure investors that the U.S. market is not rigged.

  Don’t Count out Bed Bath & Beyond

  This Wednesday, April 9, Bed Bath & Beyond ($BBBY) will release its fiscal Q4 earnings report. Let me fill you in on the back story. In early January, BBBY cut their Q4 (Dec/Jan/Feb) earnings estimate. They had been expecting earnings to range between $1.70 and $1.77 per share. Now they said it would be between $1.60 and $1.67 per share.

  The stock market wrecked the shares. In one day, BBBY plunged from $80 to $70. It continued to fall for the rest of January, and it got as low as $62 per share in early February. If that wasn’t enough, one month ago, the company lowered their Q4 estimates again. This time it was due to the lousy weather. Now they expect earnings between $1.57 and $1.61 per share.

  So where do we stand now? I still like Bed Bath & Beyond, and this is why we have a locked-and-sealed Buy List. We didn’t jump ship in a panic, and the shares have started to rebound. Yesterday, BBBY came within a penny of hitting $70 for the first time in three months. I think the market has basically written off the Q4 earnings report and is now focused on their guidance for Q1.

  For last year’s Q1, BBBY earned 93 cents per share. The Street currently expects $1.03 per share. I’m going to hold off making a forecast, but I’m still optimistic for BBBY. The company has a rock-solid balance, they’re well run and the recovery in housing is good for them. For now, I’m going to keep our Buy Below for BBBY at $71 per share. Don’t count these guys out.

  Wells Fargo Is a Buy up to $54 Per Share

  Next Friday, Wells Fargo ($WFC) will be our first Buy List stock to report for this earnings cycle. As I mentioned last week, Wells passed the Federal Reserve’s stress test with flying colors. The Fed also had no objection to WFC’s capital plan, which included a 16.7% increase to their dividend. Wells now pays 35 cents per share each quarter.

  In my opinion, Wells is the best-run big bank in America, and it’s better than a lot of small banks. The shares came very close to breaking $50 this week. Wall Street currently expects earnings of 96 cents per share. My numbers say that’s about right, so don’t expect any major earnings beat. The new dividend gives Wells a yield of 2.81%. I’m keeping our Buy Below at $54 per share.

  Six New Buy Below Prices

  The recent rally has been very good to us. Through Thursday, our Buy List is up 3.29% for the year, which is ahead of the S&P 500’s gain of 2.19%. Three of our stocks, DirecTV ($DTV), Stryker ($SYK) and CR Bard ($BCR), are already up more than 10% this year. Plus, Microsoft ($MSFT) and Wells Fargo ($WFC) aren’t far behind. This week, I’m raising the Buy Belows on six of our stocks.

  Two weeks ago, I said that I expected Oracle ($ORCL) to soon break through $40 per share, and that’s exactly what happened. In fact, the stock hit $42 per share on Tuesday. Oracle hasn’t been this high in 14 years. (Remember how the stock dropped after the last earnings report? It’s funny how quickly people forget those short-term reactions.) This week, I’m bumping up my Buy Below on Oracle to $44 per share. I really like this stock.

  Ford Motor ($F) has been especially strong lately. Two months ago, the shares pulled back below $14.50, and it recently closed at $16.39. Ford just reported very good sales for March. I’ll repeat what I’ve said before: I think Ford is worth $22 per share. I’m raising my Buy Below on Ford to $18 per share.

  

  Three of our healthcare stocks, CR Bard ($BCR), Medtronic ($MDT) and Stryker ($SYK), broke out to new highs this week. I’m expecting more good earnings news from all of them. I’m raising my Buy Below on Bard to $152 per share. Medtronic is going up to $65, and Stryker’s is rising to $90 per share.

  I’ve raised my Buy Below on Qualcomm ($QCOM) for the past two weeks, so I might as well make it three in a row. This stock continues to rally higher for us. On Thursday, QCOM topped $81 per share for another 14-year high. I’m raising Qualcomm’s Buy Below to $87 per share. This could be a break-out star for us.

  That’s all for now. First-quarter earnings season kicks off next week. Bed Bath & Beyond reports on Wednesday. Then the big banks start to chime in Friday when Wells Fargo reports. Investors will also be paying attention to the latest Fed minutes, which come out on Wednesday. If you recall, the market was rather confused by Janet Yellen’s press conference. The minutes may clear things up. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• CWS Market Review – March 21, 2014
  Eddy Elfenbein, March 21st, 2014 at 8:56 am

  “…something on the order of six months.” – Janet Yellen

  With those words, the new Fed Chairwoman sent world markets into a tizzy. How could that be, and what, pray tell, did she mean?

  Fear not, gentle reader, for I am well versed in the convoluted sub-dialect of Fed-speak, and I’ll lead you through Wall Street’s latest hissy fit. The bottom line, as I’ll explain later, is not to worry. Traders are freaking out over nothing special.

  After six painful years, the economy is slowly returning to something approaching normal. Soon, workers will be able to demand higher wages, and consumer prices will rise. This is good news—it’s what we want to happen. A side effect is that we’re soon going to return more traditional monetary policies, and that will apparently take some getting used to. In this week’s CWS Market Review, I’ll explain what you need to know.

  I’ll also walk you through the latest earnings report from Oracle. The bottom line number was a tad disappointing, but that was more than made up for by rather rosy guidance. I expect the enterprise software giant soon to hit $40 per share, which it last touched 14 years ago. I’ll break it down in a bit, but first, let’s look at this week’s Fed meeting and why everyone’s scratching their heads.

  The Fed Ditches the Evans Rule

  Before I get into this week’s Federal Reserve meeting, let’s back up a bit and explain how we got where we are. When the economy plunged into recession, the Federal Reserve responded by dramatically cutting interest rates in an attempt to cushion the blow and hopefully turn things around. Soon, the Fed got to 0% and couldn’t cut any more. Many of the top economic models said that short-term interest rates should be negative—pay people to borrow money!

  The Fed decided the best way to get below 0% was to buy bonds. Lots and lots of bonds. The fancy term for this is Quantitative Easing or QE. They tried this a few times for limited periods, but it wasn’t enough. Finally, they threw up their hands and said, “we’re going to buy bonds until things get better.” Specifically, the plan was to purchase $85 billion each month in Treasuries and mortgage-backed bonds.

  The market loved the plan, and stock prices soared. But investors wanted to know: How long would the bond-buying party last? The idea floated by Charles Evans of the Chicago Fed was to lay out a specific unemployment number and say, “we won’t end QE until we hit this number.” The Fed adopted the Evans Rule and said that 6.5% unemployment was their threshold. (The Evans Rule also included 2.5% for inflation, but we’re a long way from that.)

  Stock prices continued to climb, and the unemployment rated started to fall. Then some investors got nervous because we were getting close to 6.5% on jobs, but the economy obviously needed more QE. The reason is that so many people had left the workforce, and as a result weren’t counted as part of that 6.5%. In other words, the economy is weaker than that unemployment number suggests. As a result, the belief was that the Fed would soon abandon the Evans Rule (I first mentioned this in January), and that’s exactly what happened this week. The Fed ditched the Evans Rule.

  Yellen Confuses the Market

  Now that leads us to the next step, and here’s where things get a little complicated. Last June, the Fed signaled that it was planning to pare back on its bond purchases. The market, predictably, freaked out. This was the famous Taper Tantrum. In four months, the three-year Treasury jumped from 0.3% to nearly 1%.

  Investors believed, incorrectly, that the entire rally was due to QE, so once that was gone, the market was toast. Not only did they get that wrong, but they completely misjudged the timing of the Fed’s taper decision (to be fair, the miscommunication was mostly the Fed’s fault). Ultimately, it wasn’t until December that the Fed decided to taper its monthly bond-buying by $10 billion. In January, the Fed tapered by another $10 billion, and they did it again this week.

  The Fed had said they wouldn’t raise interest rates until they were done with bond-buying. Sure, that makes sense. But now that they’re tapering, here’s the big question: How long will it be between the ending of QE and the first rate increase? In Wednesday’s policy statement, the Fed said “a considerable time,” so when Janet Yellen faced the media at her press conference, someone asked, “Well…what does a considerable time mean?” Her answer was “something on the order of six months.”

  The next logical question is, “Six months from when?” Yellen said of QE’s end, “we would be looking at next fall.” That totally confused reporters. Did she mean fall of 2015? Nope, Yellen clarified by saying she meant this fall. Now six months from this fall means…a rate hike next spring? Hold on! That’s earlier than the market was expecting.

  

  As a result, stocks dropped on Wednesday, and the middle part of the yield curve bulged. The three-year Treasury yield rose by 16 basis points, and the five-year jumped by 19 points (the chart above). The two- and three-year Treasuries’ yields reached six-month highs. Utility stocks, which are highly sensitive to interest rates due to their rich yields, took a beating. On the forex market, the yen dropped against the dollar, and that took a 1.5% bite out of AFLAC’s ($AFL) stock during Wednesday’s trading. Gold, which had been doing well, has lost more than 4% this week.

  When Will the Fed Raise Rates?

  But does Yellen’s timetable make sense? With this latest taper, the Fed will be buying $55 billion in bonds starting with April. Follow me on this. The Fed meets again in April (they meet every six or seven weeks), so presumably another $10 billion taper would bring us down to $45 billion. Then we’d go to $35 billion at the June meeting. For July, we’d be down to $25 billion. Then in September, we’re down to $15 billion.

  The next meeting would be on October 28-29. If the Fed wiped out the last $15 billion in one move, that would mean QE wraps up in November, which is indeed in the fall, as Yellen mentioned. But if the Fed tapers by only $10 billion in October, that leaves $5 billion on the table to tapered at the December meeting. That would mean that QE would be done by the end of the year. Counting six months from that, it means we’d see the first rate increase by the middle of 2015. That’s more in line with what the futures market had been expecting.

  The market got tripped up by Yellen’s mention of “the fall” and “six months.” So here’s my take: I think this was a rookie mistake by Janet Yellen. I strongly doubt there’s anything close to a majority at the FOMC that thinks interest rates will rise next spring. The economy is getting better, but we still have a way to go, and the CPI numbers are barely moving.

  Let’s also bear in mind that we’re only talking about one measly rate increase. On Wednesday, the one-year Treasury yield skyrocketed all the way up to the highest yield in five months—0.15%! For an investment of $1 million, that works out to about $4 per day.

  Make no mistake: higher interest rates are like Kryptonite to a bull market. I think the market is paranoid that a hawkish Fed is suddenly going to spring on them. It’s as if they’ve adopted an attitude of “prove to me that you’re going to let me down.” That, combined with a few misstatements from Chairwoman Yellen, explains what happened. Higher rates are truly something to worry about, but for now, they’re still a long way off.

  Stocks rebounded impressively on Thursday. In fact, the S&P 500 barely budged between Tuesday’s and Thursday’s close. But we’re in a new world. Investors need to realize that the Fed will tighten at some point. It’s no longer a distant hypothetical. Currently most FOMC members think short-term rates will be at 1% by the end of next year and at 2.25% by the end of 2016. In other words, the Fed Funds rate will still be less than inflation for a good while more.

  Let me add one more point. The FOMC’s policy statements have gotten ridiculously long. Dear Lord, they run on and on, with lots of garbage text. Please. Just tell us the basics. A Fed statement should be no more than 300 words. Period.

  Oracle Misses Earnings, but Don’t Fret

  After the closing bell on Tuesday, Oracle ($ORCL) reported fiscal Q3 earnings of 68 cents per share. This was two cents below Wall Street’s consensus. It was also at the bottom of Oracle’s own guidance. The stock dropped sharply in the after-hours market. But as I said last week, what was more important than the actual earnings report would be Oracle’s guidance for the current quarter.

  On the conference call, Oracle said to expect fiscal Q4 earnings to range between 92 and 99 cents per share. The Street had been expecting 96 cents per share, so that left open the possibility of an earnings beat.

  On the revenue side, Oracle said it sees Q4 revenues coming in between $11.3 billion and $11.7 billion. Wall Street had expected $11.5 billion. New software sales and subscriptions would range from 0% to 10%. The best news was that hardware sales rose by 8%. That’s Oracle’s first increase since they bought Sun Microsystems four years ago. Total revenue climbed 4% to $9.31 billion, which was $50 million shy of Wall Street’s forecast.

  At the start of Wednesday’s trading, shares of ORCL opened down more than $1. Gradually, traders realized that their guidance wasn’t so bad, and Oracle rallied throughout the day. Oracle finally made it into the green and got as high as a 12-cent gain on the day. The rally was later undone by Janet Yellen’s comments, but Oracle moved largely in line with the rest of the market.

  Oracle’s business still needs to improve, but I think they’re making the right moves. I expect the shares soon to break $40, which the stock last hit 14 years ago. Oracle remains a good buy up to $41 per share.

  Buy List Updates

  Our Buy List continues to hold up well. I have a few updates to pass along. Microsoft ($MSFT) closed above $40 per share for the first time since 2000 (notice how a lot of tech stocks are hitting 14-year highs). The software king is planning to release Office for the iPad, and Morgan Stanley had good things to say about their prospects. I’m raising my Buy Below on Microsoft to $43 per share.

  The Federal Reserve just completed its latest bank “stress test,” and Wells Fargo ($WFC) passed with flying colors. The Fed wants to make sure that if things go kablooey, the large banks won’t come running back to Uncle Sam for more bailout cash. Since Wells is so well run, there wasn’t any doubt it would do well.

  The next part of the Fed’s decision comes next week when they say who’s allowed to increase their dividend. Again, I’m sure Wells will get whatever they ask for. WFC currently pays 30 cents per share each quarter. I’m expecting that to rise to 32 cents per share, give or take. Shares of WFC just broke out to another new 52-week high. I’m raising my Buy Below on Wells Fargo to $54 per share.

  

  Shares of Qualcomm ($QCOM) have been doing well lately. The stock just hit—take a wild guess—a 14-year high. There’s a chance we might get a dividend increase soon. I’m bumping up my Buy Below on QCOM to $82 per share. This is a very good stock.

  That’s all for now. Next week is the final full week of the first quarter. We’re going to be getting more economic reports that aren’t tainted by the inclement weather. On Wednesday, the Department of Commerce will release its latest report on durable goods. Then on Thursday, the government will revise the Q4 GDP report. Last month, the original report was revised downward from 3.2% to 2.4%. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

  P.S. Do you know the difference between the different types of stock orders? Don’t be embarrassed. Many experienced investors don’t. Check out my handy guide to the different types of stock orders.

• CWS Market Review – March 7, 2014
  Eddy Elfenbein, March 7th, 2014 at 8:53 am

  “The best stock to buy is the one you already own.” – Peter Lynch

  I can’t remember a week that started off so scary yet ended so optimistically. The U.S. stock market dropped sharply on Monday on the news that Russian troops had moved into the Crimea, or as our government worded it, made “an uncontested arrival.” Soon there was talk of a possible invasion of eastern Ukraine.

  While Vladimir Putin was ignoring Western leaders, he may have been paying attention to the financial markets. On Monday, the Russian ruble was the worst-performing currency in the world. The ruble, which is already down 10% this year, plunged to its lowest level ever against the dollar. In order to defend its currency, the Russian Fed jacked up interest rates by 150 basis points, from 5.5% to 7.0%. That’s a huge move, and it has a cost.

  We don’t know for sure, but it’s estimated that the Russian central bank shelled out somewhere between $10 billion and $12 billion to defend the ruble. For now, Russia’s foreign currency reserves are large enough to take the hit, but they can’t keep it up forever. On Monday, the Russian version of the Dow Jones, the Micex Index, plunged 11% for its worst loss in more than five years. Interestingly, Bloomberg estimates that several Russian oligarchs lost billions of dollars due to the Crimean incursion. In other words, perhaps this arrival wasn’t entirely uncontested.

  Well, somebody felt the heat, because on Tuesday we heard that Putin had ended Russia’s military exercises in western Russia. Everyone breathed a huge sigh of relief. Even though the Crimean crisis is still an issue, it doesn’t look like it will become something bigger and far more unpleasant. The S&P 500 celebrated on Tuesday by shooting above 1,870 to a new all-time high. It didn’t end there. On Thursday, the S&P 500 closed at yet another new all-time, 1,877.03. This is the index’s 50th record close in the past year. Since February 3, the S&P 500 has tacked on more than 7.7%.

  

  In this week’s CWS Market Review, I’ll bring you up to speed on the big debate on Wall Street: How much is poor weather really to blame for the soggy economic news? I’ll also share more good Buy List news with you. Qualcomm announced a 20% dividend increase, DirecTV cracked $80 per share (it’s already a 16% winner in the year for us) and eBay is at a 14-year high. Not bad. But first, let’s look at why all the weather excuses may have been correct.

  The Bad Weather Excuse Has Won the Argument

  Over the last few weeks, there’s been a debate raging on Wall Street about the soft economic data. The last two jobs reports weren’t so hot. The bears have said that the economy is soft and getting softer. The bulls have blamed the weak numbers on lousy weather. So who’s right?

  This is a hard debate to resolve, which is probably why it’s intensified. This week, however, we got some more data that indicates that the poor-weather thesis was probably correct. This is good news for investors, and it may suggest that 2014 will be the best year for the economy since the recession. In fact, in President Obama’s latest budget quest, he forecasts real growth of 3.1% for this year. That would be the fastest growth rate in nine years. Not only that, the president sees growth accelerating to 3.4% in 2015.

  Of course, those are just forecasts, and worse yet, forecasts from politicians. But let’s look at some hard numbers. On Monday, the ISM Manufacturing Index, a report I follow closely, came in at 53.2, which was above the Street’s expectations of 52.3. Any number above 50 indicates an expansion, while one below 50 signals a contraction. This was an important report because the ISM for January was a dud—just 51.3. That report came out on February 3, which marked the S&P 500’s recent low. Now that we’ve seen a healthy rebound, I think it’s safe to say that the January report wasn’t the start of a new trend.

  That’s not the only evidence. We also learned on Monday that real personal-consumption expenditures rose by 0.3% in January after a 0.1% pullback in December. On the other side of the ledger, consumer spending rose by 0.4% in January after a contraction of 0.1% the month before. The January spending was led by a 0.9% increase in services. That was the biggest jump in 13 years, and it was most likely due to a greater demand for utilities. In other words, folks were trying to keep warm. Another check mark for bad weather.

  But the biggest evidence to support blaming the bad weather was this week’s Beige Book, which is a collection of regional surveys done by the Federal Reserve. Eight of the 12 districts reported modest economic improvement. New York and Philadelphia had slight declines, which they blamed on the weather. Kansas City and Chicago said they were stable. Consider this stat: The December Beige Book mentioned “weather” five times. That jumped to 21 times in January. In February, “weather” was mentioned 119 times.

  The next big economic report will be the February jobs report. I’m writing this early Friday morning, and the jobs numbers come out at 8:30 ET, so you may already know the results (be sure to check the blog). As I mentioned earlier, the last two jobs reports were rather weak. The economy created 75,000 net new jobs in December and 113,000 jobs in January. That’s not so hot. Put it this way: The economy averaged more than 205,000 new jobs each month for the year prior to that. If we see a big increase in non-farm payrolls for February—say, over 200,000—then it would be another signal that the economy suffered a minor weather-related blip.

  We got a sneak preview of the jobs report on Wednesday when ADP, the private payroll firm, said they counted 139,000 new jobs last month. However, the ADP report doesn’t always sync up with the government’s figures. But another promising number came out on Thursday: The number of Americans filing first-time jobless claims fell to 323,000, which is a three-month low.

  Lately, a number of Wall Street firms have pared back their growth forecasts for Q1 GDP. Just a few weeks ago, Goldman Sachs had expected 3% growth. Now they’re at 1.7%. JPMorgan just cut their forecast from 2.5% to 2%. I don’t have a firm view just yet, but I’m beginning to think those forecasts are too pessimistic. Either way, we’ll get our first look at Q1 GDP in late April.

  The bottom line is that a lot of the market’s resiliency this week was due to more than just the calming effect in Ukraine. Investors are beginning to realize that this might be a very good year for economic growth. Let me add another point about the current market. I caution you that I’m not a technical analyst, but many chart-watchers have been impressed by the breadth of this market. In other words, a rising tide is lifting a heckuva lot of boats. It’s not a rally led by a small number of monster-sized winners like we saw during the Tech Bubble. Now let’s look at how our Buy List has been faring.

  Qualcomm Raises Its Dividend by 20%

  The good news for the market has been even better news for our Buy List. We’ve beaten the S&P 500 for six of the last seven days. Through Thursday’s close, our Buy List is up 2.22% for the year, which is more than the S&P 500’s gain of 1.55%. This is a pleasant turnaround for us. Less than one month ago, we were trailing the index by close to 1%. I’ve also been impressed that our systemic risk (that’s beta for you smart kids) is less than the overall market’s.

  Last week, we got a 17% dividend increase from Ross Stores ($ROST). This week, we got a 20% dividend increase from Qualcomm ($QCOM). I like this stock a lot. Their quarterly payout will rise from 35 cents to 42 cents per share. The board also approved a $5 billion increase to their buyback authorization. That brings the total authorization to $7.8 billion.

  If you recall, just a few weeks ago, the company handily beat Wall Street’s earnings estimates and bumped up its full-year guidance. Qualcomm also announced that Steve Mollenkopf will take over as CEO and Paul Jacobs will become the executive chairman. On Thursday, QCOM broke $77 for the first time in 14 years. Qualcomm remains a very good buy up to $79 per share.

  

  Last week, I mentioned the public feud between Carl Icahn and eBay’s board. It got even nastier this week. The immediate positive for us is that the brawl has helped the stock. Shares of eBay ($EBAY) nearly cracked $60 this week.

  Honestly, this fight is rather tedious, but I’ll boil it down for you. What happened is that eBay had bought Skype, but it didn’t do much for them, so they sold it for $2.75 billion to an investor group led by Mark Andreessen’s company (he serves on eBay’s board). Two years later, Microsoft bought all of Skype for $8.5 billion. Andreessen said that everything he did was above board and fully disclosed at the time.

  Icahn ain’t buying it. In fact, he said that he’s “never seen worse corporate governance than eBay.” Really, Carl? Icahn’s goal isn’t a secret; he wants eBay to sell off PayPal, but the board has zero interest. Don’t get me wrong: I’m an Icahn fan. We need more people putting pressure on corporate boards, but even I concede that he can take things too far. Don’t expect a PayPal spinoff anytime soon. The board has made it clear that that’s a non-starter. My take: Ignore the bickering and concentrate the business. eBay remains a solid buy up to $62 per share.

  More Buy List Updates

  Several of our Buy List stocks have rallied strongly lately. Warren Buffett recently disclosed in his yearly Shareholder Letter that Berkshire Hathaway continues to have a big stake in DirecTV ($DTV). Buffett owns 22.2 million shares in DTV, which is 4.3% of the company. Last month, the satellite-TV crushed earnings by 23 cents per share. I also like that they’re really reducing share count with their buybacks. DTV is up 16% this year, and it’s our top-performing stock on the Buy List. This week, I’m raising our Buy Below price to $84 per share.

  In January, Moog ($MOG-A) became our first dud of the year. The maker of flight-control systems missed earnings by a penny per share and guided lower for the year. The stock was clobbered and fell as low as $57 per share. But this is why we like high-quality stocks—they tend to rebound. (We just don’t know when.) Or as Peter Lynch put it in today’s epigraph, “the best stock to buy is the one you already own.” Moog shot up more than 5% on Tuesday and closed at $64.21 on Thursday. Moog continues to be a good buy up to $66 per share.

  On Thursday, Wells Fargo ($WFC) got to a new high, as did Express Scripts ($ESRX). Remember it was only a few days ago that ESRX fell after its earnings report. Now it’s at a new high!

  Also on Thursday, Oracle ($ORCL) came within 15 cents of hitting $40 per share. Larry Ellison’s baby last saw $40 in October 2000. The company will release its next earnings report after the closing bell on Tuesday, March 18. On the last earnings call, Oracle said to expect fiscal Q3 earnings between 68 and 72 cents per share.

  I also want to remind you that Cognizant Technology Solutions ($CTSH) will split 2 for 1 on Monday. This means that shareholders will now own twice as many shares, but the share price will be cut in half, so don’t be surprised when you see the lower share price on Monday. The stock has recovered very impressively from its January sell-off. CTSH is currently up more than 20% from last month’s low. I’m raising my Buy Below on Cognizant to $112 per share, which will become $56 per share on Monday. This is a great stock.

  That’s all for now. Next week will be a slow week for economic news. I’ll be curious to see the retail-sales report which is due out on Thursday. This will give us a clue as to how strong consumer spending is. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy