Bed Bath & Beyond Hits All-Time High
Posted by Eddy Elfenbein on December 14th, 2010 at 1:58 pm

Bed, Bath & Beyond (BBBY) just broke out to a new 52-week high. On April 26, the stock got as high as $48.52.

Noon Market Update
Posted by Eddy Elfenbein on December 14th, 2010 at 11:57 am

The market is up again today. This looks to be the ninth rally for the S&P 500 in the last ten sessions (granted, some of those “up days” were puny).

The Buy List is doing well. Both Fiserv (FISV) and Becton, Dickinson (BDX) are at new highs today.

Christopher Danely, an analyst at J.P. Morgan, has said that Intel (INTC) is in danger of missing Wall Street’s earnings estimate.

Danely writes that checks in Asia find orders from the PC food chain in November were stable with October levels, but didn’t increase. He notes that Intel had indicated it needed an uptick in November and December orders to meet its Q4 outlook; he thinks the chip maker is “tracking towards the low end of its Q4 revenue guidance.”

The analyst notes that notebook contract manufacturer shipments in November were seasonal, but below plan, with shipments flat with October, below expectations of a 2% rise. For Intel (and the notebook makers) to meet estimates, he says, the industry will need to see an above-seasonal December. Danely notes that the notebook manufacturers are forecasting a 1% sequential rise in shipments, above the seasonal average 10% decline.

Danely thinks Intel is likely to miss the $11.4 billion midpoint of guidance, and will come in flat sequentially at $11.1 billion.

Morning News: December 14, 2010
Posted by Eddy Elfenbein on December 14th, 2010 at 7:57 am

World Stocks Rise, Dollar Falls Before Fed

Euro Hits 3-week High Vs. Dollar as U.S. Yields Ease

Oil Steadies Near $88.50, Eyes on U.S., China

China Says Regrets WTO Ruling on US Tire Tariff

Japanese Government to Extend Stock Tax Breaks for 2 Years

ECB’s Trichet Calls for `Maximum’ Flexibility of Region’s Rescue Fund

Bank Regulators to Tackle Capital Standards

Wellstream Brings GE Energy to $4.3 Billion in Deals

Dell Seeks More Data-storage Firms

Icahn’s Lionsgate Bid: Out of Time — and Luck

From Russia With Profits?

Brett Favre Won’t Start
Posted by Eddy Elfenbein on December 13th, 2010 at 7:02 pm

It’s official: Brett Farve’s starting games streak will come to an end at 297.

The streak began on September 20, 1992.

To put this into context, the Friday before that game, the Dow was at 3,327.05. The 30-year Treasury was at 7.32%. The Nasdaq Composite was at 589.12. Gold was at $347.20.

Also, Jenn Sterger was eight years old.

The Fed’s “Mr. No”
Posted by Eddy Elfenbein on December 13th, 2010 at 6:41 pm

The New York Times profiles the Fed’s contrarian, Thomas Hoenig who is the president of the Kansas City Fed.

This is an odd time to profile Hoenig since he rotates off the FOMC at the end of the year. Tomorrow’s meeting will be his last.

This caught my eye:

By keeping interest rates too low for too long, in his view, the Fed contributed to the dot-com bubble that burst in 2001 and the even bigger housing bubble that popped in 2007.

The Nasdaq had its highest close on March 10, 2000 at 5,048.62. The index closed the year at 2,470.52, meaning the tech bubble had already popped by 51% before 2001 even began.

Tuesday’s Fed vote will be Mr. Hoenig’s last, because the presidents of the Fed’s regional banks, other than New York, share votes under a rotation system. Mr. Hoenig does not have a vote next year, and he must retire after he turns 65 in September.

As for his future, Mr. Hoenig is certain that he will not follow other Fed veterans who have gone to work on Wall Street. “I can tell you one thing,” he said. “I’ll never work for a too-big-to-fail bank.”

Um…you already do.

Baxter Approves Share Repurchase of $2.5 Billion
Posted by Eddy Elfenbein on December 13th, 2010 at 4:23 pm

Another Buy List stock, Baxter International (BAX), is buying back its stock:

Baxter International Inc. announced today that its Board of Directors has approved a share repurchase authorization of up to $2.5 billion of the company’s common stock.

Baxter has approximately $600 million of remaining authorization under a previous $2.0 billion share repurchase program approved in July 2009. Shares will be repurchased in the open market at times and amounts determined by the company based on its evaluation of market conditions and other factors.

“This approval is consistent with our disciplined capital allocation approach and reflects the confidence we have in our ongoing ability to generate strong cash flows and deliver increased value to our shareholders,” said Robert J. Hombach, chief financial officer.

Over the last five years, the company has returned more than $10 billion to shareholders in the form of dividends and share repurchases. Baxter has doubled its dividend rate during this period, and recently announced a 7 percent increase for 2011.

AFLAC Buying Dollar-Denominated Debt
Posted by Eddy Elfenbein on December 13th, 2010 at 1:17 pm

Bloomberg notes that AFLAC (AFL) is buying as much as $1 billion worth of corporate bonds through the end of this year:

Columbus, Georgia-based Aflac, the world’s biggest seller of supplemental health insurance, is shifting from Japanese government securities and focusing on dollar-denominated corporate debt rated A with a duration of about 10 years. Japanese government bonds due in 7 to 10 years yield about 0.99 percent, compared with 4.52 percent for A rated U.S. corporate debt.

“Given that interest rates are so low you have to look at your duration preferences,” Kriss Cloninger, president and chief financial officer of Aflac, said in an interview last week. “At the time we were placing the money, we felt the risk- reward advantage was with shorter-duration corporates as opposed to the longer-term Treasuries.”

The New S&P Dividend Aristocrats
Posted by Eddy Elfenbein on December 13th, 2010 at 12:01 pm

Here’s the new list of the S&P 500 Dividend Aristocrats. These are stocks that have increased their dividends for 25-straight years. For the year, this index is up 17.57%.

A&P Files for Bankruptcy
Posted by Eddy Elfenbein on December 13th, 2010 at 8:42 am

As it’s officially known, The Great Atlantic & Pacific Tea Company (GAP), or A&P, has filed for bankruptcy.

The Great Atlantic & Pacific Tea Co., the 101-year-old U.S. operator of almost 400 supermarkets under names including Waldbaum’s, The Food Emporium and Pathmark, sought bankruptcy protection after failing to successfully compete with wholesale clubs and drugstores.

The retailer, which also runs stores under its own name, Super Fresh and Food Basics, had $8.8 billion in sales for the year ended in February, according to its website. Yesterday, it listed assets of $2.5 billion and debt of $3.2 billion in a Chapter 11 filing in U.S. Bankruptcy Court in White Plains, New York. A shift in consumer spending at wholesale clubs, supercenters and drugstores hurt sales in the quarter ended Sept. 11, A&P said in a regulatory filing.

“We have taken this difficult but necessary step to enable A&P to fully implement our comprehensive financial and operational restructuring,” Chief Executive Officer Sam Martin said in a statement yesterday. “We could not complete our turnaround without availing ourselves of Chapter 11.”

This is a sad day, but honestly, things weren’t looking so good on Friday when the shares dropped by 67%. That’s usually a bad sign.

Jim Cramer called A&P exactly right over a year ago: “This one is bad. Why would I want to be on the worst operator in the group? That one is a sell, sell, sell.”

A&P has a long and proud history. The company actually was the darling of Wall Street at the beginning of the depression since it was one of the very few companies that continued to do well.

Benjamin Graham famously used the example of A&P in his book the Intelligent Investor (pages 200 to 203).

Sector Relative Strength By 10-Year T-Bond Movement
Posted by Eddy Elfenbein on December 13th, 2010 at 8:27 am

When the 10-year Treasury bond moves higher or lower, there’s a corresponding movement of stock sectors. For the most part, cyclical stocks do well and consumer stocks lag. I wanted to show what the historical relationship has been.

I went to the data library hosted by Dartmouth Professor Ken French. He has a listing of 49 industry groups going back to 1963. I broke down the daily relative performance by days when the yield on the 10-year Treasury rose, stayed the same, and fell.

The following results are annualized. In other words, when the yield on the 10-year T-bond rose, gold stocks outperformed the market by an average of 26% per year. When the yield on the 10-year fell, gold stocks underperformed by 23% per year.