Disney’s Earnings Are Due After the Close
Posted by Eddy Elfenbein on February 11th, 2021 at 11:31 am

Today is earnings day for Disney (DIS). The entertainment giant usually gets a lot of attention. The report is due out after today’s close. The current estimate is for Disney to lose 42 cents per share. Analysts will pay particular attention to Disney’s latest streaming numbers.

We broke our string of Buy List stocks beating expectations. Cerner merely met expectations. All the rest have beaten.

This morning’s jobless claims report came in at 793,000. That’s down from 812,000 from last week but it was above Wall Street’s estimate of 760,000.

In last week’s jobs report, the unemployment rate fell to 6.3%. That surprised a lot of people. The reason for the fall is that fewer people are looking for jobs.

Yesterday, Fed Chair Jerome Powell gave a speech and said, “Correcting this misclassification and counting those who have left the labor force since last February as unemployed would boost the unemployment rate to close to 10 percent in January.”

I would estimate that the U.S. economy is about 10 million jobs from full employment.

Morning News: February 11, 2021
Posted by Eddy Elfenbein on February 11th, 2021 at 7:04 am

Twitter Blocks Accounts in India as Modi Pressures Social Media

Biden Administration Pauses Trump’s TikTok Ban, Backs Off Pressure To Sell App

The Economic Case for Regulating Facebook

Investors Lukewarm on Tesla’s $1.5 Billion Bitcoin Splurge

Big Companies Unlikely to Follow Tesla’s Bitcoin Lead, JP Morgan Says

How GameStop Missed Out on Capitalizing on the Reddit Rally

G.M.’s Profits From Trucks and S.U.V.s Fuel Its Electric Quest

Toyota to Bring 3 New Electrified Vehicles to US Market

Can Jane Fraser Fix Citigroup?

Shell’s Falling Oil Output Ends Century-Long Business Model

Billionaire Beau Wrigley Says His Cannabis Company Will Be Bigger Than The Family Candy Business

Hormel to Buy Planters From Kraft Heinz for $3.35 Billion

Joshua Brown: How the Stock Market Works

Michael Batnick: Animal Spirits: Money Tree

Howard Lindzon: Robinhood, Etoro and Coinbase Proxies – The Private and Public Markets Can Be Very Connected…And The Rise Of Crossover Funds

Be sure to follow me on Twitter.

Cerner Earned 78 Cents per Share
Posted by Eddy Elfenbein on February 10th, 2021 at 4:09 pm

After today’s closing bell, Cerner (CERN) reported Q4 earnings of 78 cents per share. Previously, the company told us to expect quarterly earnings between 76 and 80 cents per share. Cerner is usually pretty accurate with its guidance.

Revenues came in at $1.395 billion. The company had been expecting between $1.365 billion and $1.415 billion.

Covid hit Cerner pretty hard, but the company has managed itself well. For the year, Cerner made $2.84 per share. That’s up from $2.68 per share in 2019.

“Cerner’s fourth quarter results reflect a very solid finish to the year,” said Brent Shafer, Chairman and CEO, Cerner. “I’m pleased with Cerner’s execution and commitment to supporting our clients in a challenging environment. Despite these challenges, Cerner delivered on financial goals, continued to make operational improvements, and further refined our growth strategies. As a result of our progress in 2020, we enter 2021 well-positioned to deliver increased value to our clients while also driving profitable growth for shareholders.”

Now let’s look at guidance.

For Q1, Cerner expects earnings of 72 to 76 cents per share on revenue of $1.37 billion to $1.42 billion. Wall Street had been expecting 76 cents per share.

For the whole year, Cerner sees earnings of $3.10 to $3.20 per share on revenue of $5.75 billion to $5.95 billion. Wall Street had been expecting $3.22 per share.

In December, Cerner hiked its dividend by 22% to 22 cents per share.

How Disney+ Became a Streaming Service Heavyweight
Posted by Eddy Elfenbein on February 10th, 2021 at 3:45 pm

A Note About Twitter
Posted by Eddy Elfenbein on February 10th, 2021 at 1:07 pm

I have a Twitter account and I use it a lot. I’m lucky enough to have gained a decent-sized following.

Thanks to Twitter, I’ve been able to connect with countless people who are smart, kind, funny and passionate about investing.

As much as I enjoy Twitter, I don’t take it that seriously. I say this because there’s a small minority of people, perhaps less than 1%, who take Twitter seriously. Very seriously.

That’s not me. I have to confess that I’m a person who is incapable of being offended. Whatever that gene is, I don’t have it. Due to this shortcoming, I occasionally, and always inadvertently, upset people on Twitter.

I find this frustrating. More often than not, I’m baffled by how some tweet could have offended anyone. It’s usually a joke that misfires. Or someone gets angry about the political slant of the tweet.

In these cases, the intent is entirely lacking on my part. I’m amazed at the political angle that some people can unearth in a seemingly benign tweet. To us un-offendables, it’s like people speaking a foreign language that’s somewhat similar to English but you can’t quite follow the whole thing.

If you think I’m exaggerating, this is from the day of the Capital Gazette shooting.

So they deserved to die, then?

— Shizuka Kobayashi (@ShizukaKobayash) June 28, 2018

I have other examples.

Still, I’m not here to upset people. Nor am I a professional comedian. As I see it, my principal goal is to share market news and observations. I’ll add some corny jokes well. That’s it. If someone gets upset by a Tweet, I’ll usually delete it.

Twitter can be a lot of fun. But if you follow me, always bear in mind that it’s not that serious.

10-Year Breakevens Highest Since 2014
Posted by Eddy Elfenbein on February 10th, 2021 at 12:42 pm

With the government spending so much money, I’ve been concerned about a resurgence of inflation. So far, there hasn’t been much evidence of higher prices. Still, I’m not the only one who’s concerned.

I like to follow the “breakeven” rates. This is basically the market’s view of expected inflation. It’s the difference between, in this case, the 10-year Treasury yield and the 10-year Inflation Protected bond. The Federal Reserve often discusses the breakeven rates since the central bank doesn’t want to see expectations get out of control.

During the worst part of the market crash last year, the 10-year breakeven rate fell to 0.5%. That’s very low. Since then, it’s rallied much higher. The breakeven rate has recently gotten as high as 2.22%. That’s the highest in six-and-a-half years (see below).

This morning, the government said that inflation rose by 0.3% in January which matched expectations. The core rate was unchanged.

Morning News: February 10, 2021
Posted by Eddy Elfenbein on February 10th, 2021 at 7:00 am

The Power Balance Is Shifting in London’s Commercial Real Estate

In Canada, Americans Are Missed, With Limits

Biden’s Next Economic Challenge: Getting Manufacturing Jobs Back

U.S. Chamber of Commerce Names Its First New Leader in 24 Years

A U.S. Housing Crisis Could Be Looming on the Horizon

Microsoft CEO Says Big Tech Needs Clearer Laws on Online Speech

Elon Musk Wants Clean Power. But Tesla’s Carrying Bitcoin’s Dirty Baggage

King of Supply-Chain Finance Expands, and Controversy Follows

Chase Coleman Leads $23 Billion Payday for 15 Hedge Fund Earners

Toyota Powers Ahead of Rivals With Much Brighter Outlook

Coca-Cola Earnings Top Estimates as Cost Cutting Offsets Pandemic’s Blow to Sales

Aunt Jemima No More; Pancake Brand Renamed Pearl Milling Company

Nick Maggiulli: The Test of Time: Art as an Investment

Ben Carlson: The Investment Strategy That Makes Your Life Easier

Joshua Brown: Explorer & How SPAC Issuers Earn 1,000% Returns

Michael Batnick: So Much Time and So Little To Do & An Inside Joke for the Super-Rich

Be sure to follow me on Twitter.

Fiserv Earned $1.30 per Share
Posted by Eddy Elfenbein on February 9th, 2021 at 4:30 pm

After the closing bell, Fiserv (FISV) reported Q4 earnings of $1.30 per share. This was the company’s 35th year in a row of double-digit earnings growth. For 2020, Fiserv earned $4.42 per share compared with $3.96 per share for 2019, so earnings growth came in at 11.6%. Previously, the company said it expected to see 2020 earnings growth of 11%.

For 2021, Fiserv expects revenue growth of 8% to 12%. For earnings, Fiserv sees earnings of $5.30 to $5.50 per share. That’s growth of 20% to 24%. Wall Street had been expecting $5.39 per share. I think it’s very likely we’ll see year #36 in a row.

For 2020, operating cash flow rose by 48% to $4.15 billion. Free cash flow increased 7% to $1.05 billion in the quarter and 11% to $3.65 billion for the full year.

More good news. The board approved a new 60-million-share buyback authorization. During Q4, Fiserv bought back 1.8 million shares for $200 million. For the whole year, Fiserv bought back 16.1 million shares for $1.64 billion.

Morning News: February 9, 2021
Posted by Eddy Elfenbein on February 9th, 2021 at 7:05 am

U.S. Maritime Regulator Urges Freight ‘Silos’ to Unite in Crisis

California’s Net-Neutrality Rules Clear Major Hurdle as Biden’s DOJ Abandons Its Efforts to Block Them

The Clash of Liberal Wonks That Could Shape the Economy, Explained

The Gig Economy Dipped Again in the Fall. But How Bad Was It?

Crisis Spurs Congress Toward Big Measures to Lift Families From Poverty

Bitcoin Powers Towards $50K as Tesla Takes It Mainstream

Reddit’s Valuation Doubles to $6 Billion After New $250 Million Funding

Lost In the ‘Gamestonks’ Mania – What is GameStop Actually Worth?

JP Morgan’s Board Rejects Switch to Stakeholder-Focused Entity

Apple Is the $2.3 Trillion Fortress That Tim Cook Built

Elon Musk’s Love-In With China May Be Over As Regulators Go After Tesla

Amazon to Buy Half of the Energy Produced by Huge Offshore Wind Farm in the Netherlands

Ben Carlson: The Catch-22 of Selling Your House Right Now

Howard Lindzon: From Tiny Bubbles To Frothy McBubbles

Joshua Brown: Shorts and Longs Are NOT Enemies!, Repeat After Me: That Sounds Stupid, I’m Buying Some Just In Case, Reddit App Installs Explode, Up 127% Year Over Year & The Plumbing

Be sure to follow me on Twitter.

Low Qual Is Leading the Charge
Posted by Eddy Elfenbein on February 8th, 2021 at 11:53 am

The stock market was up every day last week, and it’s up again today. If the market holds, this will be another all-time high close.

Friday’s jobs report showed that the U.S. economy created 49,000 net new jobs last month. The unemployment rate fell to 6.3%. Very roughly speaking, I’d say we’re about 10 million jobs away from something resembling full employment.

On our Buy List, Trex (TREX), Abbott Labs (ABT) and Disney (DIS) are all at new highs, and Ansys (ANSS) is very close. There are no Buy List earnings reports today. Our next one will come tomorrow when Fiserv (FISV) reports after the close.

One of the factors that is used to dissect the market is “quality.” Analysts like to see if high-quality stocks are leading the charge, or if they’re being left behind. That’s assumed to be a good indicator of what investors are thinking.

At the outbreak of the coronavirus, investors flocked to high-quality names. That makes sense. But since May, high quality has lagged. Actually, it’s lagged pretty badly.

Here’s a chart of Fidelity’s Quality ETF divided by the S&P 500.