Archive for the ‘Stocks’ Category

August 29th: Ed’s Daily Notes and Traders Corner   34 comments

The S&P 500 levels to watch today:

UPSIDE: 2001-2002 (2 data points), 2005 (August 26th’s high and the all-time high), and 2020 (top of the Bollinger Bands).
LAST CLOSE: 1996, inside the 1993-1998 (5 data points) range.
DOWNSIDE: 1982-1990 (July’s high and 5 data points), 1977 (August 20th’s low), 1971-1972 (2 data points), 1968 (June’s high), 1965 (50 day moving average), 1964 (August 15th’s high), 1959 (20 day moving average), 1958 (August 18th’s low), 1955 (August 14th’s high), 1947-1948 (2 data points), 1944 (August 11th’s high), 1941 (August 15th’s low), 1927-1939 (July’s low and 9 data points and the 100 day moving average), 1924 (May’s high), 1921 (August 4th’s low), 1916 (August 1st’s low), 1909-1913 (3 data points), 1904 (August 7th’s low), and 1898 (bottom of the Bollinger Bands).

S&P 500 Daily Momentum: Bullish (weakening)
S&P 500 Daily Overbought/oversold: Neutral (leaning overbought)
S&P 500 Weekly Momentum: Bearish (weakening)
S&P 500 Weekly Overbought/oversold: Neutral (leaning overbought)
S&P 500 Futures: Positive
Overall: Light volume with only small movement has left the technicals almost stalled this week. Momentum indicators for the S&P 500 seem headed to neutral, while overbought/oversold indicators still read about the same as they did at the beginning of the week.

And now for the news…

The Daily Beast: Why Obama Backed off More ISIS Strikes: His Own Team Couldn’t Agree on a Syria Strategy

After lots of bluster about striking ISIS on Syria, President Obama threw cold water on the idea Thursday, disappointing those who wanted him to take the fight to ISIS in Syria.
After a week of talk of eliminating the “cancer” of ISIS, President Obama said Thursday that he was not planning to significantly expand the war against the Islamic extremist movement anytime soon.

His remarks came after days of heated debate inside the top levels of his own national security bureaucracy about how, where, and whether to strike ISIS in Syria. But those deliberations – which included a bleak intelligence assessment of America’s potential allies in Syria — failed to produce a consensus battle plan. And so Obama, who has long been reluctant to enter into the Syrian conflict, told reporters Thursday that “we don’t have a strategy yet” for confronting ISIS on a regional level.

Only 875 more days of the lamest presidential administration ever…

Yahoo News: Nokia will have its revenge on the smartphone industry

Bobb posted this article yesterday in the comments:

Business Korea has just published a very provocative piece that depicts a monstrous troll attacking its home country’s pride and joy, Samsung. That troll, you’ll be surprised to learn, is Nokia.

The reason for this is easy to understand: Samsung may be forced to pay one of the history’s biggest patent royalty sums to Nokia, and fellow Korean electronics titan LG is not scot free, either.

What unleashed the beast in the Finnish company was its decision to sell its handset division to Microsoft a while back. As long as Nokia was a phone company, it was bound by a web of cross-licensing deals limiting how much it can charge for its thousands of handset-related patents. Nokia needed to use both essential and non-essential patents held by Samsung, Apple, Motorola and other industry giants, which put a rather severe cap on how much it could charge other phone vendors.

But when Nokia got out of handset business, the need for those cross-licensing deals vanished and Nokia emerged as a Non-Practicing Entity (NPE). Or as Business Korea defines the term, a patent troll.

This means the already competitive smartphone business just got a little more expensive.

Posted August 29, 2014 by edmcgon in News, Politics, Stocks, Technology

Ed’s Daily Notes for August 28th   3 comments

Bloomberg: Gold-Price Indicator Fading as ETPs Tumble by $71 Billion

Gold-backed funds that heralded record prices in 2011 and last year’s biggest sell-off in three decades are becoming less useful as market predictors.

After a decade of changing mostly in tandem, gold prices and holdings in exchange-traded products backed by bullion have the most-negative correlation since 2004. Investment in ETPs are headed for a fifth straight week of moving in the opposite direction of New York futures, data compiled by Bloomberg show. That would be the longest stretch since 2012, before investors began dumping gold.

Global ETPs that accumulated more bullion than France’s central bank in 2012 saw their influence wane as equities surged and the Federal Reserve took steps to ease economic stimulus, signaling higher interest rates that erode the appeal of gold as an alternative asset. As investors exited the funds, erasing about $71 billion of value, unrest from Ukraine to Gaza this year revived demand for the precious metal as a haven, boosting prices that Goldman Sachs Group Inc. says aren’t sustainable.

“There is a disconnect” because “a lot of money has left,” said Mark Luschini, the chief investment strategist at Janney Montgomery Scott LLC. in Pittsburgh that oversees $65 billion. “For gold, this year has been all about the Federal Reserve and political tension, and at the moment, the rate-increase worries are overshadowing the safe-haven buying.”

The bloom is off the golden rose. That doesn’t make gold ETP’s a “sell”. It just means the actions of retail investors in equity markets is far less relevant to the price of gold now.

Business Insider (via Yahoo Finance): This Illustration Posted By Eric Schmidt Shows How Google Thinks About Innovation

Google is one of the largest, most influential technology companies in the world. But it didn’t start out that way, and it’s not easy to maintain that status. Google Executive Chairman and former CEO Eric Schmidt has shared some insight as to how Google views innovation and the competition.

Schmidt and Google’s former SVP of Products Jonathan Rosenberg are publishing a book next month called “How Google Works.” The book dives into what Schmidt and Rosenberg learned as they helped build Google into what it is today.

Schmidt has been teasing the book by posting excerpts of illustrations and various tips from the book to his Google+ and Twitter page. His latest post emphasizes that tackling the market with different angles rather than simply trying to be better than your rival is crucial for success.

“It’s important to understand what’s going on around you, but the best way to stay ahead is a laser focus on building great products that people need,” Schmidt posted to Google+ along with the illustration.

This_Illustration_Posted_By_Eric

Posted August 28, 2014 by edmcgon in News, Precious Metals, Stocks

Ed’s Daily Notes for August 27th   2 comments

SeaDrill

Yahoo Finance: Rig company Seadrill hit by profit miss and cautious outlook

Seadrill, the world’s biggest offshore driller by market capitalisation, reported second-quarter earnings below forecasts on Wednesday and offered a cautious outlook for the rig market, sending its shares lower.

Seadrill, the crown jewel in shipping tycoon John Fredriksen’s business empire, has been hit like other rig firms by oil companies reining in spending to counter rising costs.

Seadrill’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter came in at $641 million, below forecasts of $663 million in a Reuters poll of analysts and down from the $665 million it posted a year ago.

“The near-term market for ultra-deepwater drilling units continues to be challenging, partly driven by a reduction in exploration drilling that has led to a slower growth rate in overall upstream spending,” the company said in a statement.

…The company intends to prioritise returning cash to shareholders, it said, adding that it can maintain a quarterly dividend of 1 dollar per share well into 2016, even if the rig market fails to make a significant recovery.

While I have not had time to look over their latest financials, the last point is key, since the dividend is one of the top reasons I own SeaDrill shares. The other reason? They were dirt cheap when I bought them. If they drop back down to where I bought them, I might have to add some more. I will take a “wait and see” approach to it.

Posted August 27, 2014 by edmcgon in News, Stocks, Strategy, Uncategorized

Ed’s Daily Notes for August 25th   1 comment

For the week ahead, the big event will be the release of the second guess on 2nd Quarter U.S. GDP, coming Thursday at 8:30 am EST.

For earnings reports, I get Prospect Capital (PSEC) today, and SeaDrill (SDRL) on Wednesday. Both stocks are currently in my 401(k), which I use for long-term holdings.

Bloomberg: Jackson Hole Theme: Labor Markets Can’t Take Higher Rates

Global central bankers led by Federal Reserve Chair Janet Yellen said labor markets still have further to heal before their economies can weather higher interest rates.

Even as they signaled international monetary policies are set to diverge as economic recoveries increasingly differ, officials meeting over the weekend in Jackson Hole, Wyoming, placed jobs at the center of their decision making by saying stronger hiring and wages are still needed to drive demand.

The focus on jobs suggests the Fed and Bank of England will tighten policy within a year as their economies show signs of strengthening. By contrast, European Central Bank President Mario Draghi and Bank of Japan Governor Haruhiko Kuroda acknowledged they may be forced to deploy fresh stimulus.

Making her debut as Fed chief at the annual central bankers’ conclave in the shadow of the Teton mountains, Yellen said while U.S. hiring has improved and the debate at the Fed is shifting toward when “we should begin dialing back our extraordinary accommodation,” there is still a “significant” underuse of the workforce, and the labor market has yet to fully recover from the worst recession since the Great Depression.

Yellen can cry about “job market problems” all she wants, but she is facing an increasingly hawkish FOMC. As QE nears an end in October, those hawks will become louder.

Yahoo News: Iran says it downed Israeli drone over nuclear site

Iran’s elite Revolutionary Guard said it has brought down an Israeli stealth drone above the Natanz uranium enrichment site in the centre of the country.

This news is from Iran, so take it for what it is worth. And I would normally ignore it, except for the fact recent news stories have reasonably speculated at a potential Israeli strike in Iran. If you are dabbling in the oil markets, keep this in mind.

Posted August 25, 2014 by edmcgon in Economy, Federal Reserve, News, Stocks

Happy Birthday Dad! Ed’s Daily Notes for August 20th   1 comment

funny-pictures-gerbil-makes-sprinkles-for-your-birthday-cake(hat tip to I Tried Being Tasteful for the pic)

Today is a special day for my Dad, who turns 75 today. I just want to say happy birthday Dad, and thanks for three-quarters of a century of excellence!

The Hill: Obama heads back to vacation after unexplained DC trip

President Obama went back to his vacation on Martha’s Vineyard Tuesday evening following less than 48 hours in Washington, leaving people puzzled over why he came back in the first place.

Obama’s two days in Washington were mostly quiet, and concluded with the president receiving his daily national security briefing in the morning, and joining Vice President Biden to huddle with members of his economic team in the afternoon.

…Judicial Watch estimates the extra roundtrip cost $1.1 million. Only daughter Malia accompanied Obama back to Washington.

Speculation for why Obama returned focused around the possibility of a secret foreign leader meeting or the roll out of a new administration initiative on immigration or corporate taxes.

But no such explanation materialized.

The most unusual deviation from a normal day at the White House was Obama’s dinner Monday night at Sam Kass’s home. The president, joined by deputy chief of staff Anita Breckenridge, spent nearly five hours at the White House chef’s Dupont Circle duplex apartment.

It’s possible that the party may have been a celebration of Kass’s impending nuptials to MSNBC host Alex Wagner. The couple announced their engagement last September. But the White House provided no details of the meal.

Worst…president…ever…

On the bright side, there are only 884 days left in this buffoon’s administration.

Bloomberg: Steve Ballmer Leaves Microsoft’s Board After Departure as CEO

Steve Ballmer resigned from Microsoft Corp. (MSFT)’s board, eight months after his departure as chief executive officer, ending more than three decades of direct involvement in the world’s largest software maker.

Ballmer, 58, remains Microsoft’s top individual shareholder. He had initially remained as a director after handing the top job over to one of his deputies, Satya Nadella, in February. Ballmer recently bought the Los Angeles Clippers for $2 billion and appeared in front of the team and fans this week, vowing to lift the team to “higher heights” and promising not to micromanage.

The former CEO’s departure ends a 34-year association with Microsoft, which he led as CEO from 2000 to February 2014. Revenue tripled under Ballmer’s tenure, even as the Redmond, Washington-based company struggled to compete with Apple Inc. and Google Inc. in areas such as mobile phones, tablet computers and Internet search.

If Ballmer runs the Clippers like he did Microsoft, expect him to put together a dream team. But I wonder how well guys like Michael Jordan, Larry Bird, and Magic Johnson can still play?

Fox News: NFL reportedly asking music acts to pay for playing Super Bowl halftime show

Really?

The Wall Street Journal reported Tuesday that the league has notified Rihanna, Katy Perry, and Coldplay that they are under consideration to perform at halftime of Super Bowl 49 next February. In the process of notifying them, the paper reports that the league has also asked some of the artists to either give a portion of their post-Super Bowl tour proceeds to the league or make some type of financial contribution in exchange for being offered the show.

People familiar with the matter told The Journal that the league’s request received a “chilly” reception from the artists’ representatives. The NFL does not pay the halftime acts, though the league typically covers the performers’ travel and production expenses.

Greed, thy name is NFL…

Posted August 20, 2014 by edmcgon in News, Politics, Stocks

Ed’s Daily Notes for August 14th   Leave a comment

The Hill: Why is Obama returning to Washington?

President Obama won’t make any major announcements on immigration reform during his secretive mid-vacation trip back to Washington next week, the White House said Wednesday.

The president is expected to return to the White House on Sunday, but officials won’t say why Obama is taking the unusual, and costly, trip back to Washington. He’s expected to return to Martha’s Vineyard, where he’s been vacationing, on Tuesday.

The article goes into a lot of speculation over immigration reform and other things. My guess is the president is planning some kind of classified military operation. If it goes as planned, we may never hear about it. On the other hand, if it doesn’t, it could create a situation. Maybe something involving Ukraine, Iraq, or Iran?

Regardless of the reason, it would make me reluctant to buy any stocks until next week.

Bloomberg: Recovery Halts as Germany Shrinks, France Stagnates

Yesterday, it was bad news from Asia. Today, we have Europe:

The euro area’s recovery halted in its three biggest economies in the second quarter, underlining the vulnerability of the region to weak inflation and the deepening crisis in Ukraine.

German gross domestic product shrank 0.2 percent, more than economists forecast, while stagnation in France prompted the government to scrap its 2014 deficit target after data released today. Combined with Italy’s unexpected slide into recession, the reports may add pressure on the European Central Bank to expand stimulus.

While Germany’s second-quarter weakness was largely due to a warm winter that shifted production to earlier months, the outlook for coming months is now clouded by the impact of international measures against Russia over its support of separatists in Ukraine. That imperils the euro area as a whole, where inflation is running at the slowest pace since 2009 and measures announced by the ECB will take time to have an effect.

I love the excuse for Germany: warm weather. So cold weather slows the U.S. GDP, while warm weather does it to Germany? I guess people only work in Fall and Spring?

Bloomberg: Cisco Cutting 6,000 Jobs as CEO Forecasts Stagnant Growth

Bad news for Cisco fans:

Cisco Systems Inc. (CSCO) is cutting 6,000 jobs and forecasting little to no revenue growth in the current quarter amid a slump in demand from phone and cable companies, and weakness in emerging markets.

The world’s largest networking-equipment maker, which has about 74,000 employees, said it will take a pretax charge of as much as $700 million. Including the latest round of firings, which represent about 8 percent of the workforce, Cisco has eliminated more than 18,000 people over the past three years.

John Chambers, who is nearing retirement after almost two decades as Cisco’s chief executive officer, has been grappling with slowing growth for its market-leading routers and switches. Phone carriers and other large companies are replacing legacy network hardware with software that performs many of the same tasks. Sales in emerging markets won’t recover for several more quarters, Chambers said on a conference call.

While Cisco is still in a good spot financially, they need a strategy for getting out of the death spiral in which they seem to be stuck. If they can replace Chambers with an innovation-oriented CEO, or if the stock drops to book value ($10.90/share, which isn’t likely any time soon), then I might call the stock a buy. Until then, Cisco is a solid “sell”.

Posted August 14, 2014 by edmcgon in Economy, News, Stocks, Technology

Ed’s Daily Notes for August 6th   2 comments

Bloomberg: China Said to Exclude Apple From Procurement List

China’s government excluded Apple Inc. (AAPL) iPads and MacBook laptops from the list of products that can be bought with public money because of security concerns, according to government officials familiar with the matter.

Ten Apple products — including the iPad, iPad Mini, MacBook Air and MacBook Pro — were omitted from a final government procurement list distributed in July, according to officials who read it and asked not to be identified because the information isn’t public. The models were on a June version of the list drafted by the National Development and Reform Commission and Ministry of Finance, the officials said.

Apple is the latest U.S. technology company to be excluded from Chinese government purchases amid escalating tensions between the countries over claims of hacking and cyberspying. China’s procurement agency told departments to stop buying antivirus software from Symantec Corp. (SYMC) and Kaspersky Lab, while Microsoft Corp. (MSFT) was shut out of a government purchase of energy-efficient computers.

The heightened scrutiny of foreign companies follows Edward Snowden’s revelations last year of a National Security Agency spying program and the May announcement of indictments by U.S. prosecutors of five Chinese military officers for allegedly stealing corporate secrets.

It is one thing to spy on another country. We all know that happens. But using your companies to do it is just bad business, and this is a result of that.

Business Week: The U.S. Is Becoming a Nation of Jeeps

If 2013 was the year of the pickup, 2014 belongs to Jeeps. No other brand has gained so much traction in the U.S. this year.

From January through July, Fiat sold 392,390 Jeeps in North America, 44 percent more than in the same period last year. That was enough to rocket the American brand past Kia and Dodge, its corporate cousin, to the No. 7 spot on a ranking by volume. At the moment, Jeep is right behind Hyundai in terms of total vehicles sold.

This is one of those trends I don’t get. I had a Grand Cherokee back in the 1980’s, and it was ok but nothing special. I test drove a regular Jeep in the 1990’s, and it was loud, ran rough, and was uncomfortable. I rented a Jeep Patriot this summer, and I desperately missed my Kia Forte. Overall, I have never been impressed by the Jeep brand, although everyone I have ever known with one loved it.

Regardless, I have to give Fiat (FIATY) credit for what they have done with Dodge and Jeep. Their stock is tempting, and a little cheap, but it is still an OTC stock. If I were trading it in Europe, it would be much more tempting.

Posted August 6, 2014 by edmcgon in China, News, Stocks