Best Stock Market Indicator Ever: Weekly Update

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“Earnings season is all but over and only the tail end of the quarterly and off-calendar reporting outfits are still reporting earnings.  Still, the coming week does have several key earnings reports coming down the pipe.

We are offering previews and adding color if applicable on the following companies: Apollo Group Inc. (NASDAQ: APOL); GOL Linhas Aereas Inteligentes S.A. (NYSE: GOL); Lennar Corporation (NYSE: LEN); PVH Corporation (NYSE: PVH); Walgreen Co. (NYSE: WAG); Commercial Metals Co. (NYSE: CMC); Family Dollar Stores Inc. (NYSE: FDO); The Mosaic Co. (NYSE: MOS); Paychex Inc. (NASDAQ: PAYX); Red Hat Inc. (NYSE: RHT); Sanchez Energy Corporation (NYSE: SN); Teavana Holdings Inc. (NYSE: TEA); Best Buy Co. Inc. (NYSE: BBY); Pep Boys-Manny Moe & Jack (NYSE: PBY); and Research In Motion Ltd. (NASDAQ: RIMM).

Monday , March 26

Apollo Group Inc. (NASDAQ: APOL): Thomson Reuters has estimates of $0.37 EPS and $932.8 million in revenues.  Shares of the online university at around $42.50 and the 52-week range is $37.08 to $58.29.

GOL Linhas Aereas Inteligentes S.A. (NYSE: GOL) is expected to report earnings of $0.07 EPS on a translated basis from Brazilian Reals for the Latin American airline outfit.  A slowing Brazil story has not helped GOL out and at $7.50 the 52-week trading range is $5.03 to $14.35.

Tuesday, March 27

Lennar Corporation (NYSE: LEN) was soft after weaker than expected new home sales data for February, but the homebuilder is up over 100% from the lows of 2011.  At $25.75, the 52-week range is $12.14 to $27.07. Thomson Reuters has estimates of $0.04 EPS and $699.4 million in revenues.

PVH Corporation (NYSE: PVH): Thomson Reuters has estimates of $1.09 EPS and $1.5 billion in revenues.  Ay $88.40, shares are very close to the highs with its 52-week range of $51.15 to $90.64.

Walgreen Co. (NYSE: WAG) has not been a big performer of late and the $33.50 handle today compares to a 52-week range of $30.34 to $45.34. Thomson Reuters has estimates of $0.77 EPS and $18.56 billion in revenues.

 

Commercial Metals Co. (NYSE: CMC): Thomson Reuters has estimates of $0.09 EPS and $2.98 billion in revenues. With shares around $13.78, the 52-week trading range is $8.64 to $17.84.

Family Dollar Stores Inc. (NYSE: FDO) is till winning off of the dollar store theme.  At $57.25 the 52-week trading range is $44.42 to $60.53. The company will report before the market opens and Thomson Reuters has estimates of $1.13 EPS and $2.46 billion in revenues.

The Mosaic Co. (NYSE: MOS): Thomson Reuters has estimates of $0.75 EPS and $2.54 billion in revenues. At $58.00, the 52-week range is $44.86 to $83.41.

Paychex Inc. (NASDAQ: PAYX)  should be benefitting from the increased payrolls that the Labor Department has been showing in recent months.  It is a key jobs barometer.  Thomson Reuters has estimates of $0.37 EPS and $568.8 million in revenues.

Red Hat Inc. (NYSE: RHT) is one of the high-beta stocks that we always say has to beat and raise guidance to maintain its premium valuations. Thomson Reuters has estimates of $0.37 EPS and $291.2 million in revenues. At $51.60, the 52-week range is $31.77 to $53.42 and the market cap is now $9.9 billion.  This one trades at almost 45-times the expected year ahead earnings of $1.15 EPS for fiscal year February-2013.

Sanchez Energy Corporation (NYSE: SN) is one we just do not enough estimates on to make a consensus, but this was one of the disappointing oil and gas IPOs of late 2011 and many investors are going to be waiting anxiously to see how the overall tome of the report is.  This is an Eagle-Ford Shale play in Texas.

Teavana Holdings Inc. (NYSE: TEA) is set to report on Wednesday and the stock remains with a high earnings multiple even for a growing tea retail story.  Thomson Reuters has estimates of $0.31 EPS and $67.75 million in revenues.  This one came public in 2011 and at $21.25 it has a post-IPO range of $14.28 to $29.35.  It trades at more than 40-times its expected trailing earnings estimates.

Thursday, March 29

Best Buy Co. Inc. (NYSE: BBY) is a value stock, or maybe it is just a value trap where the very low P/E ratio is masked by declining users, lower margins, and a peaking of growth already having been seen.  Thomson Reuters has estimates of $2.16 EPS and $17.2 billion in revenues.  With this being the February quarter, this is “the money quarter” as it includes holiday sales.  At $27.00, the 52-week trading range is $21.79 to $32.85. Best Buy was a $50.00 right before the recession.

Pep Boys-Manny Moe & Jack (NYSE: PBY) is being acquired, so all that matters is that there are no huge discrepancies that would cause a material change in the terms affecting its buyout.  Estimates from Thomson Reuters are $0.12 EPS and $502.5 million in revenues.

Research In Motion Ltd. (NASDAQ: RIMM) is the big kahuna of the week.  Traders have been shorting RIM aggressively, and options are active.  One trader even wanted the best longer-dated options bet for “playing RIM under $10 per share.”  Thomson Reuters has estimates of $0.82 EPS and $4.55 billion in revenues.  While earnings are expected to drop down to $2.77 EPS from $4.13 EPS, some are under the belief that long-term targets are impossible due to the Android and iPhone migration will create a long slow death here for RIM.  At $13.85, the 52-week trading range is $12.45 to $58.40.   As a reminder on all earnings dates and expectations, these may have already changed and some will change between now and the formal reporting dates.”

 

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Jail time please….

[youtube://http://www.youtube.com/watch?v=Hm6GvpJLMpo 450 300]

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The plot thickens on a disgusting can of worms….

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If we are to remain a country that respects honor, the rule of law, and justice then everyone must follow the rules or suffer the consequences….

 

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“Italian Prime Minister Mario Monti expressed concern about Spain’s public finances on Saturday, and said it would not take much to reignite the euro zone debt crisis and revive the risk of it spreading to Italy.

Bloomberg | Getty Images

Speaking at a conference by Lake Como where he was discussing the Italian government’s new labor reforms, Monti praised Spain’s efforts to reform its jobs market but said it had fallen behind on budget control.

Spain shocked markets last month when it said it had missed its 2011 budget deficit target and a few days later set itself a softer goal for 2012.

“It (Spain) certainly made profound reform of the labor market, but it did not pay the same attention to public finances,” Monti said. “This is causing us big concern because their yields are rising and it wouldn’t take much to recreate trends that could spread to us through contagion.”

He added that any fresh eruption of the euro zone sovereign debt crisis could cancel out the progress made in Italy and “take us back months.”

Read more

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“As Henry Blodget pointed out earlier, analysts are wildly optimistic about corporate profit margins right now.

Despite the fact that margins are at record highs, analysts see them going higher!

This chart from James Montier shows what’s up.

Click on the image to enlarge it.

 

 

So what’s a more realistic outlook for margins?

In a recent note, Goldman’s David Kostin warned that the S&P is still going to fall to 1250 at the end of this year (for context it’s at 1397 right now), and he cited margin compression is one reason why things will go south.

So what’s Kostin’s margin outlook?

This chart contrasts his outlook vs. the consensus. The blue dotted line his his take, and as you can see, it’s not a collapse, but it’s significantly below what the rest of Wall Street currently believes.

 

Goldman Sachs

 

So the question, then, is why is Wall Street so confident that margins will continue to increase, when they’re already at a peak?

Apparently it has a lot to do with the surging margins of the tech industry:

Information Technology is the largest sector in the S&P 500 and currently accounts for 
more than 20% of the equity capitalization of the index. For nearly 30 years the sector’s net
margins generally ranged between 6% and 10%. However, beginning in 2009 margins
began to leap higher and now stand at 16.6% on a trailing four-quarter basis as of 4Q 2011.

Bottom-up consensus forecasts Tech margins will reach 17.8% in 2012 and 18.6% in 2013.
Our top-down model forecasts the sector’s margins will climb slightly to 16.9% this year
and 17.0% in 2013. One explanation for the surge in Information Technology margin has been the structural shift from hardware and software to internet and cloud-based companies.

That story — that the shift from low-margin hardware to high-margin services/software — is a compelling one, and there is evidence that the secular shift towards higher margins is real, but…

It turns out that a lot of the margin expansion is attributable to just one company: Apple.

However, the recent increase in the Tech sector margin is entirely attributable to AAPL. During 4Q 2011 the Tech sector posted year/year EPS growth of 18% and margin expanded by 39 bp to 17.7%. Excluding AAPL, the year/year EPS growth was just 1% and sector margins actually dropped by 107 bp to 15.6%.

Apple is now such a huge player in the market that it basically dictates the index, and so it should be no surprise that so much of the margin discussion revolves back to this one company.

If you think that Apple can keep growing like crazy, and lift the entire boat, then that’s great. But for most of the market, we’re seeing signs of margins already rolling over.”

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“Trying to analyze the market sans-Apple is a growing sport, given the outsize role the company has in every category in which it resides.

Here’s a fun chart from BarCap, looking at the trajectory of tech sector earnings over the last year with and without Apple.

As you can see, tech sector earnings sans-Apple have actually been in decline since Spring 2011.

Of course, you can never perfectly remove Apple, since Apple helps take earnings away from other companies, so presumably a fair number of their competitors would be more profitable if Apple ceased to exist.”

 

 

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An interesting tweet by Michael Margolis, a former Apple TV engineer at Apple Inc., popped up in our Twitter feed this evening, and we thought it was worth passing on. According to Margolis, the new Apple TV UI was not only on the table at Apple years ago, but Steve Jobs allegedly shot it down because he didn’t like it at the time.

Source: Macgasm

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I was in Australia earlier this month and there, as elsewhere on my recent travels, the consensus among the politicians I met (at least in private) was that Washington lacked the will for meaningful course correction, and that, therefore, the trick was to ensure that, when the behemoth goes over the cliff, you’re not dragged down with it. It is faintly surreal to be sitting in paneled offices lined by formal portraits listening to eminent persons who assume the collapse of the dominant global power is a fait accompli. “I don’t feel America is quite a First World country anymore,” a robustly pro-American Aussie told me, with a sigh of regret.

Well, what does some rinky-dink ’roo-infested didgeridoo mill on the other side of the planet know about anything? Fair enough. But Australia was the only major Western nation not to go into recession after 2008. And in the last decade the U.S. dollar has fallen by half against the Oz buck: That’s to say, in 2002, one greenback bought you a buck-ninety Down Under; now it buys you 95 cents. More of that a bit later.

I have now returned from Oz to the Emerald City, where everything is built with borrowed green. President Obama has run up more debt in three years than President Bush did in eight, and he plans to run up more still — from ten trillion in 2008 to fifteen and a half trillion now to 20 trillion and beyond. Onward and upward! The president doesn’t see this as a problem, nor do his party, and nor do at least fortysomething percent of the American people. The Democrats’ plan is to have no plan, and their budget is not to budget at all. “We don’t need to bring a budget,” said Harry Reid. Why tie yourself down? “We’re not coming before you to say we have a definitive solution,” the treasury secretary told House Budget Committee chairman Paul Ryan. “What we do know is we don’t like yours.”

Nor do some of Ryan’s fellow conservatives. Texas congressman Louie Gohmert, for whom I have a high regard, was among those representatives who appeared at the Heritage Foundation to express misgivings regarding the Ryan plan’s timidity. They’re not wrong on that: The alleged terrorizer of widows and orphans does not propose to balance the budget of the government of the United States until the year 2040. That would be 27 years after Congressman Ryan’s current term of office expires. Who knows what could throw a wrench in those numbers? Suppose Beijing decides to seize Taiwan. The U.S. is obligated to defend it militarily. But U.S. taxpayers would be funding both sides of the war — the home team, via the Pentagon budget, and the Chinese military, through the interest payments on the debt. (We’ll be bankrolling the entire People’s Liberation Army by some point this decade.) A Beijing–Taipei conflict would be, in budget terms, a U.S. civil war relocated to the Straits of Taiwan. Which is why plans for mid-century are of limited value. When the most notorious extreme callous budget-slasher of the age cannot foresee the government living within its means within the next three decades, you begin to appreciate why foreign observers doubt whether there’ll be a 2040, not for anything recognizable as “the United States.”

Yet it’s widely agreed that Ryan’s plan is about as far as you can push it while retaining minimal political viability. A second-term Obama would roar full throttle to the cliff edge, while a President Romney would be unlikely to do much more than ease off to third gear. At this point, it’s traditional for pundits to warn that if we don’t change course we’re going to wind up like Greece. Presumably they mean that, right now, our national debt, which crossed the Rubicon of 100 percent of GDP just before Christmas, is not as bad as that of Athens, although it’s worse than Britain, Canada, Australia, Sweden, Denmark, and every other European nation except Portugal, Ireland, and Italy. Or perhaps they mean that America’s current deficit-to-GDP ratio is not quite as bad as Greece’s, although it’s worse than that of Britain, Canada, France, Germany, Italy, Spain, Belgium, and every other European nation except Ireland.

But these comparisons tend to understate the insolvency of America, failing as they do to take into account state and municipal debts and public pension liabilities. When Morgan Stanley ran those numbers in 2009, the debt-to-revenue ratio in Greece was 312 percent; in the United States it was 358 percent. If Greece has been knocking back the ouzo, we’re face down in the vat. Michael Tanner of the Cato Institute calculates that, if you take into account unfunded liabilities of Social Security and Medicare versus their European equivalents, Greece owes 875 percent of GDP; the United States owes 911 percent — or getting on for twice as much as the second-most-insolvent Continental: France at 549 percent.

Read the rest here.

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Here’s a weird little observation:

About a month ago, I included this Bloomberg article — S&P 500 Gets 9% Cheaper — in a linkfest.  Normally, something I cull off Bloomberg’s most popular list slips off after a day or two.

But yesterday marked a full month that this has remained on the top of the Most Popular list. As you can see from the graphic below, its #3 — a month after its Feb 23, 2012 4:39 PM publication list.

Which makes me ask the question: Why?

Read the rest here.

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Australian Bullion Dealer ABC Bullion has contacted SD to advise that one of its suppliers has provided them photographic evidence of a tungsten filled 1 kilo gold bar discovered this week.  The bar passed a hand-held xrf scan which showed 99.98% pure AU.  The tungsten was only discovered when the bar was physically cut in half.

After numerous reports of 400oz tungsten filled bars being discovered in Hong Kong, this is the first documented and verified report with photographic evidence that has been made public.

Source

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PeterLBrandt

Continuation H&S pattern would have target of $2,042

The daily Gold market chart has been forming a possible continuation inverted H&S pattern. If this interpretation is correct the only question is if the right shoulder low has been established or if further right shoulder construction is needed.

The decline on Thursday appeared to wash out weak longs. An advance and close above the Mar. 21 high would complete a  candlestick hikkake buy signal. This would give some credance to the change a right shoulder low is in place.

A decisive close above the Feb. 28 high is required to complete this H&S pattern and establish a target at $2,042.

Go here to read the rest of the analysis and see some nice charts.

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David Glovin and Bob Van Voris

After several drinks at a Greek restaurant on Manhattan’s Third Avenue in the summer of 2006, two computer programmers at Bernard Madoff’s investment firm asked their supervisor whether the boss’s business was a scam.

Chief Financial Officer Frank DiPascali laughed off the question, telling George Perez and Jerome O’Hara that Madoff was honest. DiPascali would later tell the FBI he wondered why they took so long to ask.

His chronicle of the dinner, and the lengths to which Madoff went to convince employees that his massive fraud was a legitimate business, were revealed for the first time in FBI reports made public last week. Attached to court filings by ex- Madoff employees facing fraud charges, they contain interviews with DiPascali — Madoff’s chief aide — who in 2009 pleaded guilty to his role in the biggest Ponzi scheme in U.S. history.

Once, when Perez and O’Hara confronted Madoff and asked why there was no sign of stock trades, Madoff exploded, DiPascali told the FBI.

“You are not going to tell me how to run my business,” Madoff insisted during a meeting in the office of the firm’s operations chief, Daniel Bonventre, according to DiPascali. “Trades occur overseas.”

Read the rest here.

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Dan Hart

The value of U.S. tax breaks exceeds $1 trillion, which may give both parties potential areas to cut costs and alleviate the cost of changing the tax code, the Wall Street Journal reported, citing a study.

The Congressional Research Service report found the biggest tax break is likely to be valued at $164 billion annually in 2014 and is on employer-provided health insurance, while employer-provided pensions are the second-biggest exclusion at about $163 billion, the newspaper said.

The study said the most that might be gained in additional tax revenue from eliminating tax breaks was $150 billion, because of political opposition and technical hurdles, the newspaper said.

Lawmakers might only be able to reduce tax rates by one or two percentage points for the top individual rate, the Journal said, citing the report.

Source

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ORLANDO – A witness we haven’t heard from before paints a much different picture than we’ve seen so far of what happened the night 17-year-old Trayvon Martin was shot and killed.

The night of that shooting, police say there was a witness who saw it all.

Our sister station, FOX 35 in Orlando, has spoken to that witness.

What Sanford Police investigators have in the folder, they put together on the killing of Trayvon Martin few know about.

The file now sits in the hands of the state attorney. Now that file is just weeks away from being opened to a grand jury.

It shows more now about why police believed that night that George Zimmerman shouldn’t have gone to jail.

Zimmerman called 911 and told dispatchers he was following a teen. The dispatcher told Zimmerman not to.

And from that moment to the shooting, details are few.

But one man’s testimony could be key for the police.

“The guy on the bottom who had a red sweater on was yelling to me: ‘help, help…and I told him to stop and I was calling 911,” he said.

Trayvon Martin was in a hoodie; Zimmerman was in red.

The witness only wanted to be identified as “John,” and didn’t not want to be shown on camera.

His statements to police were instrumental, because police backed up Zimmerman’s claims, saying those screams on the 911 call are those of Zimmerman.

“When I got upstairs and looked down, the guy who was on top beating up the other guy, was the one laying in the grass, and I believe he was dead at that point,” John said.

Zimmerman says the shooting was self defense. According to information released on the Sanford city website, Zimmerman said he was going back to his SUV when he was attacked by the teen.

Sanford police say Zimmerman was bloody in his face and head, and the back of his shirt was wet and had grass stains, indicating a struggle took place before the shooting.

Source

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Seoul, South Korea (CNN) — President Barack Obama travels to South Korea Saturday on a three-day trip centered on an international nuclear security summit in Seoul.

He is due to arrive in Seoul early Sunday, where he will later hold a bilateral meeting with his South Korean counterpart Lee Myung-bak.

Top officials from 54 countries, including China and Russia, will attend the summit meeting on Monday and Tuesday.

But its message of international cooperation has been overshadowed by North Korea’s announcement last week that it is planning to carry out a rocket-powered satellite launch in April.

South Korea has said it considers the satellite launch an attempt to develop a nuclear-armed missile, while the United States has warned the move would jeopardize a food-aid agreement reached with Pyongyang in early March.

President Lee has already said he will use the summit to drum up international support against the actions of his northern neighbor.

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FRANKFURT (Reuters) – Greece is well on track in its efforts to improve how it monitors its finances, the head of the European Commission’s special task force said, while adding that its banking system remained in difficulty.

“I am optimistic as never before,” Horst Reichenbach told Austria’s Passauer Neue Presse newspaper in an article published on Saturday.

“The segment in the finance ministry which is responsible for pensions has greatly improved,” he noted.

Reichenbach, who heads the special task force to help rebuild the Greek economy, said carrying out sufficient tax audits at Greek companies and the country’s wealthy population remained challenging.

Turning to banks, however, Reichenbach was less optimistic.

“The financial problems of Greece’s banks pose great difficulties. The banks now need to be re-capitalized so that the economy can prosper.”

The EU task force of about 50 officials, most of whom visit Athens intermittently, advises ministries on measures needed to improve the country’s economic competitiveness and tax collection as well as on reform of the public sector.

It estimates that Greece could potentially collect about 8 billion euros ($10.6 billion) in tax arrears out of 60 billion euros owed to the state – equivalent to about a quarter of the country’s gross domestic product.

Reichenbach said that Greece’s bureaucracy was a big hurdle to economic growth.

“The granting of licenses is a nightmare. It could take years,” he said, adding solving these problems had “absolute priority”.

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The flash crash that knocked $52 billion off Apple’s market cap was hardly the first

Snapshot of Tuesday’s “false print.” Via Seeking Alpha

By now anybody who reads the business pages knows that BATS Global Markets screwed up its initial public offering big time Friday by mangling trades in a bunch of stock symbols at the top of the alphabet, including Apple (AAPL) and BATS, its own stock.

Apple’s shares briefly fell by more than $55 per share. BATS, which had been trading for more than $15, fell to less than 4 cents.

NASDAQ quickly erased all those trades and BATS was allowed to cancel its IPO.

Read More…

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GUIRIA, Venezuela (Reuters) – Venezuela will pay Williams Cos Inc (NYS:WMB – News) and Exterran (NYS:EXH – News) $420 million for the 2009 nationalization of assets including a major gas injection project, the South American country’s oil minister said on Friday.

Oil Minister Rafael Ramirez told reporters the deal meant the two companies would drop an arbitration case that is pending against Venezuela before a World Bank tribunal.

“We reached an agreement of $420 million. They will drop the arbitration. They had been asking for $1.2 billion,” he said.

The nationalizations in 2009 were part of a broader wave of state takeovers that targeted the assets of more than 70 smaller oilfield service companies, the majority of them Venezuelan.

U.S. service company Exterran Holdings announced a $97 million non-cash charge in April 2009 relating to Venezuela’s takeover of a gas injection plant controlled by U.S. firm Williams Companies and a water injection plant, which both included Exterran as a minority partner.

During President Hugo Chavez’s 13 years in power, his socialist government has put almost all the OPEC member’s oil industry under state control, including multi-billion dollar projects run by U.S. majors.

Venezuela has about 20 cases pending against it at the World Bank’s arbitration tribunal, known as the International Center for Settlement of Investment Disputes, or ICSID.

The most high profile of those were brought by Exxon Mobil (NYS:XOM – News) and ConocoPhilips (NYS:COP – News), which are seeking combined compensation of some $40 billion for takeovers in 2007.

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