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Monthly Archives: February 2013

BoJ Rejects a Proposal to Keep ZIRP Indefinitely

“The Bank of Japan rejected a proposal for keeping interest rates virtually at zero until a price target is in sight and refrained from adding to stimulus, ahead of leadership changes next month.

The central bank kept its asset purchase fund unchanged at 76 trillion yen ($813 billion), according to a BOJ statement released in Tokyo today. That was in line with analysts’ forecasts. Policy makers rejected board member Ryuzo Miyao’s call for the pledge on rates.

A report today showing that gross domestic product shrank for a third straight quarter strengthens Prime Minister Shinzo Abe’s case for boosting fiscal and monetary stimulus to counter deflation and revive the world’s third-biggest economy. BOJ Governor Masaaki Shirakawa and two of his deputies are set to step down on March 19, leaving behind a global debate on whether Japan’s government is triggering an excessive depreciation in the yen.

“The BOJ will probably wait until the installment of new leadership,” said Takeshi Minami, chief economist in Tokyo at Norinchukin Research Institute Co. “Whoever takes the position, the BOJ will have to be more aggressive to help the economy as Abe is eying elections.” …”

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South Korea Keeps Rates on Hold as Officials Balance the Won Against a Falling Yen

“South Korea’s central bank kept interest rates on hold as officials monitor the won’s gains against the yen and look ahead to policy changes after President Park Geun Hye takes office Feb. 25.

Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate at 2.75 percent after a 25 basis point cut in October, the central bank said in a statement in Seoul today. For a second month, the decision was not unanimous. Fourteen of 15 economists surveyed by Bloomberg News predicted the decision and one forecast a cut.

Japan’s “expansionary policy operations” and fiscal tightening in advanced nations are among risks for a South Korean economy that is showing signs of gradual improvement, the central bank said. The frontloading of government spending in the first half of the year is already giving growth a boost and Deutsche Bank AG says a supplementary budget may be announced by Park’s administration in March.

The central bank may “decide in March to see if fiscal stimulus is sufficient in terms of size and scope to reduce the level of uncertainty in the economy,” said Wai Ho Leong, a senior regional economist at Barclays Capital in Singapore.

The won gained 0.2 percent to 1,084.80 per dollar at 10:42 a.m. in Seoul, according to data compiled by Bloomberg. It earlier rose as high as 1,084.27, near the strongest level since Feb. 6. The won was little changed at 11.60 per yen, according to data compiled by Bloomberg.

Currency Comments…”

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Samurai Abe to the Rescue

“Japan’s economy unexpectedly shrank last quarter as falling exports and a business investment slump outweighed improved consumption, bolstering Prime Minister Shinzo Abe’s case for more monetary stimulus to end deflation.

Gross domestic product contracted an annualized 0.4 percent, following a revised 3.8 percent fall in the previous quarter, the Cabinet Office said in Tokyo today. The median forecast of 32 economists surveyed by Bloomberg News was for 0.4 percent growth. Nominal GDP shrank 0.4 percent on quarter.

The prolonging of Japan’s recession into a third quarter shows that benefits from a weaker yen and rising stocks have yet to be felt. The lower house of parliament passed Abe’s fiscal stimulus package today, while Bank of Japan GovernorMasaaki Shirakawa and his colleagues raised their assessment for the economy and left monetary policy unchanged.

“These are pre-Abe numbers,” said Takuji Okubo, chief economist at Japan Macro Advisors who formerly worked at Goldman Sachs Group Inc. “He was only prime minister for about the last week of the quarter. We will see a fairly big pick up this year, led by exports recovering on the weaker yen.”

The yen snapped a two-day advance today after Kazumasa Iwata, a former BOJ deputy governor who is a possible candidate to replace Shirakawa, said in a statement ahead of a meeting with ruling party lawmakers that a level around 90-100 per dollar would be a return to equilibrium. The currency was 0.1 percent weaker at 93.52 as of 4:34 p.m. in Tokyo, while the Nikkei 225 Stock Average closed up 0.5 percent.

Korean Concern…”

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Meet the New Dodgers

“On February 7, 2013, Senator Bernie Sanders is introducing legislation to crack down on
Wall Street and corporate tax avoiders that are avoiding tens of billions in taxes every
year by shifting profits to the Cayman Islands and other tax havens. Rep. Jan
Schakowsky (D-IL) is introducing the companion bill in the House.
The Business Roundtable represents some of the largest Wall Street and corporate tax
avoiders in the country.
Recently, the Business Roundtable came out with a plan to raise the eligibility age for
Medicare and Social Security to 70, cut Social Security and veterans’ benefits, and
increase taxes on working families.
Many of the corporations and Wall Street banks represented by the Business Roundtable
have:
 avoided more than $128 billion in taxes by setting up over 500 subsidiaries in the
Cayman Islands, Bermuda, and other offshore tax havens since 2008;
 received more than $6.5 billion in tax refunds from the IRS, after making billions
in profits;
 outsourced hundreds of thousands of American jobs to China and other low wage
countries, forcing their workers to receive unemployment insurance and other
federal benefits; and
 received a total taxpayer bailout of more than $2.5 trillion from the Federal
Reserve and the Treasury Department and nearly caused the economy to collapse
over four years ago.
Instead of cutting Social Security, Medicare, Medicaid, and veterans’ benefits, it is time
for these corporate and Wall Street tax dodgers to pay their fair share in taxes and bring
jobs back home to America….”

Full report

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Old Man Buffet’s Favorite Eval Metric Has Just Popped

“…….Here we are in this wonderful new world where everyone values nominal stock prices more than they value the actual output that underlies it.  If this indicator isn’t a sign that we are still residing in this Fed driven asset targeting mania then I don’t know what is.

To me, the whole thinking is backwards and more disruptive than anything else, but the party must go on.  Lord knows the Fed isn’t taking the punch bowl away any time soon.  So drink up.  Maybe you’ll get so drunk you’ll sleep through the inevitable bad parts when they arrive.

Chart via Orcam Investment Research:

 

buffett valuation

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Citi’s Panic-Euphoria Chart Hits Froth Territory

“Simply put, when investors are panicking, then it’s probably a good time to buy.  If investors are euphoric, then it’s probably time to sell.

“The Panic/Euphoria Model has spiked to near its highs over the past three years, suggesting frothy levels have ensued,” writes Citi’s Tobias Levkovich. “While a variety of other factors are constructive for equity indices, this proprietary gauge is starting to get perilously close to euphoria, cutting above the complacency readings seen in April/May 2012. In the past, when the model reached such levels, the equity markets experienced some modest consolidation. ”

Levkovich notes that the futures market and hedge fund performance does not reflect “aggressive bullishness.”  However, the massive flow of money into equity mutual funds and various surveys suggest otherwise.

Here’s a historical look at Citi’s model: …”

Full article and chart

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BNP Economist Goes Against the Grain Stating Samurai Abe’s Policies Will End Badly

 

“….The consensus view among economists and analysts is that a weaker yen, driven by recently-elected Prime Minister Shinzo Abe’s stimulative fiscal and monetary policies, will be great for the Japanese economy. They represent a fighting chance to overcome deflation for the first time in a long time.

Ryutaro Kono, the top Japan economist at BNP Paribas, takes a decidedly different view on “Abenomics,” as these new policies have been dubbed.

Kono writes in a note to clients, “Fiscal expansion only boosts growth while it is happening. When its effects fade, what remains is likely to be a sluggish economy with high inflation, coupled with public debt so swollen that the probability of a fiscal crisis soars.”

Here is the roadmap to how “Abenomics” in 2013 translates to fiscal crisis in 2015, according to Kono (emphasis added)….”

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Japan’s GDP Falls 0.1%…Where is Samurai Abe?

“Japanese Q4 GDP came in at a miss.

Analysts expected a rise of 0.1%. Instead it was a fall of 0.1%.

More shocking was the 0.4% fall in nominal GDP. That’s worse than the expectation of 0.0% nominal GDP…”

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Bill Ackman Updates His $HLF Short

“Hedge fund titan Bill Ackman, who has been in the spotlight for his Herbalife short, is answering investor questions live at the Harbor Investment Conference at JPMorgan Chase right now.

Ackman’s $12 billion Pershing Square Capital Management is shorting more than 20 million shares of Herbalife.  Ackman believes the multi-level marketing company that sells nutrition products is a “pyramid scheme” and has a price target of $0.

We’re on site and live blogging Pershing Square Capital Management’s responses.  Refresh this page for updates.

Before the Q&A, Ackman auctioned off lunches with himself and the others who presented today.  Blue Mountain’s Andrew Feldstein lunch brought in $30,000.

Now we’re gettng to the Q&A, but first Ackman is going to talk about his Herbalife short….”

Updated presentation

 

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$MET Beats the Street, Profits Down 90%

Source

“Feb 13 (Reuters) – MetLife Inc, the largest U.S. life insurer, reported a 90 percent fall in quarterly profit on derivative losses linked to its credit spreads but its operating profit beat estimates.

The company’s net income fell to $96 million, or 9 cents per share, in the fourth quarter, from $959 million, or 90 cents per share, a year earlier.

On an operating basis, MetLife earned $1.25 per share.

Analysts on average expected earnings of $1.18 per share, according to Thomson Reuters I/B/E/S.”

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$TWX To Divest Some Magazine Ownership to $MDP

 Source

Time Warner Inc. TWX +0.67% is in talks to divest itself of most of its magazine group to Meredith Corp., MDP -0.13% say people familiar with the matter, keeping only Time, Sports Illustrated and Fortune titles.

Meredith, which owns magazines such as Better Homes and Gardens, is mostly focused on women’s titles. The addition of Time Inc.’s titles would give it a much stronger presence in that part of the market. Time Inc. owns People, InStyle and Real Simple, among other titles.

Time Inc. has struggled in recent years amid an industrywide slowdown in print advertising. The division’s revenues fell 7% in 2012 to $3.4 billion and operating income declined 25% to $420 million due to lower advertising and subscription revenues.

Time Inc. recently announced plans to reduce its workforce by 6% in an effort to cut costs—and that action is expected to lead to a $60 million restructuring charge in the first quarter.

News that Time Warner was exploring a sale of Time Inc. was reported earlier Wednesday by Fortune magazine, which is owned by the publishing company.”

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$WFM Tanks on Poor Guidance

Source

“Whole Foods shares are dropping sharply after the company’s fiscal first-quarter earnings report.

Shares were down 7% at $90.08, after the company reported earnings of 78 cents a share on sales of $3.86 billion. That was a match on the top line, and a penny better on the bottom line than Street consensus.

But the company offered a weak outlook for the rest of fiscal 2013. “The company does not expect to produce the same level of EPS growth over the remainder of the year as it produced in the first quarter,” the company said in a press release, “due primarily to tougher gross-margin comparisons, particularly in the second- and third-quarters of last year, along with its ongoing strategy to expand value offerings across the store.”

The company pegged FY13 EPS between $2.83-$2.87, which is says it’s maintaining. But Street consensus is for EPS of $2.90, according to FactSet.”

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$AMAT Posts a 71% Drop in Profits

Source

“Feb 12 (Reuters) – Chip gear maker Applied Materials’ first-quarter profit fell 71 percent, hurt by lower orders.

Net income fell to $34 million, or 3 cents per share, from $117 million, or 9 cents per share, a year earlier. Excluding items the company earned 6 cents per share.

Revenue fell 28 percent to $1.57 billion.”

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Judge Throws Out Key Suit on Botched $FB IPO

“On Wednesday, a judge in the Southern District of New York dismissed a key group of plaintiffs in litigation against Facebook for allegedly mishandling its 2012 initial public offering.

The case dismissed the so-called “derivatives” group of investor lawsuits, which claimed Facebook’s management and directors — including CEO Mark Zuckerberg — should have been held liable for their alleged mishandling of the deal….”

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After Hours Shakers and Movers

Source, more stocks for junkies

 

Symbol Company Name Last Change Volume
HES Hess Corp. 67.95 UNCH UNCH 6,000,000
FTR Frontier Communication … 4.48 -0.02 -0.38% 1,711,936
YHOO Yahoo! Inc. 21.15 UNCH UNCH 1,107,282
CSCO Cisco Systems Inc. 21.13 -0.01 -0.05% 675,747
SPY SPDR S&P 500 ETF Trust 152.15 0.00 0.00% 668,631
IWM iShares Russell 2000 I … 91.46 -0.02 -0.02% 366,256
BAC Bank of America Corp. 12.15 -0.02 -0.16% 316,498
ATVI Activision Blizzard Inc. 13.71 -0.02 -0.15% 302,066
EWT iShares MSCI Taiwan In … 13.61 +0.01 +0.04% 284,821
ETFC E*TRADE Financial Corp. 11.32 +0.02 +0.18% 281,048
WYNN Wynn Resorts Ltd. 122.70 +0.30 +0.25% 246,477
MSFT Microsoft Corp. 28.03 UNCH UNCH 235,501
SHO Sunstone Hotel Investo … 11.86 UNCH UNCH 207,910
NVDA NVIDIA Corp. 12.40 +0.03 +0.24% 201,920
SBAC SBA Communications Corp. 67.45 UNCH UNCH 195,211
BIG Big Lots Inc. 33.66 +0.16 +0.48% 171,906
GLW Corning Inc. 12.78 UNCH UNCH 165,520
GE General Electric Co. 23.39 UNCH UNCH 159,053
PLCM Polycom Inc. 10.12 UNCH UNCH 132,540
ACAS American Capital Ltd. 13.70 UNCH UNCH 115,420
PFE Pfizer Inc. 27.00 UNCH UNCH 107,240
XTEX Crosstex Energy L.P. 18.21 -0.04 -0.19% 103,931
SIRI Sirius XM Radio Inc. 3.20 UNCH UNCH 88,878
HBAN Huntington Bancshares … 7.16 +0.03 +0.46% 83,209
T AT&T Inc. 35.42 UNCH UNCH 82,879

Source 

NASDAQ Ten Most Active Share Volume

 

As of 2/12/2013 6:40:43 PM

Symbol Company Last Sale* Change Net / % Share Volume
Sirius XM Radio Inc. $ 3.18 0.02  0.63% 16,219,928

FB

Facebook, Inc. $ 27.44 0.07  0.26% 6,979,156
Comcast Corporation $ 41.75 2.78  7.13% 2,715,898

QQQ

PowerShares QQQ Trust, Series 1 $ 67.84 0.11  0.16% 1,385,648

MU

Micron Technology, Inc. $ 7.89 0.03  0.38% 1,088,326
Intel Corporation $ 21.19 unch 1,018,982
Zynga Inc. $ 3.22 0.03  0.92% 904,909

CA

CA Inc. $ 24.87 unch 732,783
Cisco Systems, Inc. $ 20.99 0.03  0.14% 661,589
Dell Inc. $ 13.78 0.02  0.14% 645,736

NASDAQ Ten Most Advanced

As of 2/12/2013 4:16:00 PM

Symbol Company Last Sale* Change Net / % Share Volume
RPX Corporation $ 12 1.31  12.25% 10,518
Comcast Corporation $ 41.75 2.78  7.13% 2,715,898
Comcast Corporation $ 39.95 2.37  6.31% 68,609
Unilife Corporation $ 2.18 0.10  4.81% 22,286
Quality Distribution, Inc. $ 8.50 0.38  4.68% 6,705
Sapient Corporation $ 12.60 0.41  3.36% 7,094
Solazyme, Inc. $ 9.19 0.25  2.80% 25,441
Glu Mobile Inc. $ 2.39 0.05  2.14% 3,938
Catamaran Corporation $ 53.20 1.03  1.97% 8,885
IAC/InterActiveCorp $ 43.4443 0.6143  1.43% 296,395

NASDAQ Ten Most Declined

As of 2/12/2013 5:05:32 PM

Symbol Company Last Sale Change Net / % Share Volume
Natural Alternatives International, Inc. $ 4.85 0.39  7.44% 11,940
NETGEAR, Inc. $ 33.80 2.70  7.40% 29,933

EA

Electronic Arts Inc. $ 16.45 1.09  6.21% 58,300
Buffalo Wild Wings, Inc. $ 77.26 3.81  4.70% 486,089
Blue Nile, Inc. $ 29.70 1.27  4.10% 32,682
Seattle Genetics, Inc. $ 28.50 0.74  2.53% 39,596
Equinix, Inc. $ 210.10 4.43  2.06% 291,175
LivePerson, Inc. $ 13.40 0.26  1.90% 19,473
BlackRock Kelso Capital Corporation $ 10.36 0.20  1.89% 11,267
Web.com Group, Inc. $ 18 0.34  1.85% 5,809

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The 10 Most Overbought S&P 500 Stocks

MPS, HRB, THC, TSN, BLK, GS, VLO, CI, TMO, HRL,

“As the market continues to make new highs, we wanted to look at the 10 most overbought names in the S&P 500 based on our proprietary countertrend.

As many of you know, we have been pretty constructive on the market, and in my last few columns, on Jan. 8 ,Jan. 23 and Feb. 4 , respectfully, said that the S&P 500 (SPY) was not extended based on our proprietary countertrend reading.

You may recall from our last column we showed the most overbought markets in the last 18 years based on our countertrend measure. Currently we are at a reading of -.63 on our countertrend reading, below are the six most overbought markets in the last 18 years and how they performed 30 days later.

Dec. 15, 1995, countertrend: -.90.97

Aug. 5, 1997, countertrend: -.74.19

Jan. 16, 2004, countertrend: -.72.28

Feb. 14, 2007, countertrend: -.69.03

Jan. 14, 2010, countertrend: -.74.52

Feb. 2, 2011, countertrend: -.72.52

Here is how the S&P 500 performed 30 days following these readings.

Dec. 15, 1995: -3.13%

Aug. 5, 1997: -2.20%

Jan. 16, 2004: +1.00%

Feb. 14, 2007: -3.15%

Jan. 14, 2010: -5.63%

Feb. 2, 2011: -2.69%

In our last column, we pointed out our thesis for the possibility of having this current market go down as one of the most overbought market in the last 18 years. You had the greatest credit deleveraging in the past 70 years with an unprecedented flood of global liquidity pushing all asset prices up. Many of the known risks of 2012 are out in the open at this juncture would need a new tail risk to reset prices….”

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$CSCO Posts a Slight Beats Both Top and Bottom Line

Source

“Networking equipment titan Cisco Systems (CSCO) this afternoon reported fiscal Q2 revenue in line and earnings per share that topped consensus.

Revenue in the three months ended in January rose to $12.1 billion, yielding EPS of 51 cents.

Analysts had been modeling $12.1 billion and 48 cents a share.”

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