Posts by Jeff Macke
- Jeff Macke at Breakout16 hrs ago
On December 9th of last year the U.S. Treasury sold its final 31.1 million shares of General Motors (GM) stock, coming just a year after Treasury announced plans to exit its 500 million share position in the once bankrupt car company. According to a timeline created by NPR, the Treasury department sold out less than one month before GM executives linked a faulty ignition switch to 31 crashes and at least 13 fatalities.
Treasury’s decision to dump its entire stake in GM allowed it to avoid $262 million in potential losses.
Nine days later in New York former SAC trader Michael Steinberg was convicted on multiple counts of insider trading shares of Dell. Steinberg will be sentenced later this month and is facing up to 85 years in prison. Steinberg’s crime was trading based on a chain of evidence including ex-employees and an analyst with a different firm who reportedly had close ties to the company.
- Jeff Macke at Breakout1 day ago
Earnings season only started last week but according to John Butters of FactSet much of the suspense is already ruined, at least in terms of what we expect to hear from particular sectors. In the attached clip, Butters says that the ten major sectors will be split evenly between winners and losers but the spread between the have and have nots will be huge.
“Your top performers are going to be the telecom services sector with growth of about 24.5% and the utility sector with growth of about 6.7%. They’re really the two standouts when it comes to growth this quarter.”
- Jeff Macke at Breakout1 day ago
Selloffs come in phases. As we’ve been tracking ad nauseum, the slow-building group-effort to the give this stock market the official correction America’s long-dormant sense of propriety demands is only about 5 trading days old. Remember, a week ago last Friday the Dow Jones Industrial Average (^DJI) was at a record high that might have broken out with some vigor had not every private equity group on earth, with tech stocks already down 10%, deciding that last week would be a great time to stuff several IPOs into the market.
Out came La Quinta (LQ) and Ally (ALLY), IPOs so unloved they each priced at the very bottom of their original ranges and found almost no organic buying as they opened for trading. The most troubling thing about the deal as far Wall Street pros were concerned wasn’t the fact that suckers got stuck with bad shares. That’s business as usual. What was frightening was how casual Blackstone and the other underwriters were about breaking the range.
Here are the Trending Tickers for Friday April 11th as measured by your yahoo Finance searches:
Gap (GPS) - Shares are lower by more than 4% after the company said it saw a 6% decline in same store sales during March. Despite reiterating earnings guidance for the full year Gap said it expects margins for Q1 to be worse than expected. For those new to retailing, when both sales and margins are worse than expected earnings are probably going to come in light. Gap deserves a downgrade just for not having the guts to warn in plain English.
JPMorgan (JPM) - Shares are down more than 3% after the company missed earnings expectations, citing weakness in both trading and mortgage originations. CFO Marrianne Lake told analysts, "the reality is we still have issues open in front of us." According to Lake these issues include unknowable expenses related to litigation and compliance efforts. On the sort of bright side, an atypically subdued CEO Jamie Dimon said he has growing confidence in the overall economy.
Howard Schultz wants to sell a new drug
Having changed the way America spends its mornings, Starbucks (SBUX) Chairman and CEO Howard Schultz wants to capture your nights as well. Recently the chain announced plans to rollout its Starbucks Evening wine and beer stores. It’s an expansion of Starbucks Evening prototype stores.
The critics took issue with the idea of debasing the relatively wholesome environment of a coffee shop with the degeneracy of a bar. It's a point that seems almost willfully ignorant of caffeine's place as America's most socially acceptable and available-over-the counter-medication.
The skeptics and doomsayers say it will be impossible for Starbucks to switch from coffee shop to bar over the course of the day. They snipe that baristas won't have the skillset required to handle delivering the complexities of taking and filling booze orders. The customers will be different and alcohol is somehow more complex.
It's Friday, April 11th and stocks around the world are trading lower this morning after yesterday saw the worst one day Nasdaq (^IXIC) selloff since 2011. The most dramatic weakness overnight seen in Japan where the Nikkei (^N225) dropped to six-month lows after a plunge in Softbank and a warning from fast growing merchant Fast Retailing. Here are some things to keep in mind as we countdown the minutes to the closing bell.
Watch bank stocks after JPMorgan (JPM) reported weaker than expected earnings and revenues. CEO and Unofficial Prince of Wall Street Jamie Dimon described the quarter as a "good start to the year," but said the bank faced "industry wide headwinds in markets and mortgage."
The Dow Jones Industrial Average (^DJI) fell 267 points on Thursday as any doubts about whether or not the market is in the middle of a full-blown correction were put to rest. Investors who got lured into stocks during yesterday’s rally were quickly flushed. Only the closing bell could stop the losses but not before the S&P 500 (^GSPC) had been hit for a 2% loss and the Nasdaq dropped another 3%.
As Aaron Task and I discuss in the attached clip, the selling was particularly bad in some of the biotech and social media stocks that were market leaders as recently as last month. Facebook (FB) gave back almost all of the 7% gain it posted on Wednesday and the iShares biotech ETF (IBB) got crushed to the tune of 6%.
Nice bounce yesterday with the S&P500 (^GSPC) taking back about half of the losses since last Friday and high-flying names like Facebook (FB) recording badly needed snap back rallies. As the dust settles it seems the prevailing mood on Wall Street has gone from trying to avoid catastrophic losses to assuming that the last month has been a replay of January’s decline (read: another chance to buy every conceivable dip and let the consequences be damned).
In the attached clip Jason Trennert of Strategas is quick to disabuse investors of any notions they may have about volatility being over but is still encouraged by the long-term heath of the market.
When Wall Street strategists insist on hedging their forecasts using time frames it means one of two things. Usually it’s a way of sidestepping accountability and ducking into the standard sales pitch about the stock market historically returning somewhere around 9% or more on an annual basis. While mathematically true that’s neither earth shattering nor actionable.
In the case of Raymond James’ Jeff Saut his emphasis on the big picture is a polite way of avoiding the fact that stocks have been trading horribly for over a month and there’s little to suggest the near-term risk outlook is anything other than ominous.
“I think longer-term we’re in a secular bull market very much like we were from 1982 to 2000,” offers Saut in the attached video. “Not a lot of people believe that, especially not the individual investors. They don’t understand how you can have a secular bull when you have dysfunctional government, unemployment higher than what it should be at this stage of a recovery and GDP lower than what it should be.”
- Jeff Macke at Breakout6 days ago
Here are today's Trending Ticker's as measured my your Yahoo Finance searches:
Constellation Brands (STZ) - up more than 1% after opening a tall can of better than expected earnings.
Linked In (LNKD) - Topeka Capital upgraded it to buy from hold and the stock is up more than 2 percent on the news
And the big story today is La Quinta Holdings (LQ) which started trading earlier today. Shares initially fell off but regained their footing and are trading up more than one percent. La Quinta sold 38.2 million shares at $17. The deal values La Quinta at roughly $2.1 billion.
The La Quinta offering was supposed to be for 37.2 million shares priced between $18 - $21. With the current price hovering around $17 investors are clearly saying "no mas" to more IPOs.