Posts by Jeff Macke
- Jeff Macke at Breakout1 hr ago
Here are the trending tickers for today as measured by the list of your Yahoo Finance ticker searches:
Isaac Newton be damned Apple (AAPL) is falling higher by more than 7%. The company posted a terrific quarter last night, beating on the top and bottom lines and recording its best margins in years. Shareholders are also jazzed over a $30 billion increase of its buyback program, an 8% dividend boost and weirdest of all a 7 for 1 stock split. That's right: 7. Post-split Apple will be about $80 per share; almost exactly the median price of the 30 stocks in the Dow Jones Industrial Average (^DJI). I still say it's a huge mistake not to be investing in the store base but we're making money today so who cares?
- Jeff Macke at Breakout3 hrs ago
After months of product announcements and price tweaks Amazon (AMZN) will finally talk numbers tonight after the closing bell. Analysts are officially expecting earnings of 23-cents per share on $19.43 billion in revenues. With shares off $75 since Amazon's last earnings report and the company's famous disdain for profits, shareholders are simply hoping for anything better than agonizing.
There's no shortage of questions surrounding the world's largest online retailer. In just the last 3 months Amazon has raised the price of its Prime subscription, secured a deal to stream HBO programs, released a voice-activated set-top box and is still expanding into local delivery.
- Jeff Macke at Breakout5 hrs ago
It should come as no surprise to anyone with the physical ability to sense temperature that the first quarter of 2014 was slow as far as the economy was concerned. When a long cold winter meets a slow-growth economy, activity freezing to a halt is the only reasonable forecast.
The meteorological fact of the horrendous climate is the best explanation for why Wall Street seems to be drawing strength from the ongoing drumbeat of downcast news from corporate America. Barely half of the companies that have reported so far managed to beat famously low-balled revenue forecasts and earnings are little better. Unless there are dramatic beats lurking out there, Q1 2014 will be the first time growth has contracted since 2012.
In a letter to investors in his fund, hot-shot hedge fund manager David Einhorn claims "we are witnessing our second tech bubble in 15 years.” To support his case Einhorn cites examples like the rejection of “conventional valuation methods,” short sellers being forced to cover positions and big first-day pops for IPOs.
In the attached clip Mark Luschini of Janney urges investors not to paint the tech market with quite so broad a brush. “The tech sector is about 19% of the S&P 500 (^GSPC) so a lot of companies get rolled up into that space,” Luschini notes, “While I agree that particularly some of the social media companies that were trading at 20, 50, 100 times earnings or sometimes ‘priced to hope’ earnings ratios are indicative of bubble-like characteristics, I can’t say that for the tech industry in the aggregate.”
This week a very rich man made about a billion dollars trading on material, non-public information.
The investor is Bill Ackman and what he knew was that Valeant Pharmaceuticals would be making an unsolicited bid for botox-maker Allergan. Ackman knew about the bid because he and his Pershing Square Capital Management were partners with Valeant in the bid.
In anticipation of this deal Ackman purchased 4.99% of Allergan stock over several weeks. Once that stake was built Ackman let the market settle for a few days before going for the kill. In what he called a "rapid accumulation program" of Allergan stock. (In English Ackman bought call options and "forward contracts" giving him the right to buy another 4.7% of the company at a set price and date to be named later).
April has been the cruelest of months for traders. Unless you count last February which was pretty horrible as well. In fact, anyone active in the market has had more than enough opportunity to get themselves flipped in and out of the market with the worst imaginable timing.
No one has had a worse run of it than the well-respected Dennis Gartman who got whip-sawed out of stocks on April 7th, reiterated the call on the 10th, and suddenly showed up long yesterday morning, right in time for a rally back from where the market was at its heights.
Which isn’t to pick on Gartman in particular. This is a very difficult stock market and trading via pundit is all but impossible under the best of circumstances. If anything Gartman at least has the grace to change his mind about the call rather than sticking to disastrous, multi-year bear calls or emerging annually to shout “Crash” into any open mic a la Marc Faber in 2012, 2013 and earlier this month.
- Jeff Macke at Breakout2 days ago
Hank Smith of Haverford told us all McDonalds (MCD) wasn’t an earnings story. In February Smith came on Breakout and said Micky-Ds was a “Yield of Dreams” story; a company able to issue you debt at such low yields that it had the ability to the generate yield and conduct buybacks almost regardless of performance.
Sure enough McDonalds reported a disappointing first quarter this morning as the company continues to wrestle with any number of social, cultural and dietary headwinds. For the quarter ending March 31st the real burger kings reported EPS of $1.21 per on $6.7 billion ins revenue. Wall Street analysts had been expecting earnings of $1.24 on slightly higher revenues.
Not that estimates and operational performance matter all that much at McDonalds anymore. After an initial drop shares were up pre-market. Here’s a screengrab of the company’s press release. See if you can guess what investors are focusing on:
- Jeff Macke at Breakout3 days ago
Is the next big thing dead before it even got here? In an Easter weekend bloodbath Nike (NKE) announced heavy layoffs in its hardware group. Though the company is lightly denying the news it would seem the FuelBand is dead. The move could mark the beginning of the post-peak era for wearable devices just days (or weeks or even months) before Apple (AAPL) announces its endlessly discussed smart watch.
As it turns out even the most self-absorbed generation of Americans in history eventually get sick of looking at their own data.
- Jeff Macke at Breakout3 days ago
Here are the names and numbers to keep an eye on as we roll in to the last full week of April:
Four: That's the number of days in a row both the S&P 500 (^GSPC) and the Nasdaq (^IXIC) have managed to post gains. After sputtering along to start last week, some decent earnings and old-fashioned seller's fatigue led to a nearly 3% gain for the S&P 500. It was the strongest weekly performance since last July, and it pushed the senior market index back into the green for 2014.
- Jeff Macke at Breakout6 days ago
Five years after a real estate bubble popped in epic fashion, it seems Americans are looking to get back in the trade. According to a recent Gallup poll, 30% of us say real estate is the best long-term investment. Gold and stocks were ranked as the second most popular investments at 24%.
The results are a far cry from the peak popularity of housing back in 2002, but are still eye-popping in light of the magnitude of the housing collapse just 6 years ago. In the attached clip Yahoo’s Phil Pearlman says America’s passion for investing in whatever seems to be rising at the moment may have given us collective amnesia, but other forces are at work as well.
“Part of this is confirmation bias,” explains Pearlman. Most people didn’t sell in 2007. Those who managed to hang on are still in tangible possession of a physical asset in the form of their house. Intuitively any asset that managed to survive the last decade of craziness in America can’t be all bad, can it?
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