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    • With first quarter earnings season now 90% over, and the stock market extending a winning streak that has led to a string of record highs, investors could be forgiven for assuming that all is well inside the halls of corporate America. Unfortunately, it's not. As John Butters, senior earnings analyst at FactSet explains, that's only half the story.

      "On the earnings side, we'll give the companies high marks. On the revenue side, the marks aren't as good," Butters says in the attached video of the better than expected 3.2% earnings growth rate for the S&P 500 (^GSPC) versus no sales growth at all.

      "However, if you go to the revenue side, it was not a good quarter. We saw less than half (48%) of the companies beat (sales expectation) and it looks like we're going to finish with no growth for the quarter," he says, pointing out that it was even less than the meager 1% sales growth analysts were looking for at the start of earnings season a month ago.

      Despite this mixed report card and an overwhelmingly negative guidance ratio (where 79% of companies gave a bleaker outlook than the analysts who cover them), equity markets have largely ignored cautionary indicators and tacked another 3% onto a 6-month, 20% rally that started in mid-November. Over the past five years, Butters says, this negative guidance ratio has averaged only about 61%, which suggests that, for whatever reason(s), companies are even more cautious today than usual.

      Read More »

    • Can a CEO be fired for being obnoxious?

      That's just one of the questions being asked regarding Abercrombie & Fitch (ANF) CEO Mike Jeffries after a Change.org petition demanded Jeffries, "stop telling teens they aren't beautiful; make clothes for teens of all sizes!"

      The petition picked up steam after BusinessInsider.com and others ran stories pointing out that Abercrombie doesn't stock XL or XXL women's clothing, allegedly because they don't want overweight women wearing their brand.

      Another sensationalist media attack? Not really. Jeffries himself addressed his marketing strategy in a 2006 interview with Salon. Said Jeffries:

      Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely. Those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla. You don’t alienate anybody, but you don’t excite anybody, either.

      It's a staggeringly stupid thing for Jeffries to have said but it's not as though A&F's strategy isn't obvious within minutes of entering a store. In the attached piece, Breakout Co-Host Matt Nesto points out that ANF shareholders include fund juggernauts like Fidelity Investments which owns ANF shares in more than a dozen different funds.

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    • For more than 30 years the Bank of Japan groped for a monetary policy that would break the country about of its torpor. Finally in April, BOJ president Haruhiko Kuroda got the world's attention by taking actions so extreme the market couldn't help but react. The Yen has collapsed through a huge technical barrier at 100 per dollar and the Nikkei (^N225) is making 5-year highs.

      The question for traders is whether this is just another fake out or if the long-awaited Japanese recovery has finally begun.

      Louise Yamada, managing director of Louise Yamada Technical Research Advisors, says both the Yen and the Nikkei moves are the real deal.

      Today's leap over 100 is huge for the Yen. Yamada and others expected it to take longer for the currency to break through such time-tested resistance. Now that it's happened the Yen is in a spot that should be familar to U.S. investors: the rally is "due for a rest" but the momentum just won't stop.

      Related: Japanese Rally Will End in Tears, Warns Schiff

      "It's looks like a legitimate breakout in the Nikkei and clearly a legitimate decline in the currency," Yamada says in the attached video. What's that mean?

      Read More »

    • Jamie Dimon may be both feared and idolized on Wall Street, but institutional investors seem to be falling out of love with the king of JPMorgan (JPM).

      Self-styled corporate governance experts from groups like Institutional Shareholder Services (ISS), the California Public Employees' Retirement System (CalPERS) and the Illinois State Board of Investment (ISBI) have all announced that they will vote in favor of separating the roles of chairman and CEO at JPM. If the groups have their way, Dimon will be stripped of his chairman title but retain his role as CEO.

      The split of the chairman and CEO roles is something of a crusade for institutional investors, the idea being that a chairman should be a check on the CEO's power to control a corporation's agenda. JPM is being targeted, in particular, as a reaction to the "London Whale" debacle of 2012.

      James Altucher, editor of Altucher Confidential, questions the timing and motivation of the institutional funds, while pointing out the absence of similar outrage on the cusp of the financial crisis when investors could have used some help. "Where were they in 2007 on Lehman Brothers when shareholders actually needed them?"

      Plenty of people didn't see the meltdown coming. Less forgivable is the fact that the groups have no evidence that splitting the roles of chairman and CEO actually helps shareholders. The bare minimum qualification for those with a legal responsibility to protect retirees' money should be some sort of evidence that their proposals make sense.

      Read More »

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