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The bump isn’t just Trump: What’s driving the stock rally

Photo: Richard Drew /Associated Press

The bump isn’t just Trump: What’s driving the stock rally

STAN CHOE, ASSOCIATED PRESS

NEW YORK — The stock market is hitting new heights, and yes, excitement about President Donald Trump’s policies is part of the reason for it. But it’s not the only one, analysts say.

Even if Trump had lost the election, many professional investors and analysts say they still would have expected stocks to rise, just perhaps not to the same degree. The Standard & Poor’s index has leapt 11.6 percent since Election Day, packing more gains into four months than it’s had in five of the last six full years. It dipped a bit Thursday, but it’s still close to its record set a day earlier.

Here’s a look at some of the factors behind the strong run for stocks:

Trump bump: The first reaction for markets to Trump’s win of the White House was confusion. Many investors had been expecting a victory for Hillary Clinton, and markets around the world tumbled on election night as the result became apparent. But they reversed course within hours. The reason: Investors are expecting the Trump White House to push through tax cuts for businesses and to loosen regulations on them.

Lower tax bills for companies should lead to an immediate rise in earnings, and stock prices tend to track profits over the long term. Easier regulations should also help businesses, the thinking goes, particularly big banks and other financials that have been under restrictions imposed following the financial crisis.

Financial stocks have been the best-performing sector by far of the 11 that make up the S&P 500 since the election. Besides the hope for looser regulations, analysts are also excited about the prospect for bigger profits given recent gains in interest rates, which will make lending money more profitable.

Improving economy: Growth has been frustratingly slow since the end of the Great Recession, but the job market is picking up steam. The unemployment rate in January was 4.8 percent, and economists see the economy as close to full employment. A report on Thursday showed that the fewest number of workers applied for unemployment benefits last week since Richard Nixon was in the White House.

Improvement was underway before Trump entered the White House, but his election has spurred things along. Optimism among small businesses, for example, spiked higher after the election and is now at its highest level since 2004, according to surveys from the National Federation of Independent Business.

Confidence also jumped for regular households following the election, and consumer confidence is at its highest level since the summer of 2001. If that translates into more purchases at stores and elsewhere, it should drive even more economic growth.

Other economies around the world are also improving, raising expectations for profits of big U.S. companies, which do a lot of their business overseas.

Investor confidence: Confidence has spread even to regular investors.

After years of hiding out in bonds and other safer investments, retail investors began creeping back into stock mutual funds and exchange-traded funds following the election. Investors plugged $20.7 billion into U.S. stock funds in November, the biggest month in nearly two years. They’ve followed that up with more purchases. That buying has helped to bid up stocks even more.

Corporate profits: Big businesses are finally earning bigger profits again.

Earnings per share for companies in the S&P 500 were nearly 6 percent higher last quarter than a year earlier, with nearly all of the companies reporting, according to S&P Global Market Intelligence. It’s a sharp turnaround from a year ago, when low oil prices and other factors were pulling down profits for S&P 500 companies. Profit growth was particularly strong for technology and financial companies. Microsoft’s earnings rose on stronger sales of business software, for example, and investment banks reported a strong quarter for their trading operations.

But just as each of these pillars has helped to lift stocks in recent months, a weakening of any one of them could remove some support. If tax cuts come later than expected, or if they end up being only minor ones, it could mean a drop for stocks.

Critics also worry that that stock prices have run up at a time when they were already looking overpriced relative to their earnings. One popular way to measure whether the stock market is expensive or not is to compare the S&P 500’s level against its earnings over the prior 10 years, adjusted for inflation. By that measure, which was popularized by Nobel-winning economist Robert Shiller, the S&P 500 is close to its most expensive level since the dot-com bubble was deflating in 2002.

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Domino’s Streak of Strong Sales Growth Continues

by Riedelmeier from Pixabay

Domino’s Streak of Strong Sales Growth Continues

By Daniel B. Kline | February 28, 2017 — 12:01 PM EST

Clearly, the Noid has been defeated.

Domino’s (NYSE: DPZ) continues to deliver results that defy the market conditions dragging down sales in much of the restaurant industry. The company posted comparable-store sales gains in both the United States and globally in the fourth quarter, its 23rd straight quarter of domestic same-store growth and its 92nd quarter in a row growing internationally.

And it’s not just that the company managed to add to its same-store sales totals: The numbers have been impressive. Domestic same-store sales climbed 12.2% year over year in Q4, and they jumped 10.5% for the full year. The chain’s international locations had 4.3% growth in Q4 and a 6.3% gain for the year.

“I’m extremely proud of our franchisees and operators worldwide, including those who contributed toward back-to-back years of double digit sales growth in the U.S.,” said CEO J. Patrick Doyle in the Q4 earnings release. “While these unprecedented results speak for themselves, I am most pleased with the passion and energy we demonstrated throughout 2016 in meeting the challenge of sustained success. The momentum and alignment within our system has never been stronger.”

A look at Domino’s numbers

In addition to growing same-store sales, Domino’s also improved its earnings per share. The company delivered Q4 EPS of $1.48, up 25.4% over the prior-year quarter. Full-year EPS came in at $4.30, up 23.9% over 2015. Revenue also climbed 10.6% year-over-year, despite the previous year’s quarter being a week longer.

Domino’s also provided indications that its expansion across the world is unlikely to slow down anytime soon. The company reported “record global net store growth of 1,281 stores in 2016, comprised of 171 net new domestic stores and 1,110 net new stores internationally.”

What’s next?

This is a clear case of “if it’s not broke, don’t fix it.” Going forward, however, Domino’s will tweak its formula. The company will continue to modernize the look of some of its stores, and it has been a steady innovator when it comes to ordering technology.

There’s nothing that suggest that an end is coming to either of Domino’s same-store sales streaks in the current quarter. Customers globally seem to have an ever-increasing desire for really convenient, mediocre pizza that this chain has been stunningly good at filling.

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Daniel Kline has no position in any stocks mentioned.
Published at Tue, 28 Feb 2017 17:01:02 +0000

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Tesla gets downgraded to ‘sell’ by Goldman Sachs

Tesla gets downgraded to ‘sell’ by Goldman Sachs

  @lamonicabuzz

Goldman Sachs thinks it’s time to pull the plug on Tesla’s stock.

David Tamberrino, an analyst at the influential Wall Street investment bank, downgraded Tesla’s stock to a “sell” rating on Monday morning. It’s pretty rare for analysts to be that negative about a high-profile company.

Tesla’s stock fell nearly 5% Monday and shares are now down more than 10% since the company reported its latest financial results last week. Tamberrino lowered his price target only slightly, from $190 to $185.

But a price of $185 is more than 25% below the $257 level it closed at on Friday. Shares were trading around $246 Monday following the downgrade.

Although Tesla (TSLA) recently said there’s strong demand for its Model S and Model X electric cars as well as the upcoming Model 3 — Tesla’s more affordable vehicle that should be available later this year — investors are nervous about all that Tesla has on its plate.

Tesla also recently bought SolarCity, an alternative energy company that is run by two cousins of Tesla CEO Elon Musk.

Tamberrino said the SolarCity deal was one reason why he was worried about Tesla.

The Goldman Sachs analyst added that “the acquisition of SolarCity — which is undergoing its own business model transition — comes at a time when we believe Tesla should be singularly focused on becoming a mass automobile manufacturer.”

As for the Model 3, Tamberrino thinks it will have “a more subdued launch curve than the company is targeting as some suppliers have expressed concern around final designs not being locked down.”

For that reason, Tamberrino thinks Tesla’s production goals for the Model 3 are too ambitious.

He’s predicting that Tesla won’t be able to hit an annualized run rate of more than 100,000 Model 3s until the fourth quarter of 2018 — a full year later than what Tesla expects.

Tesla also announced during its earnings call that its CFO was stepping down, not something that investors ever like to hear.

And Musk discussed plans to build as many as three more Gigafactories for battery and solar panel production. Tesla already has one for batteries in Nevada and another in Buffalo for solar panels.

Tamberrino is worried that Tesla is going to need to sell more stock to raise capital by the end of this year. That would dilute the value of existing Tesla stock.

But shares of Tesla are still up 15% this year despite the recent sell-off. Investors are happy with the solid demand for the Model S and Model X.

Some investors have also expressed hope that Musk’s willingness to participate in CEO summits at the White House with President Trump could mean that Trump will not attack Tesla the way he has other big companies.

The fact that Tesla has big plans to invest on U.S. factories may also help Musk curry favor with Trump — even though Musk opposes Trump’s proposed ban on immigrants from several predominantly Muslim nations and has taken issue with Trump’s assertions that climate change may not be real.

But Tesla is going to face a lot more competition from GM (GM), Toyota (TM), Ford (F) and Nissan(NSANF) in the electric car market.

Some analysts are worried Tesla may have dropped the ball by not getting the Model 3 to market sooner since GM already has the Chevy Bolt out and Nissan has the Leaf. Both of those cars are priced at levels that should be competitive with the Model 3.

And Goldman’s Tamberrino thinks that Tesla has too many distractions to deal with all the emerging competition from auto giants in Detroit and Japan.

“The company may lack the singular focus it should have on achieving its Model 3 launch targets,” he said.

Tesla was not immediately available for comment about the Goldman Sachs report.

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Fidelity slashes fees on stock and ETF trades to $4.95

A sign marks a Fidelity Investments office in Boston, Massachusetts, U.S. September 21, 2016. REUTERS/Brian Snyder/File Photo

Fidelity slashes fees on stock and ETF trades to $4.95

Fidelity Investments said on Tuesday it cut the price on trades for stocks and exchange-traded funds by 38 percent for retail brokerage clients.

Boston-based Fidelity’s price reduction to $4.95 from the previous commission of $7.95 a trade, will likely put pressure on the rest of the U.S. brokerage industry. Fidelity’s price offers a discount of more than 50 percent when compared with some rivals.

“It puts the flag up that Fidelity is the value player in investing,” said Ram Subramaniam, president of Fidelity’s retail brokerage business.

Discount brokers TD Ameritrade Holding Corp and E*Trade Financial Corp each charge $9.99 per trade and Charles Schwab Corp charges $6.95.

Fidelity said it also reduced option pricing to $0.65 per contract, down from $0.75. Fidelity’s online brokerage business has 17.9 million accounts and $1.7 trillion in total client assets.

(Reporting By Tim McLaughlin; Editing by Andrew Hay)

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Snapchat IPO; Trump Tuesday; Mobile World Congress

Snapchat IPO; Trump Tuesday; Mobile World Congress

  @CNNMoneyInvest

1. Snapchat IPO: Snap Inc., the parent company of Snapchat, is expected the reveal its initial public offering price after the market closes on Wednesday. While it’s one of the most highly anticipated companies to hit the stock market in a while, analysts attending Snap’s IPO road show have expressed concern about its earnings and revenue growth potential.

Snap’s 200 million shares are expected to be priced between $14 and $16 a share. That would give it a market value of nearly $20 billion.

2. Trump Tuesday: Tuesday will be a big day for President Trump. He’s kicking off with an interview on Fox & Friends, which will be his first morning show appearance since the inauguration. He called the Fox News Channel show the “most honest” morning program at a recent press conference.

Later that day, his sons Eric and Donald Trump Jr. will cut the ribbon at the new Trump International Hotel and Tower in Vancouver. The $360 million dollar facility has been the site of protests for the last several months with another planned on Tuesday.

President Trump will deliver his first address to a joint session of Congress at 9 p.m. ET. This will be the first time that he will outline his agenda to lawmakers. He’s expected to lay out what he’s achieved during his first month and announce what to expect for the rest of 2017.

3. Mobile World Congress kicks off: There’s nothing phone-y about all the new tech that will be released in Barcelona, Spain, beginning Monday. More than 2,000 companies, including HTC, LG, Sony (SNE) and Samsung will be on hand to reveal the latest in phones, tablets and anything else related to mobile gadgets.

The biggest buzz will go to Samsung following last year’s Note 7 disaster. Millions of the flammable phones were recalled. But Samsung isn’t expected to release the S8 follow-up. Instead it will focus on tablets.

Another company to keep an eye out for is Nokia (NOK). The iconic Nokia 3310 “candy bar” phone is expected to be making a comeback.

4. Coming this week:

Monday – Mobile World Congress kicks off

Tuesday – GDP second estimate; Trump’s Vancouver hotel opens and he addresses Congress

Wednesday – Auto sales numbers

Thursday – Chain store sales released

Friday – Nintendo Switch released worldwide

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Buy These Uptrending Stocks on the Pullback (LRCX)

 

Buy These Uptrending Stocks on the Pullback (LRCX)

By Cory Mitchell | Updated February 20, 2017 — 10:08 AM EST

Some traders like to buy a stock as it makes a new high, while others prefer to buy on a pullback. Stock prices are always moving up and down, so buying on a pullback presents an opportunity to get in at a better price than the recent highs the price has fallen from. These stocks have been trending higher for the last year and are currently pulling back. If the uptrend continues, these pullbacks could provide a good opportunity to take advantage of the next swing to the upside.

Lam Research Corp. (LRCX) started rallying in February of 2016, and in July broke out of a year-long range. The price has continued to rally strongly in 2017, reaching a high of $119.14. The price has started to pullback off that high, closing at $114.90 on Feb. 17. The trendline extending back to early 2016 indicates a potential buying region near $110 to $109. That entry area aligns with minor resistance from November and December, which could now act support. A number of other pullbacks during this rally have been about $9 to $10. If that holds true on this pullback, then the price would be expected to drop into that $110 region before rallying again. Ideally, wait for the price to stall out in the $110 region and then start bouncing again—showing that the price is still respecting that area—before buying. That way a stop loss can be placed below the recent swing low. A more conservative upside target is $121, while a more aggressive target is $125 for this short-term trade.

waiting for buying opportunity on LRCX

Copart, Inc. (CPRT) rallied strongly in 2016, also breaking out of a long-term range. In 2017 the price hit a high of $59.86 on Feb. 16. The price has barely started to pull back, but when it does, the first potential buying region is near $56. That’s where a trendline extending back to June intersects. Wait for the price to pause and rally off the $56 area before buying. This way a stop loss can be placed just below the recent swing low. June, September, and November are all examples where the price paused near support and then rallied. The price target on this short-term trade is $60.75. Note that Copart has earnings on Feb. 21.

waiting for pullback in CPRT

Genesee & Wyoming Inc. (GWR) bottomed at $41.56 in 2016 and has been moving steadily higher since. The rally since the start of 2016 has shown some tendencies which can aid in picking an entry area. Mainly, the price tends to rally and then move sideways within a range. In November the price rallied to a 2016 high of $80.73. It then experienced a sharp pullback, but then paused and rallied off the $69 region. Based on the tendency to range, and $69 being the closest support area within the uptrend, $69 to $68 is the potential buying zone. The stock has also shown a tendency to have a false break through the bottom of range before moving higher. Therefore, traders may need to give this trade a large stop loss (below $65 for example), or alternatively look for an entry near $67 or $66 if the price pulls back that far. This provides for a lower-risk trade as the entry point is closer to the stop loss level. The price target on this trade is $83.

Waiting for buying opportunity on pullback in GWR

The Bottom Line

Depending on the exact entry and stop loss levels, these trades have the potential for providing excellent risk/reward ratios. The trades are based on the assumption that the current uptrend will continue. The risk is that it won’t. This is why stop loss orders are used to limit the risk in case the price drops more than expected. These trade ideas are short-term in nature, designed to capture only a short-term rise in the stock price. Traders should do their own analysis and make sure all trades they take align with their own trading objectives.

Disclosure: The author doesn’t have positions in any of the stocks mentioned
Published at Mon, 20 Feb 2017 15:08:00 +0000

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With stocks at highs, investors eye consumer results

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 With stocks at highs, investors eye consumer results

By Saqib Iqbal Ahmed| NEW YORK

U.S. stock investors may look to a host of results from consumer-facing companies including Wal-Mart Stores Inc (WMT.N) next week for signs on whether the recent market rally has more room to run.

The consumer names are among the last major companies of the S&P 500 earnings season to report, but the results will also be watched for a read on spending as well as for commentary from executives on President Donald Trump’s proposal to tax imports.

Retail executives, some of whom met with Trump this week, have argued such a tax will raise consumer prices and hurt their businesses.

Besides Wal-Mart, Macy’s (M.N) and Home Depot Inc (HD.N) are among the heavyweights due to report next week.

Investors also will keep a close eye on housing-related data to gauge if a recent rise in consumer spending and inflation data is translating into higher home prices and a pick-up in home sales, market strategists said.

Wall Street ended the week on a high note, with all three major indexes registering record highs and the Dow reaching a seventh straight record close. [.N/C]

Investors were watching consumer names this week as Trump met with chief executives of Target Corp (TGT.N), Best Buy Co Inc (BBY.N) and six other major retailers.

Next week, investors may be looking for more clues about the impact of Trump’s proposals on retailers, with particular focus on Wal-Mart, JJ Kinahan, chief market strategist at TD Ameritrade in Chicago said.

“Maybe not so much what their earnings say as much as what their conference call will say about some of the president’s proposals around border taxes and immigration,” he said.

Results from some of the largest consumer-facing companies will also provide a read on whether improving consumer sentiment is reflected in actual results, said Steve Chiavarone, portfolio manager at Federated Investors.

“Does sentiment continue to work higher and eventually pull up actual results or can sentiment only take you so far until you have some follow-through in the real data? Those are the things that will be on our minds,” he said.

Results from small-cap retail companies will also be pored over as these companies have struggled from a profitability standpoint, said Steven DeSanctis, equity strategist at Jefferies.

“Though retail sales numbers have been good, profitability for a lot of the retailers has not been good,” he said.

“That’s going to be a big telltale sign for us. We’re overweight discretionary, thinking that was the cheapest group out there, and it still is the cheapest but… if the E drops out the PE, you run into a problem there,” he said, referring to price-to-earnings for the group.

 

(Reporting by Saqib Iqbal Ahmed; Additional reporting by Caroline Valetkevitch; Editing by James Dalgleish)
Published at Fri, 17 Feb 2017 22:44:46 +0000

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Cisco helps Wall Street extend streak of record highs

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By Yashaswini Swamynathan

U.S. stocks eked out enough gains on Thursday for the three main indexes to notch a record intraday high for the sixth straight session, helped by gains in Cisco.

The rally was sparked a week back by President Donald Trump’s vow of a ‘phenomenal’ tax announcement. Robust economic data has also been a boost, while bank stocks have risen on prospects of an upcoming interest rate hike.

Trump tweeted on Thursday: “Stock market hits new high with longest winning streak in decades. Great level of confidence and optimism – even before tax plan rollout!”

“The market is likely to take a breather after recklessly rising to continued record highs without a pause,” Perter Cardillo, chief market economist at First Standard Financial wrote in a note.

This type of action is due to the market expecting a perfect fiscal reform and that maybe placed on hold, he said.

The S&P 500 technology index .SPLRCT rose 0.29 percent and gave the broader index its biggest boost. Cisco (CSCO.O), which jumped 2.8 percent to $33.76 was the top stock on the three main indexes.

Adding to strong data points of late, a Labor Department report Thursday that showed the number of Americans filing for unemployment benefits rose less than expected last week.

At 9:38 a.m. ET (1438 GMT), the Dow Jones Industrial Average .DJI was up 14.36 points, or 0.07 percent, at 20,626.22, while the Nasdaq Composite .IXIC was up 10.13 points, or 0.17 percent, at 5,829.57.

The S&P 500 .SPX was up 0.96 points, or 0.04 percent, at percent, at 2,350.21. The index ended higher for the seventh session in a row on Wednesday, its first such streak since September 2013.

Six of the 11 major S&P sectors were higher, with utilities .SPLRCU and real estate .SPLRCR gaining the most, after two straight days of losses.

NetEase (NTES.O) jumped nearly 10 percent to $287.19 following the Chinese online game developer’s revenue beat.

Molina Healthcare (MOH.N) tumbled 16 percent to $50.35 after the health insurer reported a fourth-quarter loss and forecast 2017 profit far below estimates.

Alexion Pharma (ALXN.O) rose 2.9 percent to $135.84 after the company gave a 2017 revenue forecast that a Leerink analyst said would likely quell investor concerns.

Advancing issues outnumbered decliners on the NYSE by 1,425 to 1,132. On the Nasdaq, 1,231 issues rose and 972 fell.

The S&P 500 index showed 39 new 52-week highs and no new lows, while the Nasdaq recorded 75 new highs and eight new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D’Souza)
Published at Thu, 16 Feb 2017 14:54:20 +0000

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Groupon Beats on Q4 Revenue, EPS

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Groupon Beats on Q4 Revenue, EPS

By Eric Volkman | February 15, 2017 — 5:10 PM EST

There’s nothing like a more impressive than expected quarter to send a company’s stock price shooting higher. Such was the case for Groupon (NASDAQ: GRPN), which reported a fourth quarter that greatly pleased the market.

For the period, the company posted revenue of just under $935 million, an almost 2% improvement on a year-over-year basis. This was on the back of gross billings that were largely flat, at nearly $1.7 billion. On an adjusted basis, net income came in at $42.5 million ($0.07 per share), nearly double the $23.3 million ($0.04) of the same quarter the previous year.

On average, analysts were expecting revenue of only $914 million, and an adjusted bottom line of $0.03 per share.

For the entirety of 2016, Groupon’s revenue inched up by 1% to $3.1 billion, on billings that dipped by 3% to just under $6.1 billion. Adjusted net profit was $23 million ($0.04 per share).

“Our concentrated focus on key strategic initiatives provided a strong foundation for Groupon going forward and resulted in a streamlined global operation, a healthier Goods business, improved customer service and strong customer acquisitions after a successful online and offline marketing strategy,” CEO Rich Williams said in the press release detailing the results.

Groupon also proffered guidance for the current year. The company believes its adjusted EBITDA will be in the $200 million to $240 million range, well up from the $178 million of 2016. It did not provide revenue or net profit estimates.

Following the unveiling of the results, Groupon’s stock price increased sharply, closing Wednesday 23% higher at $4.66 per share.

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*Stock Advisor returns as of February 6, 2017

Eric Volkman has no position in any stocks mentioned.
Published at Wed, 15 Feb 2017 22:10:06 +0000

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Berkshire takes huge bite of Apple, boosts airline stakes

Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at the Fortune’s Most Powerful Women’s Summit in Washington October 13, 2015. REUTERS/Kevin Lamarque/File Photo

Berkshire takes huge bite of Apple, boosts airline stakes

By Jonathan Stempel| NEW YORK

Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) was an aggressive buyer of stocks in last year’s fourth quarter, nearly quadrupling its stake in Apple Inc (AAPL.O) and increasing its stake sevenfold in the four biggest U.S. airlines.

In a regulatory filing, Berkshire reported owning 57.4 million shares of Apple as of Dec. 31, which would now be worth $7.74 billion, up from just from 15.2 million shares in the iPhone maker three months earlier.

Berkshire also reported a $9.3 billion airline stake, with investments topping $2.1 billion in each of American Airlines Group Inc (AAL.O), Delta Air Lines Inc (DAL.N), Southwest Airlines Co (LUV.N) and United Continental Holdings Inc (UAL.N).

It also disclosed new stakes in satellite radio company Sirius XM Holdings Inc (SIRI.O) and seed company Monsanto Co (MON.N), which is being bought by Germany’s Bayer AG (BAYGn.DE).

Though it is unclear who make which investments, the filing appears to reflect much of the $12 billion of stock that Buffett said he had bought between the Nov. 8 Presidential election and the end of January.

Larger Berkshire investments such as Wells Fargo & Co (WFC.N), Coca-Cola Co (KO.N) and International Business Machines Corp (IBM.N) are normally Buffett’s, but the 86-year-old billionaire has given his deputies Todd Combs and Ted Weschler more to invest over the years.

Berkshire’s initial investment in Apple got attention last year, given Buffett’s usual aversion to technology companies – apart from IBM – which he considers outside his zone of competence.

The new, larger stake makes Berkshire one of Apple’s 10 biggest investors.

“I’m stunned to see the size of that Apple position,” said Thomas Russo, who oversees $11 billion of assets, including 12 percent in Berkshire, at Gardner Russo & Gardner in Lancaster, Pennsylvania.

Berkshire did not respond to a request for comment.

The Omaha, Nebraska-based conglomerate also owns roughly 90 companies such as the BNSF railroad, Geico car insurance and Dairy Queen ice cream.

Its Class A shares closed on Tuesday up $2,078.95 at $250,419, a record high closing price and less than 0.2 percentage points below its all-time high on Dec. 14.

 

APPLE BECOMES CORE HOLDING

The plunge into Apple appears particularly well-timed.

Shares of Apple closed on Tuesday up $1.73 at $135.02, also a record closing high.

Assuming Berkshire has not sold its stake, Apple’s 16.6 percent gain this year would leave it with a $1.1 billion paper profit in 2017 alone.

It had been widely believed that Berkshire’s initial investment came from Combs or Weschler.

But their decisions have sometimes influenced Buffett, as when Berkshire last year paid $32.1 billion for aircraft parts maker Precision Castparts Corp, once a Combs investment.

“It’s quite possible that Warren woke up and began to understand the virtues of Apple that he had been neglecting or, like with Precision Castparts, Todd or Ted had an affinity for Apple that sparked interest from Warren,” Russo said.

Combs and Weschler are the leading candidates to eventually succeed Buffett as Berkshire’s chief investment officer.

The airline investments, meanwhile, suggest that Buffett has overcome his two-decade aversion to the sector after an unhappy – though, he has said, profitable – investment in US Air Group.

Buffett told talk show host Charlie Rose in an interview last month that it was “in large part” his decision to dive back into airlines.

“The industry was once balkanized, but now it is bulking up, and has come to realize that an empty seat is a perishable asset,” Russo said. “More planes are traveling more full.”

Shares of American, Delta, Southwest and United, as well as Apple, Monsanto and Sirius, rose in after-hours trading.

Such increases often occur when investors perceive that Berkshire has given a company its imprimatur.

Monsanto and Sirius did not immediately respond to requests for comment.

To make room for new investments, Berkshire appeared to have shed a $1.8 billion stake in agricultural equipment maker Deere & Co (DE.N) and nearly all of what remained from a more than decade-old stake in retailer Wal-Mart Stores Inc (WMT.N).

(Reporting by Jonathan Stempel in New York; Additional reporting by Jennifer Ablan and Dan Burns; Editing by Leslie Adler, Bernard Orr)
Published at Wed, 15 Feb 2017 11:03:35 +0000

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Xoma Launches $25 Million Registered Offering

thinkstockphotos144717230

Xoma Launches $25 Million Registered Offering

By Shobhit Seth | February 13, 2017 — 11:00 AM EST

Xoma Corp. (XOMA) agreed to sell 1.2 million shares of its common stock and 5,003 shares of its convertible preferred stock in a registered direct offering. The Berkeley, California-based Xoma expects to gross around $25 million from the offering. (See also, Xoma Declares 1-for-20 Reverse Stock Split.)

The sale will be made directly to Biotechnology Value Fund L.P. and some of its affiliates. The sale will be made at a fixed price of $4.03 per share, which was Xoma’s closing price on the Nasdaq on Friday.

Each share of the Series X preferred stock will be equivalent to 1,000 shares of registered common stock, giving the preferred stock a value of $4,030 per common share, based on a conversion price of $4.03 per share of the common stock.

While the preferred stocks can be converted any time by the shareholder, there is a conditional cap on the conversion. The conversion will be disallowed if it leads to the beneficiary owing 19.99% or more of the then issued and outstanding total common stock of Xoma. (For more, see XOMA Reports Success in Insulin Trials.)

Subject to customary closing conditions, the direct issue is expected to close on or about February 15, 2017.

Xoma discovers and develops novel antibody therapeutics, 25 of which are financed by other biotech and pharmaceutical companies and tied to potential milestone and royalty payments. (See also, XOMA Reports Proof of Concept for New Drug.)
Published at Mon, 13 Feb 2017 16:00:00 +0000

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iRobot’s Q4 Tops Analysts’ Revenue, EPS Estimates

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iRobot’s Q4 Tops Analysts’ Revenue, EPS Estimates

By Eric Volkman | February 9, 2017 — 9:50 AM EST

iRobot (NASDAQ: IRBT) cleaned up in the final quarter of 2016, delivering a frame that comfortably exceeded analyst projections. For the fourth quarter, the Roomba maker’s revenue inched up by 3% year over year to $212.5 million — an all-time Q4 high for the company. Net profit went in the other direction, however, falling by 29% to $13.7 million ($0.49 per diluted share).

In spite of that bottom-line slide, both figures were well higher than analysts’ average estimates. These anticipated revenue of just under $206 million, and a per-share net profit of $0.41.

This is the latest in a string of quarterly earnings beats by iRobot. In the third quarter, it reported EPS of $0.70; on average, analysts were modeling EPS of $0.43.

For the full year, iRobot’s revenue was slightly below $661 million, 7% higher than the 2015 result. Net profit fell by 5% to $41.9 million ($1.48 per share).

The company also proffered guidance for the current year. It believes it will book revenue of $770 million to $785 million for 2017, which would be 16% to 19% higher than the 2016 result. It anticipates that its EPS will be in the $1.35 to $1.65 range.

In the press release unveiling the results, iRobot CEO Colin Angle said that the top-line growth will result from “deeper household penetration of Roomba in the U.S., accelerating growth in overseas markets, [and] capitalizing on our first mover advantage in the wet floor care category, particularly in Asia.”

The company has been active in the latter segment since 2005; currently, its key product in the category is the Braava floor mopping robot.

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Published at Thu, 09 Feb 2017 14:50:03 +0000

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S&P 500 ekes out gain while banks drag on Dow

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S&P 500 ekes out gain while banks drag on Dow

By Lewis Krauskopf

The S&P 500 ended slightly higher on Wednesday as investors digested mixed earnings reports, while the Dow Jones Industrial Average slipped as bank stocks weighed.

The Nasdaq gained moderately to close at a record high for a second straight day, lifted by big tech names such as Facebook (FB.O) and Apple (AAPL.O).

Allergan (AGN.N) shares rose 3.7 percent after the drugmaker’s fourth-quarter profit and revenue topped estimates. Gilead Sciences (GILD.O) shares tumbled 8.6 percent and were the biggest drag on the benchmark S&P after the biotech company’s weak forecast for its hepatitis C medicines.

Major U.S. stock indexes are hovering around record highs after a rally following the Nov. 8 election of President Donald Trump amid expectations he will usher in fiscal stimulus and lower regulations and taxes.

But the rally has stagnated in recent days as investors await more details about Trump’s potential economic policy agenda.

“Usually, this would be a period in which earnings and guidance drive the market,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“But because it’s the first three weeks or four weeks of a new president who is promoting radical change than what has been going on, Washington takes precedence, I think, over earnings in the eyes of investors these days.”

The Dow Jones Industrial Average .DJI fell 35.95 points, or 0.18 percent, to 20,054.34, the S&P 500 .SPX gained 1.59 points, or 0.07 percent, to 2,294.67 and the Nasdaq Composite .IXIC added 8.24 points, or 0.15 percent, to 5,682.45.

Financials, which have soared since the election, were the worst-performing S&P sector, falling 0.8 percent. Goldman Sachs (GS.N) fell 0.8 percent, making it the biggest drag on the Dow, and JP Morgan (JPM.N) dropped 0.9 percent.

Bank stocks are sensitive to interest rate changes, and U.S. Treasury yields fell to their lowest levels in weeks.

 

The real estate .SPLRCR and utilities .SPLRCU sectors, which tend to perform well in low-rate environments, were the best performing groups.

“As the yield curve flattens, we’re back to a very tough environment for financials,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “They live off the spread.”

With about two-thirds of the S&P 500 having reported results, fourth-quarter earnings are on track to have climbed 8.3 percent, which would be the best performance since the third quarter of 2014, according to Thomson Reuters I/B/E/S.

 

In other corporate news, Nordstrom (JWN.N) shares rose 4.1 percent. Trump attacked the retailer on Twitter for dropping his daughter Ivanka’s clothing line.

About 6.7 billion shares changed hands on U.S. exchanges, similar to the daily average over the last 20 sessions.

Advancing issues outnumbered declining ones on the NYSE by a 1.29-to-1 ratio; on Nasdaq, a 1.23-to-1 ratio favored decliners.

The S&P 500 posted 19 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 92 new highs and 51 new lows.

(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Alan Crosby and Nick Zieminski)
Published at Wed, 08 Feb 2017 21:33:46 +0000

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Affirm, Inc.

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Affirm, Inc.

By Barbara A. Friedberg | February 7, 2017 — 7:00 AM EST

Estimated valuation: $800 million

Product: Consumer Loans

IPO Timeline: TBD

Date Founded: 2012

Affirm is committed to improving the financial industry and add transparency and accountability to the banking experience. Founded in 2012 by former PayPal principal, Max Levchin, the company has received $520 million in four funding rounds. In October 2016, Affirm received its most recent round of funding, $100 million debt financing from lead investor Morgan Stanley, according to CrunchBase. This follows an April 2016 round of $100 million from lead investor Founders Fund and others.

Affirm’s initial product is a lending solution that can be used to pay for purchases at a variety of online or bricks and mortar retail stores. The Silicon Valley company prides itself in transparency and explains that there are no hidden fees so that the total you see at checkout is the amount you pay.

Here’s How Affirm Works

There are two ways to sign up for Affirm. You can sign up for an account on the Affirm website or app. Or, you can select Affirm as the payment method when checking out with an online merchant partner. Users must be at least 18 years old in most states, have a U.S. home address (not available in West Virginia), and have a U.S. mobile or VoIP number registered in their names. Finally, you must provide your full name, email address, birth date, and full or last 4 digits of your social security number.

If it sounds too easy, as with any loan product, there are interest charges. Affirm loans charge between 10% and 30% APR simple interest. This is the only fee. In comparison, creditcards.com states that the current national average credit card interest rate is approximately 15%.

The Affirm payment options are also transparent. If you use Affirm to purchase an item for $100 or more, you can repay the loan over 3, 6 or 12 months. For smaller purchases between $50.00 and $99.99, you can pay over 3 or 5 months. Merchants may offer different options.

Affirm explains that it is not like a credit card with an upper limit. Consumers may take out several Affirm loans simultaneously and each will be evaluated on its own merit. Although, consumers might get approved for one loan and denied for another.

In April 2016, Bloomberg’s Gjorgievska wrote about the firm and stated that Affirm gives shoppers the opportunity to finance their purchases at checkout in over 700 online and brick-and-mortar stores. Retailers that accept Affirm include Casper Sleep Inc., Wayfair, Motorola and BCBG Max Azria. The company has plans for other services including loyalty rewards programs and financial management tools, and strives to expand its market presence. Additional growth plans include a possible move into the mortgage and auto financing areas, according to a VentureBeat conversation with founder Max Levchin.

The Affirm Nay Sayers

VentureBeat, among others, isn’t a fan of Affirm. In a recent article, Robert Harrow states several problems with Affirm. The underlying critique of Affirm is that just because you can finance a purchase, doesn’t mean that you should. The article continues by explaining the disadvantage of financing purchases at 10% to 30% interest and paying off these items during periods that could stretch out to a year. VentureBeat claims that this type of credit is promoting irresponsible borrowing for wants and luxuries that the consumer can’t afford. In a comparison between buying a Casper mattress on a credit card and paying it off over 12 months with an Affirm loan, the total credit card loan carried lower interest rates and netted a lower total interest payment than the Affirm loan.

The Bottom Line

Affirm clearly fills a market need in a crowded lending sphere. Along with its fintech peers, the online lending industry is exploding. As more retailers accept Affirm, the opportunities for consumers to pay with credit will accelerate. Yet, to reiterate the VentureBeat critique, just because you can pay with credit, doesn’t mean that it’s necessarily a good idea
Published at Tue, 07 Feb 2017 12:00:00 +0000

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US Index Open Interest Put / Call Ratio Analysis

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US Index Open Interest Put / Call Ratio Analysis

By: Captain Hook | Mon, Feb 6, 2017


The following is an excerpt of commentary that originally appeared at Treasure Chests for the benefit of subscribers on Wednesday, January 25, 2017.


Not long now. Not long to month end. Not long until we see what the (fake?) January Barometer signal tells us to expect this year. There’s only one problem – this signal has been rendered redundant by speculator betting practices and the machines. Case in point – last year. Last year stocks were hammered in January. But how did stocks end the year? Answer: Higher – much higher. They were higher not because of ‘fundamentals’. But because the consensus of speculators were (are) still betting on lower prices, where ‘bad news’, like a Trump victory was supposed to be, triggers another short covering rally. Thing is, the entire ‘reflation rally’ from 2009 has been one short covering rally after another because of this ruse – conceivably the best ‘con job’ to date pulled off by status quo price managers.

And as you can see in the attached, true sentiment conditions have changed little post expiry this month, yet again, with continued slow motion erosion in both broad market bears and precious metals bulls alike (but going in different directions.). Certainly if the OEX ratio is any indication of true pro-trading stock jockey sentiment, this group is now broken, which in and of itself should bring trouble for stocks all on its own. These are the guys who control the big positions across the spectrum, which could spark movement in other trend following markets, not the least of which being QQQ put buyers. Therein, if trend following ratios like QQQ join the others, which have already collapsed into downtrends (SPY, IYT, MNX), the machines would have nobody remaining to squeeze, and stocks would go down.

In the meantime however, and despite this developing condition, because of the ratios trending higher (QQQ, DIA, RUT), higher to sideways prices in the broads remains a distinct possibility. The ‘trick’ will be if a positive January Barometer signal will affect speculator betting practices the same way as last year, where the consensus wagered on lower stock prices for the remainder of the year, which again, is why they finished 2016 higher. This year things should turn out to be the opposite, especially with Trump so loud about how great things will be under his administration. Everyday it’s another opportunity to grandstand for The Donald – and eventually this noise, and the gains in stocks, will exhaust the bears (put buyers), bringing all broad market put / call ratios down in the process.

And of course it’s just the opposite for precious metals. Speculators remain stubbornly (stupidly?) bullish on these markets (understandably), which should continue to affect North American (Western) paper pricing mechanisms negatively; however, the hope is just as bearish broad market speculators become exhausted for reasons discussed above (continued and intensifying Trump hype), bullish precious metals speculators will do the same. Again, timing this transition is difficult, however as mentioned previously, where if this does not take hold in the first quarter, the second appears probable at the outside. It could be the broads rolling over need to lead in terms of sequencing, however this will not matter in the full measure of time (years).

Talking specifics about the precious metals ratios (see here), when posting them yesterday morning I actually got excited when the big spikes higher in AGQ and GDX came up, however this euphoria was quickly replaced by very mixed feelings in seeing the rest of the ratios (except ABX and GG), which are rising, however it’s a start. Again, slowly but surely, the bulls are capitulating, meaning more of the key open interest put / call ratios we follow are rising for real (over unity like GDX), which will turn the machines in the bull’s favor. So with any luck a very insistent (on success) Trump will cave paper market speculators heads in to the point they finally capitulate on a lasting basis. Again, the barrage of news should be like a machine gun until the speculators give up.

This was the reason for the S&P 500 (SPX) to go up and test key resistance at 2280 today, where you will remember, if this mark is breached on a closing basis, no discernable resistance is encountered until it gets up into the 2400-plus area (never mind Dow 20k), the bottom side of the long-term channel (see Figure 3). You may have noticed the CBOE Volatility Index (VIX) closed right on important support at 11 yesterday, where any breach now would propel the SPX / VIX Ratio above long-term sinusoidal resistance on a sustained basis (see Figure 1). What does this mean? It means the market is a ‘run away’, where although further strength will likely prove temporal, still, a move to 2400-plus SPX is definitely possible running into February in blow-off fashion.

For precious metals, this might be enough to kill the rally for a bit. Who needs gold when you have Trump and rising stocks – right? Watch gold at $1180. A breach would not be good.

No ‘rope-a-dope’ for Trump. He’s come out of the corner swinging. The only problem with fighters like this is they burn out fast. That’s what happened to him with his Atlantic City Casinos. One casino wasn’t enough. Then they all got in trouble because of his huge ego.

Looks like a repeat here style wise, with the big question how long it lasts.

So while there’s no telling how long it will take Trump to punch himself out, if the 1928 / 1929 analog is any indication, summer is quite possible.

See you next time.


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Captain Hook

Captain Hook
TreasureChests.info

Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. We are not registered brokers or advisors. Certain statements included herein may constitute “forward-looking statements” with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

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Published at Mon, 06 Feb 2017 10:52:10 +0000

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Analyst: Cisco to Hike Dividend Soon

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Analyst: Cisco to Hike Dividend Soon

By Shoshanna Delventhal | February 5, 2017 — 11:09 PM EST

While income-minded investors are already attracted to Cisco Systems Inc.’s (CSCO) 3.3% dividend yield, analysts now predict the firm could be planning to hike its dividend higher as soon as this week.

Analysts at research firm IHS Markit foresee the San Jose, Calif.-based tech firm to raise its dividend about 8% this week to $0.28 a quarter, up from $0.26, reports Barron’s. The expected dividend raise would be reflected in a new dividend yield of 3.6% for Cisco, assuming its stock price remains constant.

“In the past (except in FY16) the company raised its quarterly dividend by 2 to 3 cents and we project similar growth as earnings projections show modest increase in profits for the future. The management has increased the dividend five times since first issuing in 2011 and the quarterly rise occurred at the Q3 stage. Management indicated, as part of their capital allocation strategy, they intend to distribute a minimum of 50% of their free cash flow annually to shareholders through cash dividends and share repurchases,” wrote IHS Markit analyst Vik Parmar.

Past Disappointments

Cisco is slated to report its most recent fiscal 2017 second-quarter earnings Feb. 15, yet analysts say the dividend announcement could precede the earnings report, estimating an announcement to come Feb. 10.

This quarter will be telling for Cisco after disappointing investors with lower-than-expected guidance, attributed general weakness in some larger service providers. (See also: Cisco CEO: ‘Look Beyond One Quarter’.)

The networking industry leader’s share price of $31.31 on Friday close represents an approximate 37% increase year-over-year (YOY) as the firm shifts away from declining hardware systems sales to emerging markets such as cybersecurity, collaboration, the cloud and the Internet of Things (IoT). (See also: Cisco to Buy AppDynamics for $3.7B Before its IPO.)
Published at Mon, 06 Feb 2017 04:09:00 +0000

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Under Armour under siege: Stock plunges 25%

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Under Armour under siege: Stock plunges 25%

  @lamonicabuzz

Stephen Curry and the Golden State Warriors have the best record in the NBA. Tom Brady will attempt to win his fifth Super Bowl with the New England Patriots on Sunday.

Both endorse Under Armour. But their winning ways aren’t helping the company. At all.

The sportswear company reported sales and earnings that missed forecasts. It also said revenues for 2017 would be lower than what Wall Street expected.

And the company said its chief financial officer was stepping down for “personal reasons.” Wall Street often assumes that an executive leaving for “personal reasons” is a sign that a company is in trouble and that someone needs to take the fall.

Under Armour (UAA) tanked on this trifecta of bad news. Shares plunged nearly 25% in early trading Tuesday. That put the stock on track for its worst one-day drop ever.

Under Armour CEO Kevin Plank, who is part of a group of business leaders advising President Trump about economic policy for U.S. manufacturers, said in the earnings announcement that there were “numerous challenges and disruptions” in the quarter.

Many big retailers — most notably Macy’s (M) and Kohl’s (KSS) — reported weak results for the holidays, leading investors to wonder whether the American consumer is in trouble or if traditional retailers are just losing more ground to Amazon.

Under Armour has been hit particularly hard by the problems facing brick-and-mortar retailers, especially those specializing in athletic wear. The Sports Authority went out of business. Finish Line (FINL) closed hundreds of stores last year.

The poor start to 2017 for Under Armour is even more troubling when you consider how awful a year the company had in 2016. The stock plummeted nearly 30% last year because of weak sales and the broader challenges in the athletic apparel industry.

Archrival Nike (NKE) also had a dismal 2016. In fact, it was the worst-performing Dow stock last year.

Both were hurt by a resurgent Adidas (ADDDF), which posted strong sales and earnings last year, partly because of ties to the Summer Olympics in Rio and the Euro 2016 soccer tournament.

But while Under Armour is still struggling, Nike has bounced back. It reported solid results for its latest quarter, fueled by a rebound in China and Europe.

Nike’s stock did fall Tuesday along with Under Armour. But the House of Swoosh’s shares are still up nearly 4% this year. Nike also recently announced plans to set up small Nike stores at JCPenney (JCP) — a deal that could hurt Under Armour, too.

Under Armour can’t seem to catch a break. It was once a Wall Street darling. Investors embraced its upstart, underdog story.

They also loved that the company was able to sign big names like Curry, Brady and others — such as Carolina Panthers quarterback Cam Newton, baseball star Bryce Harper and golf champion Jordan Spieth — to big deals.

But Under Armour has a lot of challenges it now has to overcome. The company’s famous marketing tagline — “We Must Protect This House!” — now sounds like a rallying cry that’s fallen on deaf ears on Wall Street … and with sneaker-buying consumers.

Published at Tue, 31 Jan 2017 15:43:27 +0000

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Analysts Say California Resources May Rise to $26

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Analysts Say California Resources May Rise to $26

By Kevin Johnston | January 27, 2017 — 10:31 AM EST

California Resources Corporation (CRC) continues to climb quietly. By “quietly,” we mean without large moves or high volume. In recent trading sessions, the stock has closed at the top of the day’s trading range. This is a short-term bullish signal. Such a signal must be supported by the longer trend.

The longer trend not only indicates further price increases, it looks like a price channel is forming. In other words, CRC may settling into a price range where the lows and highs touch predictable trend lines. (See also: Channeling: Charting A Path To Success.)

Some momentum traders trade price channels exclusively. They buy when the stock hits the bottom of the price channel, then sell when the price hits the top of the price channel. CRC could be forming a price channel that will allow for that type of trading.

Long-term investors don’t need to attempt that much buying and selling. Instead, they can buy on the dips and hold the stock. This method will build a position in the stock at a relatively low price.

Analysts have estimated that California Resources will rise to $25 or $26 per share. As of this writing, it is trading at just above $23 per share.

The problem with price targets is that they are educated guesses and are subject to change. Investors may indeed make two to three dollars per share on the stock if the analysts are right, but that doesn’t mean everyone should sell once the stock hits its price target. It means that as the stock climbs, investors must continue to do due diligence to determine if the stock could go higher or will stall.

That due diligence would have to show improved revenues and operating income to justify a continued uptrend past the target price. California Resources’ income has been positive for the last two quarters, and revenues have been flat. With oil above $50 per barrel now, it is reasonable to expect CRC to show some increases in revenues and income.

The company will report earnings on February 16. A surprise on that date could cause analysts to reset the target price.
Published at Fri, 27 Jan 2017 15:31:00 +0000

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Stocks, dollar steady after Trump-led dip

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Stocks, dollar steady after Trump-led dip

 

By Patrick Graham
| LONDON

Stock markets steadied while the dollar recovered some ground on Tuesday after unease over how the U.S. policy slate will develop under Donald Trump’s presidency drove the currency to its weakest since early December.

Traders in Asia said shares were helped by hopes that the concerns about a stronger dollar expressed by the U.S. President-elect at the weekend, would be beneficial to emerging markets where companies have borrowed heavily in dollars.

In Asia, MSCI’s ex-Japan Asia-Pacific shares index .MIAPJ0000PUS rose 0.3 percent, just shy of a three-month high hit last Thursday. Energy and cyclical stocks were the chief gainers.

Short-covering also helped, especially in China .SSEC, where stocks tumbled more than 4 percent last week as traders took some money off the table before Trump’s inauguration on Friday.

European stock markets .FTEU3 were broadly steady after a choppy start, banking shares under pressure as investors chewed over details of the impact of regulatory fines on Deutsche Bank. (DBKGn.DE)

“You’ve seen the banks ease, everything has taken a breather after the strong start in January for stocks,” said Andy Sullivan, a portfolio manager with GL Asset Management UK in London.

 

“The last few days have been choppier and for the rally to be sustained, we need to see earnings growth start to come through.”

MSCI’s broadest index of global share prices .MIWD00000PUS reached its highest since mid-2015 on Friday and, driven by a bounce in expectations for U.S. inflation and growth since Trump’s election, is within sight of all-time highs.

But worries about the new U.S. president’s attitude to trade and politics, with relations with China in focus, have begun to show up more in some asset prices since the start of the year.

The dollar fell almost 1 percent on Tuesday and is on course for its worst two weeks since the election after Trump expressed concern about the dollar’s strength in the context of trade relations with China. .DXY

 

It recovered around 0.3 percent on Wednesday with eyes on a speech by the head of the Federal Reserve and U.S. inflation data for clues on the path of interest rates.

Sterling, which soared more than 3 percent on Tuesday after Prime Minister Theresa May’s Brexit speech, fell back 0.7 percent.

“Everything is just a partial reversal of the price action yesterday,” said RBC Capital Markets currency strategist Adam Cole, arguing that the greenback’s weakness had been primarily driven by excessive positioning at the end of last year.

With doubts growing about the sustainability of the “Trump trade” – higher stocks and a stronger dollar – investors’ favorite safe havens for capital have been in demand.

Gold XAU= was perched comfortably at a two-month high above 1215 dollars per ounce. It is up nearly 8 percent in the last three weeks. The yen dipped half a percent as the dollar rose on Wednesday, but is still trading around its highest in seven weeks. JPY=

Oil prices fell by just over 1 percent, with benchmark Brent futures LCOc1 dipping to $54.70 per barrel and U.S. crude to $51.68.

 

(editing by John Stonestreet)
Published at Wed, 18 Jan 2017 10:45:33 +0000

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Facebook Stock Short Interest Declines 22%

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Facebook Stock Short Interest Declines 22%

By Richard Saintvilus | January 17, 2017 — 5:11 AM EST

If you ever want to know how the market feels about a particular company, the stock’s short interest movement can often serve as your best gauge. Short interest offers a sense of how pessimistic or “bearish” investors are about a company over a certain time period.

In the case of Facebook, Inc. (FB), the Menlo Park, Calif.-based social media giant has scared away plenty of doubters. As of the most recent settlement date, Facebook’s short interest has declined from 24.3 million shares to 18.8 million, marking a 22.6% decline. Notably, the decline in bearish sentiment, reversing last month’s 32% rise, has come even as Facebook has battled issues with fake news and received criticism for reporting inaccurate ad metrics to advertisers. (See also: Why These Tech Stocks Are Poised to Thrive.)

Investors, or in this case short sellers, who believe the price of a stock will fall can seek to profit from that decline by betting money on that belief. They can borrow the shares, hoping to sell them once the share price falls or before they have to purchase or replace the shares. That collective belief is then measured and calculated in the short interest total, which is reported bi-weekly.

The fact that Facebook short interest has recently declined is not surprising. The company is set to report fourth quarter fiscal 2016 earnings results on Feb. 1. Short sellers don’t want to be on the wrong side of the trade, given the stock’s history of rising by double digits on strong results. Plus, last week, Raymond James analysts came to Facebook’s defense, saying they don’t expect the company’s ad revenue to be affected by recent events. (See also: Will Facebook’s Ad Metric Errors Hurt Q4 Results?)

For the quarter that ended December, Wall Street expects Facebook to post earnings per share of $1.30 on revenue of $8.48 billion. For the full year, which ended in December, earnings are expected to rise 80% year over year to $4.10 per share, while full-year revenue of $27.3 billion would mark a rise of 52% year over year.

Facebook shares closed Friday at $128.34, up 1.36%. The shares have risen 11.5% year to date, compared with a 1.6% rise in the S&P 500 (SPX) index. (See also: Facebook Aims to Tackle Fake News in Germany.)
Published at Tue, 17 Jan 2017 10:11:00 +0000

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