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You're up early on a weekend, I guess the markets never take a day off for us lol.
Very nice call Mike! I remember you mentioning MSG recently :)
Successful Trades: 16/18 = 89%
*Refer to the Intro/iBox for more information.
Anytime :)
Fiscal Cliff? Why Markets Haven't Priced In Disaster—Yet
Published: Friday, 24 Aug 2012
By: Patti Domm
The stock market hasn’t priced in the end of the world this December, and it’s not pricing in the “fiscal cliff.”
That’s because most investors don’t believe either will happen. While economists say the fiscal cliff (Learn More) has already created a drag on the economy, the impact on the stock market is less certain, and the outcome is about as predictable as the behavior of Congress.
“Most people have a relatively benign view of the risks involving the fiscal cliff, and the idea that it’s going to be addressed in the lame duck session of Congress,” says Goldman Sachs U.S. equity strategist David Kostin. “Some people have that view, and that’s a pretty optimistic view. Experience might suggest that politicians are not in the mood to coming to resolutions necessarily.”
The Mayan calendar predicts an end to the world on Dec. 21, and the U.S. reaches the so-called fiscal cliff on Jan. 1. That's when Bush-era tax cuts expire and automatic spending cuts go into effect if Congress does not act to stop them.
The severe spending cuts, agreed as part of the debt ceiling (Learn More) compromise, slice across federal agencies but disproportionately bite into the defense budget.
Kostin, speaking on “Squawk on the Street” this week, said there’s justified concern that Congress might act much like it did during the debt ceiling debate last year. (Watch the video)
“You saw the experience last year. Ten days, market fell 10 percent around the whole issue of the debt ceiling and negotiations,” he said. (Read More: Goldman Says Dump Stocks Before Fiscal Cliff)
But other analysts say investors expect more from Congress this time and they doubt it will let $500 billion in tax increases and spending cuts barrel into an already weak economy.
“I think the consensus is we don’t hit the whole fiscal cliff, and in that respect it is priced in,” said Bill Stone, chief investment strategist with PNC Wealth Management. “I think you can find enough places where there is enough agreement, and once the election goes by, whoever is in charge can get it done. The danger is people are worrying that there’s a chance the market does get more nervous about it. This leaves all of us with a little shudder (after) last year’s debacle with the debt ceiling.”
The fate of the fiscal cliff is unlikely to be resolved in any way prior to the election.
“The fiscal cliff is something that will affect us in fewer than six months, could have a devastating impact. A lot of people believe cooler minds will prevail but the fiscal cliff could have a swifter and more devastating impact. You pretty much will have an idea as to whether this will happen right after the election,” said Sam Stovall, chief equity analyst with S&P Capital IQ.
There is as much speculation about the fiscal cliff as there is about the outcome of the election.
If President Obama were to be re-elected but the Republicans win a majority in the Senate, his post-election behavior might be very different than if Democrats remain in control. There is also a view it will be much easier for compromise to be reached on taxes than on spending cuts.
Mesirow Financial chief economist Diane Swonk said the impact on the economy may have already been felt in the second quarter, as companies slowed down investment and became more cautious.
“I’ve talked to several CEOs in the Midwest who just assume we’re going off the cliff regardless of who wins,” she said.
Stovall said there are scenarios where the uncertainty could remain into the new year, which would be negative for markets.
“Technically, you could say even if Romney were to get in, and both houses of Congress were to be Republican, they’re not going to be in charge until January of next year. The current make up of Congress could say we’re going to let you worry about that next year and we’re going to fall off the cliff anyway,” he said.
There’s been some speculation that if Republican presidential candidate Mitt Romney wins, he could push extension of the Bush tax cuts for everyone post Jan. 1, and make any changes retroactively. (Read More: How Much Will It Cost You If Bush Tax Cuts End? A Lot)
The Obama administration, meanwhile, is adamant about reinstating higher tax rates for wealthy Americans. If there is a compromise on taxes, and Bush tax cuts are extended before the end of the year, it would stop the biggest immediate hit to the economy. But that would leave the thorny budget issues for the new year.
"It's not going to save the stock market, but it could save the economy,” Stovall said.
“There’s one scenario people are talking about. The Republicans win, and they don’t want to compromise. There’s no way that’s going to happen,” said Daniel Clifton, head of policy research at Strategas. He said both parties will recognize the political gravity of not acting.
Another scenario may be that should the Republicans sweep, taking the White House and Senate, they could make clear to rating agencies that they have a mandate, but they need more time to make major changes.
The Congressional Budget Office this week warned that the U.S. could fall back into recession during the first half of 2013, if Congress fails to act on the tax increases and spending cuts.
The “fiscal cliff” would drive unemployment back up to 9.1 by the end of the year and economic progress would stop, it said. The CBO previously forecast that inaction by Congress would trigger a mild recession for the first half of 2013, but now it sees contraction of 2.9 percent in GDP.
“Our base case is we’re probably going to get a fiscal drag of 1 percent of GDP but that’s telling you not all the provisions are going to make it through,” said Clifton.
Clifton said interest in the cliff among investors is high but the uncertainty makes it difficult to invest around it.
“The election is going to have an outsized impact on what provisions do make it through or not. There’s a very high interest, but there’s very little interest to act on it. You have more immediate things. You have QE. You have Europe,” he said. “You’re not going to be able to fully handicap the fiscal cliff until you get through the election. If Obama wins, there’s a higher probability that Bush tax cuts are reinstated for upper income.”
Clifton said the stock market could also feel the impact if investors believe capital gains taxes will go up. There is already an increase of 3.8 percent increase for high income individuals, which goes into effect on capital gains and certain other type of income Jan. 1, as part of the new health care law. The Obama Administration would like the capital gains rate to rise to 20 percent from 15 percent.
“It’s a 63 percent increase in the capital gains tax rate. On a real financial equity market impact, you’re lowering the after-tax rate of return on equities and that means, all else being equal, the stock market goes lower,” he said. Clifton said when the capital gains tax rate was raised to 28 percent from 20 percent in the late 1980s, there was “a rush out the door.” In the last three months of 1986, investors realized capital gains at 8 percent of GDP, a number that is more normally 2 percent, he said.
Clifton does not anticipate knowing which way it will go until the beginning of December, and then Congress has three weeks to get it done.
“Once you get into the lame duck session, it gets very serious,” Clifton said. For instance, Congress will need to act or the Alternative Minimum Tax (AMT) (Learn More) will impact many millions more tax payers. Internal Revenue Service Oversight Board chairman Paul Cherecwich warned in an interview last week that if Congress misses the Dec. 31 deadline to extend expired tax provisions there will be a domino effect including delays in the start of the tax filing season and a delay in sending refund checks.
“They only act when the gun is at their head,” he said. If Obama wins, he may want to deal with the existing Congress on the debt ceiling extension, which comes back for a vote March 1. Because of that, he may fold on some of his opposition to tax extensions for the wealthy, Clifton said.
The toughest task for Congress will be making changes in the budget to stop the automatic, or “sequestered” cuts. “ “Defense is 20 percent of total federal spending. They are 50 percent of all the sequestered cuts,” Clifton said.
“Fifty percent of cuts are non-defense. They will hit the Department of Agriculture, the Department of Education, all across the government. We are going to have to fire federal employees. Nobody wants the sequester to go into effect.”
If Congress waits until after the election, it will have just several weeks to get the cuts done, but each party already has a framework. Odds of a resolution of the sequester before year end are about 55 percent, says Clifton. “It’s really a reflection of what Congress looks like,” he said.
YELP making a reversal.
Nice list, added it.
I just sold my last position this morning, so I'm on the hunt for new tickers lol. Plenty of nice ones on yours :) It looks like YELP is making a reversal now
HEB (+12%) Hemispherx Biopharma files complete response with the FDA regarding its Ampligen new drug application for Chronic Fatigue Syndrome -- The FDA has agreed to accept, for review, further analyses of data from Hemispherx's AMP-516 Phase (Briefing.com)
ARUN (+15.74%) Aruba shares rise on results, brokers raise price targets
(Reuters) - Shares of Aruba Network Inc (ARUN.O) looked set to open up 15 percent on Friday, after it reported a rise in quarterly revenue on solid demand for its wireless network equipment and a host of brokerages raised their price targets on the stock.
IDIX (-3%)
HMSY (-7.52%)
ATPG (-7.88%)
Wow, such a great bounce from the low today, congrats!
ADSK (-15.96%) Autodesk Tumbles On Reduced Sales Forecast And Job Cuts
By Ari Levy - Aug 24, 2012 6:42 AM PT
Autodesk Inc. (ADSK) shares plunged the most in more than three years after the software maker lowered its annual sales forecast and said it plans to cut jobs as it restructures to focus on cloud and mobile computing...
Stocks Open Lower Amid Renewed EU Fears
Published: Friday, 24 Aug 2012
By: JeeYeon Park
Stocks dipped slightly at the open Thursday as renewed jitters over Greece's future in the euro zone overshadowed a better-than-expected durable goods orders.
All three major averages are on track for their biggest weekly drop in 12 weeks...
Morning Dan! Market Pullback here, which means another buying opportunity? :)
AAPL Update: I said it looked like a good hold for 700+, and its headed in that direction! Especially with iPhone 5 set to hit stores on September 12.
AAPL Update: I said it looked like a good hold for 700+, and its headed in that direction! Especially with iPhone 5 set to hit stores on September 12.
Morning Mike!
KYAK (+11%) Kayak's Profits Rises as Revenue Jumps 36%
Published: Wednesday, 22 Aug 2012
By: Reuters
Kayak Software reported a higher quarterly profit as the travel search website gained from a 36 percent rise in revenue from online tour agencies.
Kayak's [KYAK 30.80 3.07 (+11.07%)] net income in the second quarter rose to $7.3 million, or 19 cents per share, from $3.8 million, or 10 cents per share, a year earlier.
Revenue rose to $76.9 million.
Incoming, Golden Cross event with the moving averages.
Wow, awesome job, thanks! I'll definitely have my fill with reading today lol :)
They're holding up well after-hours; we'll see how things pan out tomorrow.
*I have no position in the company.
Following in Dell's footsteps performance wise for the PPS? Only time will tell :)
End of Day Tankers:
EGI (-15.48%)
EXPR (-11.12%)
FGP (-11.08%)
NEXS (-26.49%)
PPHM (-16.48%)
PSID (-12%)
UCTT (-10.45%)
More Easing Warranted Unless Economy Improves: Fed
Published: Wednesday, 22 Aug 2012
By: Reuters
The Federal Reserve is likely to deliver another round of monetary stimulus "fairly soon" unless the economy improves considerably, minutes from the central bank's August meeting show.
While the meeting was held before a recent improvement in the economic data, including a stronger-than-expected July reading for U.S. employment, policymakers were pretty categorical about their dissatisfaction with the current outlook.
Following the release, U.S. stocks pared losses, and U.S. Treasury debt prices extended price gains.
"Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery," the Fed said in minutes to its July 31-Aug. 1 meeting.
Fed officials saw significant risks to an already weak U.S. economy, which grew at a sluggish 1.5 percent annual rate in the second quarter. The risks include a worsening of Europe's financial strains and the looming U.S. budget cuts and tax hikes, which have become commonly known as the fiscal cliff.
Many Fed officials supported extending the central bank's guidance for the likely timing of an eventual interest rate hike, currently set at late 2014, further into the future. But they decided to defer the decision to the Fed's Sept. 12-13 meeting, when the central bank will release a new round of economic forecasts.
Officials also actively debated and tested the possibility of developing a consensus Fed forecast.
A couple of policymakers favored lowering the rate the Fed pays banks to park their excess reserves at the central bank, currently at 0.25 percent. But several participants worried that money market funds could run into trouble if their returns are crimped further.
Thanks for keeping us updated Dan :)
Existing Home Sales Rise 2.3 Percent on Pent-Up Demand
Published: Wednesday, 22 Aug 2012
By: Reuters
U.S. existing home sales rose 2.3 percent in July to 4.47 million from 4.37 million in the previous month but missed analysts' estimates, according to the National Association of Realtors.
"It's pretty much in line with market forecasts," said Omer Esiner, chief analyst at Commonwealth Foreign Exchange. "It's encouraging to see the inventory of unsold homes come down and median price continue to rise, though I think there are technical issues involved in that. The homes that are selling tend to be higher in price, which is skewing that a bit."
Monthly sales increased in every region but the West, where housing inventory is tight. Sales were just below analysts' expectations of a 4.52 million-unit rate.
“Mortgage interest rates have been at record lows this year while rents have been rising at faster rates," said Lawrence Yun, the association's chief economist. "Combined, these factors are helping to unleash a pent-up demand.”
Nationwide, the median price for a home resale was $187,300 in July, 9.4 percent higher than in the same month a year earlier.
The report’s embargo, which was set to lift at 10 a.m. EST, was broken about 30 minutes before when a reporter at Bloomberg gained access to an invisible computer link from the association and Tweeted the data early.
The association’s chief economist said there will be an investigation into how this link was accessed.
SRZ (+59%) Health Care REIT to buy Sunrise Senior Living in deal valued at about $1 billion
Associated Press
TOLEDO, Ohio (AP) -- Health Care REIT Inc., a real estate investment trust, plans to buy Sunrise Senior Living Inc. in an all-cash deal valued at about $1 billion.
The Toledo, Ohio-based company said Wednesday it will pay $14.50 for each share of Sunrise, which is based in McLean, Va. The price represents a premium of more than 62 percent to Sunrise's closing stock price of $8.93 on Aug. 21.
Sunrise shares climbed $5.28, or more than 59 percent, in morning trading to $14.22. The stock had previously traded in a range of $3.68 to $9 in the past 52 weeks...
LPHI (+12%) Now that's a bounce!
KTCC (+22.72%) Year-over-Year Revenue Up 36% and Net Income Up 103%
Continued New Customer Wins and Revenue Diversification
SPOKANE VALLEY, Wash.--(BUSINESS WIRE)--
Key Tronic Corporation (KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter and year ended June 30, 2012.
For the fourth quarter of fiscal 2012, Key Tronic reported total revenue of $96.7 million, up 46% from $66.0 million in the same period of fiscal 2011. For the full year of fiscal 2012, total revenue was a record $346.5 million, up 36% from $253.8 million in fiscal 2011...
WSTLA (-14.05%) Wet Seal Suffers Loss on Lower Sales
By Zacks Equity Research
Wet Seal Inc. (WTSLA) reported second quarter fiscal 2012 loss of 7 cents per share compared to year-ago quarter’s earnings of 3 cents per share. The loss was in line with the Zacks Consensus Loss Estimate, but was narrower than management’s guidance range of a loss of 9 cents to 10 cents. The loss resulted from a decline in sales and margins...
UCTT (-10.15%) Ultra Clean Holdings shares tumble on lower revenue outlook, lost business from major customer
Associated Press
NEW YORK (AP) -- Shares of Ultra Clean Holdings Inc. lost more than 20 percent before the opening bell after the semiconductor equipment maker cut its revenue outlook for the current quarter.
The Hayward, Calif., company, which makes machines used by semiconductor companies to produce chips, said a decline in demand it reported last month is worse than it anticipated. It's also lost business from a major customer.
At that time, when it reported second-quarter results, the company predicted third-quarter earnings per share of 10 to 14 cents on revenue of $107 million to $112 million...
RJET (-7.68%) Evercore Partners downgraded shares of Republic Airways Holdings Inc. (RJET) from an overweight rating to an equal weight rating.
PPHM (-16.13%) Peregrine: Bavi Results Are Overhyped And Inconclusive
Seeking Alpha August 22, 2012
http://seekingalpha.com/article/821601-peregrine-bavi-results-are-overhyped-and-inconclusive?source=yahoo
We think Peregrine Pharmaceuticals (PPHM) is highly overvalued, following its 500% run-up over the past two months on what we consider to be overhyped and inconclusive Phase II results for its cancer drug Bavituximab, also known as Bavi. The recent massive stock price increase for PPHM is highly unjustified and we think that the company is worth much less than the $300 million market capitalization it is currently valued at.
In our opinion, investors are assigning an overly inflated valuation to an unproven Phase II drug with an unusual mechanism of action on a substantially incomplete subset of data...
EXPR (-8.4%) Express cuts full-year profit outlook, shares fall
Associated Press
COLUMBUS, Ohio (AP) -- Express posted a 25 percent jump in net income for the second quarter, but shares plunged 11 percent after the clothing retailer slashed its profit outlook for the year and said that same-store sales barely rose last quarter and it expects about the same for the rest of the year.
Revenue for the second quarter also fell short of Wall Street expectations.
Express Inc. earned $15.8 million, or 18 cents per share, compared with $12.6 million, or 14 cents per share, in the prior-year period...
DELL (-7%) Dell Forecast Misses Estimates
By Aaron Ricadela - Aug 22, 2012 6:44 AM PT
Dell Inc. (DELL) declined the most in three months after cutting this year’s profit forecast as revenue from corporate customers fails to counter shrinking personal computer sales.
The company yesterday forecast third-quarter revenue that missed analysts’ estimates and cut its profit outlook by 20 percent, as competition from Apple Inc. (AAPL)’s iPad and an anemic global economic recovery drags down PC demand...
Morning tankers...not many :)
BBY (-6.72%)
IMUC (-17.53%)
VHC (-3.18%)
WAVX (-9.82%)
Morning tankers...not many :)
BBY (-6.72%)
IMUC (-17.53%)
VHC (-3.18%)
WAVX (-9.82%)
Best buy misses big and halts guidance; shares take a tumble (-6.72%).