Thursday, November 7, 2013

Markets fall on concerns about Federal Reserve's easing policy

The Dow sank 152 (closing at the lows), decliners over advancers 3-1 & NAZ plunged a very big 74.  The MLP index lost 5 to just over 450 & the REIT index was off 3+ to the 272s.  Junk bond funds were mixed & Treasuries gained.  Oil & gold also sold off.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLZ13.NYM....Crude Oil Dec 13....94.18 Down ...0.62  (0.7%)

Live 24 hours gold chart [Kitco Inc.]

  • A man walks his dogs past the New York Stock Exchange prior to the Twitter IPO, Thursday, Nov. 7, 2013 in New York. Twitter set a price of $26 per share for its initial public offering on Wednesday evening and will begin trading Thursday under the ticker symbol "TWTR" in the most highly anticipated IPO since Facebook's 2012 debut. (AP Photo/Mark Lennihan)
Photo:   Yahoo

Twitter went on sale for the first time, instantly leaping more than 70% above their offering price in a dazzling debut that exceeded even lofty expectations for the most anticipated IPO since Facebook (FB) last year.  At the opening bell, the social network was valued at $31B, more than Macy's (M) & roughly comparable to Deere (DE).  TWTR, which has never turned a profit in the 7 years since it was founded, worked hard to temper expectations ahead of the IPO.  The IPO was carefully orchestrated to avoid the glitches & eventual letdown that surrounded FB's first appearance on the NAZ.  Trading on the NYSE opened at $45.10, 73% above the IPO price.  In the first few hours, the stock jumped over $50 amid a broader market decline.  $1.8B was raised when it sold 70M shares at $26 each.  At $26 per share, the company was valued at more than $18B, less than a quarter of FB's value of $104B at the time of its IPO.  Named after the sound of a chirping bird, TWTR got its start in 2006 after its founders discussed creating a service that would let users exchange short messages.  Since then, the site that lets users send short messages in 140-character bursts has attracted world leaders, religious icons & celebrities, along with CEOs, businesses & countless marketers.  The stock jumped 19.19 to 45.18 on its first day of trading.

Twitter Surges in Trading Debut After $1.82 Billion Share Sale

Twitter (TWTR)

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CBS reported Q3 profit growth that met estimates, lifted by sales of shows to streaming services from Netflix (NFLX) & Amazon (AMZN).  Revenue advanced 11% to $3.63B, beating the $3.53B projection.  EPS from continuing operations increased 22% to 76¢ from 59¢ a year earlier.  ChieEO Leslie Moonves is boosting sales by selling streaming rights to “The Good Wife,” “Under the Dome” and “Dexter,” which played on its Showtime cable network, to Web-based services.  CBS is also increasing programming fees it charges pay-TV providers such as Time Warner Cable (TWC).  Profit matched the projection for 76¢.  Advertising gained 4.3% to $1.86B, while licensing & distribution revenue rose 18% to $1.1B.  Affiliate and subscription fees, including retransmission revenue, jumped 23% to $611M.  “We are on the way to monetizing every eyeball that is watching our content,” Moonves said.  The company had debt of $6.3B & $226M in cash as of Sep 30.  Profit at the entertainment division, which includes the broadcast network, increased 14% to $394M & sales grew 12% to $1.88B.  Income at the cable division, home to its Showtime, rose 15% to $255M on sales that increased 37%.  Profit from local broadcasting, which includes the company’s TV & radio stations, fell 15% to $161M from a year ago, when the division benefited from political campaign advertising.  Revenue dropped 3% to $641M. The Simon & Schuster publishing division lifted profit 7.9% to $41M on sales that gained 6.7% to $224M.  The stock dropped 2.71.

CBS Profit Climbs 22% as Sales to Streaming Outlets Lift Results

CBS Corp (CBS)

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  • FILE - In this Monday, May 6, 2013, file photo, a Wendy's single with cheese large combo meal is photographed at a Wendy's restaurant in Mt. Lebanon, Pa. The Wendy's Co. reports quarterly financial results before the market opens on Thursday, Nov. 7, 2013. (AP Photo/Gene J. Puskar, File)
Photo:   Yahoo

Wendy's Q3 loss narrowed as more customers snapped up its new Pretzel Bacon Cheeseburger & Pretzel Pub Chicken sandwiches, along with other menu items. Results  beat expectations & the company raised its guidance.  However, the company said it expects adjusted earnings, before taxes, interest, & other items, to fall 10% in the Q4, as it invests in future growth initiatives.  WEN has been offering new items such as more premium bun & said it is bringing back its Bacon Portabella Melt, serving it on a toasted brioche bun.  It's is also pushing renovations to make its restaurants more inviting.  CEO Emil Brolick said the strategy is "proving to be effective" against both its traditional quick-serve restaurant competitors & new entrants.  While the Pretzel Bacon Cheeseburger did well, another new product, a grilled chicken flatbread, did not do as well as expected & sales momentum slowed at the end of the qtr, Brolick said.  Sales rose 3.2% at restaurants open at least a year.  The net loss of $1.9M was essentially break even per share, which compares with a loss 7¢ per share last year.  Excluding costs related to paying back debt early & selling some restaurants, EPS was 8¢, 2 pennies better than expected.  Revenue edged up nearly 1% to $640.8M, which was also better than projected.  The company expects adjusted EPS of 25¢ for fiscal 2013, higher than prior guidance of 20-22¢.  Analysts are forecasting 23¢.  The stock dropped 1.04 (12%). 

Wendy's adjusted 3Q net income beats Street Associated Press

Wendy's (WEN)

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It's surprising that the raw number for GDP growth is getting so much attention.  The thinking is that "better than expected" growth may prompt the Federal Reserve to taper its bond buying program sooner (an event that is approaching).  As pointed out below, the underlying numbers make the 2.8% growth rate a little shaky.  But that brings back the main thought inspiring buyers.  Low interest rates are necessary for a rising stock market.  That's a sad comment on this rally which has given the Dow an astounding advance of 2.5K this year.  Pay attention to DC.  Not only is the Obamacare disaster going to pinch the recovery, but it has put the need to fund gov spending for the rest of the fiscal year & raising the debt ceiling onto a back burner.  Those are enormous issues & will have to be resolved at the last second, as usual.  The outcome will be based on political considerations, not what is best for the economy & recovery.  But the Dow is not disturbed.

Dow Jones Industrials

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