Week: 14-20 April 2014

Corellas inspecting palm trees at Port Melbourne beach

Corellas inspecting palm trees at Port Melbourne beach

CALENDAR

Click here for events this week (and beyond).

USA

US Treasury notes and bond yields

Term 18 Apr 14 11 Apr 14 4 Apr 2014 28 Mar 2014 21 Mar 14
2-year T-Note 0.399% 0.359% 0.415% 0.454% 0.429%
5-year T-Note 1.731% 1.577% 1.702% 1.748% 1.707%
10-year T-Note 2.721% 2.628% 2.726% 2.721% 2.744%
30-year T-Bond 3.517% 3.489% 3.587% 3.547% 3.609%

US market indices Thumbs Up

Index 18 Apr 2014 Week 11 Apr 2014 Month 31 Mar 2014 Year 31 Dec 13
S&P 500 1,864.85 +2.71% 1,815.72 -0.40% 1,872.34 +0.89% 1,848.36
DJIA 16,408.54 +2.38% 16,027.84 -0.30% 16,457.66 -1.01% 16,576.66
NASDAQ 4,096.52 +2.39% 3,999.73 -2.46% 4,198.99 -1.94% 4,176.59

PORTFOLIO

Portfolio index

USD and AUD indices since 28 Jun 2013

USD and AUD indices since 28 Jun 2013

This week’s performance Thumbs Up

Index 18 Apr 2014 Week 11 Apr 2014 Month 31 Mar 2014 Year 31 Dec 13
USD Index 1.312 +1.49% 1.293 -2.54% 1.346 -6.22% 1.399
Trading USD/AUD 0.93756 -0.75% 0.94460 +0.51% 0.93282 +4.42% 0.89789
AUD Index 1.399 +2.26% 1.369 -3.04% 1.443 -10.19% 1.558

Portfolio stocks

Apple AAPL +1.03%

AAPL share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

AAPL share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

  • Friday close: $524.94 +1.03% from $519.61.
  • Market value: $468.241bn +$4.755bn from $463.486bn.
  • P/E (historical): 13.02 ↑ from 12.89
  • P/E (1 year fwd): 12.29 ↑ from 12.20
  • Latest financial reports: 10-Q (Oct-Dec 2013)
  • Target (1 year): NASDAQ consensus $600, range $480 ↔ $777.
    Consensus increased from $590.
  • Analyst recommendations: 23 (+2) strong buy, 5 (-1) buy, 9 hold.
  • SEC filings (CIK 0000320193): Edgar Search (New, Beta)

Amazon AMZN +4.23%

AMZN share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

AMZN share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

  • Friday close: $324.91 +4.23% from $311.73
  • Market value: $149.505bn +$6.338bn from $143.167bn
  • P/E (historical): 560 ↑ from 537
  • P/E (1 year fwd): 186 ↑ from 181
  • Latest financial reports: 10-K (Dec 2013)
  • Target (1 year): NASDAQ consensus $435, range $325 ↔ $500.
  • Analyst recommendations: 22 (+1) strong buy, 2 buy, 5 (-1) hold.
  • SEC filings (CIK 0001018724): Edgar Search (New, Beta)

Ebay EBAY +2.82%

EBAY share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

EBAY share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

Facebook FB +0.70%

FB share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

FB share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

Google

Google's share classes were more closely aligned this week (Chart: Yahoo Finance)

Google’s share classes were more closely aligned this week (Chart: Yahoo Finance)

Google Class A GOOGL +1.04%

GOOGL share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

GOOGL share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

  • Friday close: $543.34 +1.04% from $537.76.

Google Class C GOOG +1.04%

GOOG share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

GOOG share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

  • Friday close: $536.10 +1.04% from $530.60.

Linkedin LNKD +5.81%

LNKD share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

LNKD share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

VMware VMW +3.96%

VMW share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

VMW share price – week to 18 Apr 2014 (Chart: Yahoo Finance)

  • Friday close: $103.17 +3.96% from $99.24.
  • Market value: $44.444bn +$1.693bn from $42.751bn
  • P/E (historical): 43.90 ↑ from 42.23
  • P/E (1 year fwd): 40.46 ↑ from 40.07
  • Latest financial reports: 10-K (Dec 2013)
  • Target (1 year): NASDAQ consensus $112.5, range $61 ↔ $130.
    Consensus raised from $110.
  • Analyst recommendations: 16 strong buy, 3 (+1) buy, 9 hold, 1 sell.
  • SEC filings (CIK 0001124610): Edgar Search (New, Beta)

USD/AUD

USD/AUD for the week to 18 Apr 2014

USD/AUD for the week to 18 Apr 2014

Good Friday 18 Apr 2014

Dawn arrival - one of the last of this cruise ship season

Dawn arrival – one of the last of this cruise ship season

USA

Economy

Regional and State Employment and Unemployment – March 2014 Thumbs Up

Regional and state unemployment rates were generally little changed in March. Twenty-one states had unemployment rate decreases, 17 states and the District of Columbia had increases, and 12 states had no change, the U.S. Bureau of Labor Statistics reported today. Forty-six states and the District of Columbia had unemployment rate decreases from a year earlier and four states had increases. The national jobless rate was unchanged from February at 6.7 percent but was 0.8 percentage point lower than in March 2013.

In March 2014, nonfarm payroll employment increased in 34 states, decreased in 16 states, and was unchanged in the District of Columbia. The largest over-the-month increases in employment occurred in Florida (+22,900), North Carolina (+19,400), and Georgia (+14,600). The largest over-the-month decrease in employment occurred in Pennsylvania (-8,400), followed by Virginia (-5,100) and Illinois (-3,200). The largest over-the-month percentage increases in employment occurred in North Carolina, North Dakota, South Carolina, Utah, and Wyoming (+0.5 percent each). The largest over-the-month percentage decline in employment occurred in Nebraska (-0.3 percent), followed by New Mexico and Rhode Island (-0.2 percent each). Over the year, non farm employment increased in 45 states and the District of Columbia and decreased in 5 states. The largest over-the-year percentage increase occurred in North Dakota (+4.5 percent), followed by Nevada (+3.8 percent) and Florida (+3.0 percent). The largest over-the-year percentage decreases in employment occurred in Alaska, Kentucky, and New Mexico (-0.2 percent each).

Department of Labor: Bureau of Labor Statistics, “Regional and State Employment and Unemployment – March 2014“, 18 Apr 2014 (10:00) More

Broadly, we are seeing improvement in the labor market. As the economy gains more momentum, employment increases and spending improves.
Michael Wolf, Economist, Wells Fargo Securities LLC More

The breakdown of the trend of unemployment by state shows how much progress has been made in putting America back to work. The direction and magnitude of unemployment drops in many states is dramatic.
Chris Rupkey, Chief Financial Economist, Bank of Tokyo-Mitsubishi UFJ Ltd. More

Nightly Business Report, 18 Apr 2014 More

Thursday 17 Apr 2014

Some days it's just too good to work inside.  Today was one of those days.

Some days it’s just too good to work inside. Anita decided that today was one of those days.

Britains Princess Catherine visiting Sydney's Blue Mountains

Britain’s Prince William and wife were also outdoors, visiting Sydney’s Blue Mountains More

UKRAINE

Geneva agreement Thumbs Up

A conference today in Geneva produced an agreement to de-escalate tensions in Ukraine. Negotiators at the conference included:

Key points in the Geneva Statement are: More

  • All sides must refrain from any violence, intimidation or provocative actions, and reject expressions ‘of extremism, racism and religious intolerance, including antisemitism’.
  • All illegal armed groups must be disarmed; all illegally seized buildings must be returned to legitimate owners; all illegally occupied streets, squares and other public places in Ukrainian cities and towns must be vacated.
  • Amnesty will be granted to protesters and to those who have left buildings and other public places and surrendered weapons, with the exception of those found guilty of capital crimes.
  • The Organisation for Security and Co-operation in Europe (OSCE) will play a leading role in helping the authorities implement the agreement More
  • Constitutional reform would be inclusive, transparent and accountable.

Market reaction

Russia’s Micex Index and US indices rose on the announcement of the accord.

Any deceleration of the conflict will be a relief for the market. Combine the ease of the tension between Russia and Ukraine and generally a positive tone of earnings, the result is an upward drifting market.
Terry Morris, Senior Equity Manager, National Penn Investors Trust Co. ($2.8bn) More

USA

Economy

Unemployment insurance weekly claims report. Week to 12 Apr 2014 Thumbs Up

In the week ending April 12, the advance figure for seasonally adjusted initial claims was 304,000, an increase of 2,000 from the previous week’s revised level. The previous week’s level was revised up by 2,000 from 300,000 to 302,000. The 4-week moving average was 312,000, a decrease of 4,750 from the previous week’s revised average. This is the lowest level for this average since October 6, 2007 when it was 302,000. The previous week’s average was revised up by 500 from 316,250 to 316,750.

The advance seasonally adjusted insured unemployment rate was 2.1 percent for the week ending April 5, unchanged from the previous week’s unrevised rate of 2.1 percent. The advance number for seasonally adjusted insured unemployment during the week ending April 5 was 2,739,000, a decrease of 11,000 from the previous week’s revised level. This is the lowest level for insured unemployment since December 15, 2007 when it was 2,737,000. The previous week’s level was revised down by 26,000 from 2,776,000 to 2,750,000. The 4-week moving average was 2,785,250, a decrease of 32,500 from the previous week’s revised average. This is the lowest level for this average since January 19, 2008 when it was 2,777,500. The previous week’s average was revised down by 6,500 from 2,824,250 to 2,817,750.

Department of Labor: Employment and Training Administration, “Unemployment insurance weekly claims – Week to 12 Apr 2014“, 17 Apr 2014 (08:30) More

Comment

Not only have you had a slowdown in layoffs, but also the total number of people on state benefit rolls has fallen. The labor market is getting better.
Brian Jones, Senior U.S. Economist, Societe Generale More

Usual Weekly Earnings of Wage and Salary Workers for First Quarter 2014 Thumbs Up

Median weekly earnings of the nation’s 104.3 million full-time wage and salary workers were $796 in the first quarter of 2014 (not seasonally adjusted), the U.S. Bureau of Labor Statistics reported today. This was 3.0 percent higher than a year earlier, compared with a gain of 1.4 percent in the Consumer Price Index for All Urban Consumers (CPI-U) over the same period.

Department of Labor: Bureau of Labor Statistics, “Usual Weekly Earnings of Wage and Salary Workers for First Quarter 2014“, 17 Apr 2014 (10:00) More

Stock market indices Thumbs Up

After a solid day for risk yesterday, we have a more cautious tone before a long weekend. Earnings had a more negative tone highlighted by Google and IBM’s after-market earnings misses.
Jim Reid, Strategist, Deutsche Bank AG (Pre-market) More

The market, with the sell-off and some downward revisions to estimates, maybe set itself for better reactions to earnings than it might have been the case earlier. Broadly, what we’re going to learn from earnings is that we’re pretty much on the trajectory of what the market expects it to be on.
Gerry Paul, Chief Investment Officer of U.S. Value Equities, AllianceBernstein LP ($454bn) More

Today’s earnings were mixed, with some beating and others missing expectations, but the results we’ve seen this week have given the season a positive tone. We had expected a greater impact from weather, but industrials and banks are all doing better, which relieves that area of concern.
Kate Warne, Investment Strategist, Edward Jones ($787bn) More

Indices

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX 1,864.85 +0.14% 1,848.36 +0.89%
DJIA INDU 16,408.54 -0.10% 16,576.66 -1.01%
NASDAQ IXIC 4,095.52 +0.23% 4,176.59 -1.94%
Nightly Business Report: 17 Apr 2014 Watch

PORTFOLIO

Portfolio indices Thumbs Up

:-) Outperformed Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.312 +0.32% 1.399 -6.22%
Valuation Rate USD/AUD 0.93756 -0.49% 0.89789 +4.42%
Portfolio Index AUD 1.399 +0.81% 1.558 -10.19%

Portfolio stock prices

Stock Ticker P/E h P/E f Today Change 31 Dec 13 YTD
Apple AAPL 13.02 12.15 $524.94 +1.14% $561.02 -6.43%
Amazon AMZN 560 185 $324.91 +0.38% $398.79 -18.53%
Ebay EBAY 25.22 21.45 $54.97 +0.51% $54.865 +0.19%
Facebook FB 99.90 59.13 $58.94 -1.31% $54.649 +7.85%
Google A GOOGL 16.35 24.85 $543.34 -3.65% $560.365 -3.04%
Google C GOOG N/A N/A $536.10 -3.67% $560.365 -4.33%
Linkedin LNKD 763 NE $175.42 +2.10% $216.83 -19.10%
VMware VMW 43.90 40.13 $103.17 +0.81% $89.71 +15.00%

Wednesday 16 Apr 2014

CHINA

Economy Thumbs Up

China’s first quarter GDP grew 7.4% (compared to GDP a year ago), the slowest rate in 18 months. Result, slightly below the government’s 7.5% target Target.

Monthly report on industrial production operation – Mar 2014

In March 2014, the total value added of the industrial enterprises above designated size was up by 8.8 percent year-on-year (the following growth rates of value added are real growth rates, after deducting price factors), 0.2 percentage points higher than that in the first two months of 2014. In March, the total value added of the industrial enterprises above designated size went up by 0.81 percent month-on-month. From January to March, the total value added of the industrial enterprises above designated size was up by 8.7 percent.

National Bureau of Statistics of China, “Monthly report on industrial production operation in March 2014“, 16 Apr 2014 More

Total retail sales of consumer goods – Mar 2014

In March 2014, the total retail sales of consumer goods reached 1,980.1 billion yuan, up by 12.2 percent year-on-year (nominal growth rate. The real growth rate was 10.8 percent. The follows are nominal growth rates if there’s no additional explanation). Of the total, the retail sales of consumer goods of units above designated size was 1,023.1 billion yuan, increased 10.2 percent. From January to March, the total retail sales of consumer goods reached 6,208.1 billion yuan, up by 12.0 percent year-on-year. Of which, the online retail sales of units above designated size was 81.5 billion yuan, increased 51.7 percent.

National Bureau of Statistics of China, “Total Retail Sales of Consumer Goods in March 2014“, 16 Apr 2014 More

National Real Estate Development and Sales – Mar 2014 Quarter

The total investment in real estate development in the first three months of 2014 was 1,533.9 billion yuan, a nominal increase of 16.8 percent year-on-year (actual increase was 15.5 percent after deducting price factors), 2.5 percentage points lower over the first two months. Of which, the investment in residential buildings was 1,053.0 billion yuan, up by 16.8 percent, 1.6 percentage point lower, and accounted for 68.7 percent of real estate development investment.

National Bureau of Statistics of China, “National Real Estate Development and Sales in March 2014“, 16 Apr 2014 More

Quarterly business climate index – Mar 2014 Quarter

The business climate index (BCI) of industrial enterprises was 128.0 in the first quarter of 2014, increased 3.7 points quarter-on-quarter, mainly due to a higher expected BCI of industrial enterprises that reflected the anticipation of future business climate of industrial enterprises. Of which, the current BCI of industrial enterprises that reflected the current state of business climate of industrial enterprises was 122.5, down by 6.1 points quarter-on-quarter; the expected BCI of industrial enterprises that reflected the anticipation of future business climate of industrial enterprises was 131.6, up by 10.2 points quarter-on-quarter. In the first quarter, the entrepreneur expectation index (ECI) of industrial enterprises was 124.3, up by 3.3 points quarter-on-quarter.

National Bureau of Statistics of China, “Business Climate Index of Industrial Enterprises Increased in the First Quarter of 2014“, 16 Apr 2014 More

USA

Economy

Janet Yellen’s speech

At our most recent meeting in March, the FOMC reformulated its forward guidance for the federal funds rate. While one of the main motivations for this change was that the unemployment rate might soon cross the 6-1/2 percent threshold, the new formulation is also well suited to help the FOMC explain policy adjustments that may arise in response to changes in the outlook. I should note that the change in the forward guidance did not indicate a change in the Committee’s policy intentions, but instead was made to clarify the Committee’s thinking about policy as the economy continues to recover. The new guidance provides a general description of the framework that the FOMC will apply in making decisions about the timing of liftoff. Specifically, in determining how long to maintain the current target range of 0 to 25 basis points for the federal funds rate, “the Committee will assess progress, both realized and expected, toward its objectives of maximum employment and 2 percent inflation.”24 In other words, the larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained. This approach underscores the continuing commitment of the FOMC to maintain the appropriate degree of accommodation to support the recovery. The new guidance also reaffirms the FOMC’s view that decisions about liftoff should not be based on any one indicator, but that it will take into account a wide range of information on the labor market, inflation, and financial developments.

Along with this general framework, the FOMC provided an assessment of what that framework implies for the likely path of policy under the baseline outlook. At present, the Committee anticipates that economic and financial conditions will likely warrant maintaining the current range ‘for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.’

Janet Yellen, Chair, US Federal Reserve, “Monetary Policy and the Economic Recovery“, Speech given to the Economic Club of New York, 16 Apr 2014. Text

Industrial production and capacity utilisation

Industrial production increased 0.7 percent in March after having advanced 1.2 percent in February. The rise in February was higher than previously reported primarily because of stronger gains for durable goods manufacturing and for mining. For the first quarter as a whole, industrial production moved up at an annual rate of 4.4 percent, just slightly slower than in the fourth quarter of 2013. In March, the output of manufacturing rose 0.5 percent, the output of utilities increased 1.0 percent, and the output of mines gained 1.5 percent. At 103.2 percent of its 2007 average, total industrial production in March was 3.8 percent above its level of a year earlier. Capacity utilization for total industry increased in March to 79.2 percent, a rate that is 0.9 percentage point below its long-run (1972–2013) average but 1.2 percentage points higher than a year prior.

Federal Reserve, “Industrial Production and Capacity Utilization – G.17“, 16 Apr 2014 More

Residential construction Mar 2014

BUILDING PERMITS
Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 990,000. This is 2.4 percent (±1.0%) below the revised February rate of 1,014,000, but is 11.2 percent (±1.1%) above the March 2013 estimate of 890,000.
Single-family authorizations in March were at a rate of 592,000; this is 0.5 percent (±1.0%) above the revised February figure of 589,000. Authorizations of units in buildings with five units or more were at a rate of 370,000 in March.

HOUSING STARTS
Privately-owned housing starts in March were at a seasonally adjusted annual rate of 946,000. This is 2.8 percent (±14.7%) above the revised February estimate of 920,000, but is 5.9 percent (±8.4%) below the March 2013 rate of 1,005,000.
Single-family housing starts in March were at a rate of 635,000; this is 6.0 percent (±15.5%) above the revised February figure of 599,000. The March rate for units in buildings with five units or more was 292,000.

HOUSING COMPLETIONS
Privately-owned housing completions in March were at a seasonally adjusted annual rate of 872,000. This is 0.2 percent (±13.2%) below the revised February estimate of 874,000, but is 7.7 percent (±14.3%) above the March 2013 rate of 810,000.
Single-family housing completions in March were at a rate of 602,000; this is 3.8 percent (±12.6%) below the revised February rate of 626,000. The March rate for units in buildings with five units or more was 258,000.

Department of Housing and Urban Development and US Census Bureau, “New Residential Construction in March 2014“, 16 Apr 2014 (08:30am) More

Stock market indices Thumbs Up

Indices

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX 1,862.31 +1.05% 1,848.36 +0.75%
DJIA INDU 16,424.85 +1.00% 16,576.66 -0.92%
NASDAQ IXIC 4,086.23 +1.29% 4,176.59 -2.16%
Nightly Business Report: 16 Apr 2014 Watch

PORTFOLIO

Portfolio indices Thumbs Up

:-( Underperformed Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.308 +0.84% 1.399 -6.53%
Valuation Rate USD/AUD 0.94214 +0.19% 0.89789 +4.93%
Portfolio Index AUD 1.388 +0.65% 1.558 -10.92%

Mar 2014 quarter reports

IBM and Google disappointed investors in their Mar 2014 quarterly reports, released after market close today.

IBM IBM -0.31%

IBM’s revenue ($22.5bn) was 1.86% below estimates ($22.9bn) – mainly caused by reductions hardware sales in emerging countries (e.g. BRIC revenue, with the largest reductions in China). EPS ($2.54) were in line with estimates.

IBM closed down 4.48% at $188.20 in after hours trading.

Google GOOGL +2.77% GOOG +3.75%

Google’s EPS ($6.27) missed analysts’ estimates ($6.40). Revenue ($15.4bn) was also slightly below estimates ($15.5bn).

GOOGL closed down 0.73% at $544.70 in after hours trading.

Report

We completed another great quarter. Google’s revenue was $15.4 billion, up 19% year on year. We got lots of product improvements done, especially on mobile. I’m also excited with progress on our emerging businesses.
Larry Page, CEO, Google. Report

Quick analysis

Google Inc.’s costs are rising as the search provider finds it harder to keep up with a broad shift to advertising on mobile phones, with sales falling short of estimates.

Revenue, excluding sales passed on to partners, was $12.2 billion in the first quarter, falling short of a projection by analysts for $12.3 billion, according to data compiled by Bloomberg.

Google’s audience is steadily migrating to smartphones, where the company gets less money for marketing spots than on desktops and tablets. Facebook Inc. and other rivals are also challenging Google’s dominance in the online market. Even though Chief Executive Officer Larry Page is getting more advertisers to buy promotions, with total volume rising 26 percent, the average price for an ad fell 9 percent.

Brian Womack, Reporter, Bloomberg More

Portfolio stock prices

:-) Temporary exhuberance: Google’s Mar 2014 quarter report disappointed investors. :-(

Stock Ticker P/E h P/E f Today Change 31 Dec 13 YTD
Apple AAPL 12.87 12.13 $519.01 +0.20% $561.02 -7.49%
Amazon AMZN 558 181 $323.68 +2.40% $398.79 -18.83%
Ebay EBAY 25.09 21.14 $54.69 +1.47% $54.865 -0.32%
Facebook FB 101 58.50 $59.72 +1.07% $54.649 +9.28%
Google A GOOGL 14.79 24.13 $563.90 +2.77% $560.365 +0.63%
Google C GOOG N/A N/A $556.54 +3.75% $560.365 -0.68%
Linkedin LNKD 747 NE $171.82 +0.54% $216.83 -20.76%
VMware VMW 43.55 40.09 $102.34 +0.12% $89.71 +14.08%

Tuesday 15 Apr 2014

USA

Economy

Consumer Price Index – Mar 2014 Thumbs Up

The CPI increased 0.2% in Mar 2014, higher than the expected 0.1% increase, but within the 0% – 0.4% range of expectations.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in March on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.5 percent before seasonal adjustment.
Department of Labor, Bureau of Labor Statistics, “Consumer Price Index Summary“, 15 Apr 2015 (08:30am) More Cached

The overall picture is that inflation has stopped falling and is on a gradual uptrend. To some extent, today’s numbers relieve fears about the U.S. slipping into deflation or a prolonged drop in prices that hurts borrowers and profits.
Thomas Costerg, Economist, Standard Chartered Plc More

Real earnings – Mar 2014

Real average hourly earnings for all employees fell 0.3 percent from February to March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This decrease stems from unchanged average hourly earnings and a 0.2 percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings rose 0.3 percent over the month due to the 0.3 percent decrease in real average hourly earnings being more than offset by a 0.6 percent increase in the average workweek.

Real average hourly earnings rose 0.5 percent, seasonally adjusted, from March 2013 to March 2014. The increase in real average hourly earnings, combined with an unchanged average workweek, resulted in a 0.5 percent increase in real average weekly earnings over this period.

Department of Labor, Bureau of Labor Statistics, “Real Earnings“, 15 Apr 2015 (08:30am) More Cached

While increases in consumer prices are a good sign for many concerned about disinflation, it is not positive for the overall economy unless wages rise in tandem.
Jay Morelock, Economist, FTN Financial More

Stock market indices Thumbs UpThumbs DownThumbs Up

NBR co-host Tyler Mathison described today as a "Whipsaw Day"

NBR co-host Tyler Mathison described today as a “Whipsaw Day” (Chart: Yahoo Finance)

Worrying about China and Ukraine

China’s growth data tomorrow may demonstrate a weaker-than-expected economy. Expectations for large-scale stimulus may not be in place and there could be smaller measures instead.
Ronald Wan, Chief China Adviser, Asian Capital Holdings Ltd. More

The quarter-on-quarter data will show growth momentum has actually bottomed out in the first quarter.
Chen Xingdong, Chief China Economist, BNP Paribas SA More

There’s a tremendous amount of volatility and uncertainty because of concerns over Russia and Ukraine. That’s going to shift the winds of the market on a minute-by-minute basis. You’re in the process right now, in the short run, of sorting through earnings, as well as geopolitical and economic issues.
Chad Morganlander, Portfolio Manager, Stifel Nicolaus & Co. ($150bn) More

Interviewed on NBR tonight Jeff Kleintop, Chief Market Strategist, LPL Financial said “If the prospects for US military engagement are off the table, markets tend to look past the geopolitical conflict even if they accelerate into a potential civil war.

Unclear direction

Stocks are having meaningful moves in both directions because people are nervous on both sides. Subjectivity plays such a pivotal role, and emotions, in what’s been going on in this market that it’s hard to pinpoint what causes a turn in the direction.
Michael James, Managing Director, Equity Trading, Wedbush Securities Inc. More

Indices

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX 1,842.98 +0.68% 1,848.36 -0.29%
DJIA INDU 16,262.56 +0.55% 16,576.66 -1.89%
NASDAQ IXIC 4,034.16 +0.29% 4,176.59 -3.41%
Nightly Business Report: 15 Apr 2014 Watch

Tech stock news

Twitter TWTR +11.43% has agreed to acquire data partner Gnip. “Gnip is one of four companies with access to Twitter’s so-called “fire hose,” the full stream of tweets since 2006, which now average roughly 500 million a day. Gnip analyzes this information and resells it, primarily to businesses interested in how consumers view them.More

PORTFOLIO

Portfolio stock news

Google’s GOOGL +0.64% contact lens camera patent application

Google's contact lens camera patent application (Image: Patent Bolt) More

Google’s contact lens camera patent application (Image: Patent Bolt) More

Portfolio indices Thumbs Down

:-( Underperformed Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.297 -0.25% 1.399 -7.30%
Valuation Rate USD/AUD 0.94037 -0.71% 0.89789 +4.73%
Portfolio Index AUD 1.379 +0.47% 1.558 -11.49%

Portfolio stock prices

Stock Ticker P/E h P/E f Today Change 31 Dec 13 YTD
Apple AAPL 12.85 12.16 $517.9599 -0.71% $561.02 -7.68%
Amazon AMZN 545 181 $316.08 +0.05% $398.79 -20.74%
Ebay EBAY 24.72 21.17 $53.90 -0.15% $54.865 -1.76%
Facebook FB 100 58.31 $59.09 +0.34% $54.649 +8.13%
Google A GOOGL 14.39 23.99 $548.70 +0.64% $560.365 -2.08%
Google C GOOG N/A N/A $536.44 +0.74% $560.365 -4.27%
Linkedin LNKD 743 NE $170.90 +3.09% $216.83 -21.18%
VMware VMW 43.50 39.52 $102.22 +1.43% $89.71 +13.94%

Monday 14 Apr 2014

USA

Economy

As it usually does each spring, CBO has updated the baseline budget projections that it released earlier in the year. CBO now estimates that if the current laws that govern federal taxes and spending do not change, the budget deficit in fiscal year 2014 will be $492 billion. Relative to the size of the economy, that deficit—at 2.8 percent of gross domestic product (GDP)—will be nearly a third less than the $680 billion shortfall in fiscal year 2013, which was equal to 4.1 percent of GDP. This will be the fifth consecutive year in which the deficit has declined as a share of GDP since peaking at 9.8 percent in 2009.

Congressional Budget Office, “Updated Budget Projections 2014 – 2024“, 14 Apr 2014 More

Advance retail sales – Mar 2014 Thumbs Up

Retail sales in Mar 2014 were 1.1% higher than in Feb 2014, the biggest gain since September 2012. Feb 2014 sales growth was adjusted upwards from 0.3% to 0.7%.

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $433.9 billion, an increase of 1.1 percent (±0.5%) from the previous month, and 3.8 percent (±0.7%) above March 2013. Total sales for the January 2014 through March 2014 period were up 2.5 percent (±0.4%) from the same period a year ago. The January 2014 to February 2014 percent change was revised from +0.3 percent (±0.5%)* to +0.7 percent (±0.2%).

Retail trade sales were up 1.1 percent (±0.5%) from February 2014, and 3.7 percent (±0.7%) above last year. Auto and other motor vehicle dealers were up 9.5 percent (±3.2%) from March 2013 and nonstore retailers were up 7.8 percent (±2.5%) from last year.

US Department of Commerce – US Census Bureau, “Advance Monthly Sales For Retail and Food Services – March 2014“, 14 Apr 2014 (08:30am) More

It really is a story of pent-up demand. As employment levels continue to improve at a modest pace, so too should consumer spending.
Russell Price, Senior Economist, Ameriprise Financial Inc More

It shows there is an underlying current of strength in the economy despite the drag from the severe winter weather
Robert Dye, Chief Economist, Comerica More

This is not a fragile economy. The linchpin of economic growth, the consumer is back and with the consumer’s help, growth will be even faster in 2014
Chris Rupkey, Chief Financial Economist, Bank of Tokyo-Mitsubishi UFJ More

Manufacturing and trade: Inventories and sales – Mar 2014 Thumbs Up

Sales. The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for February, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,311.8 billion, up 0.8 percent (±0.2%) from January 2014 and were up 1.8 percent (±0.5%) from February 2013.

Inventories. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,715.6 billion, up 0.4 percent (±0.1%) from January 2014 and up 4.2 percent (±0.5%) from February 2013.

Inventories/Sales Ratio. The total business inventories/sales ratio based on seasonally adjusted data at the end of February was 1.31. The February 2013 ratio was 1.28.

US Department of Commerce – US Census Bureau, “Advance Monthly Sales For Retail and Food Services – March 2014“, 14 Apr 2014 (10:00am) More

Stock market indices Thumbs Up

We’re in a tug of war between the fundamentals of earnings – and so far, some have looked good – and then a broad cloud of geopolitical uncertainty underlying everything, which hasn’t been getting the attention it deserves in markets.
Nicholas Colas, Chief Market Strategist, ConvergEx Group More

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX 1,830.61 +0.82% 1,848.36 -0.96%
DJIA INDU 16,173.24 +0.91% 16,576.66 -2.43%
NASDAQ IXIC 4,022.69 +0.57% 4,176.59 -3.68%
Nightly Business Report: 14 Apr 2014 Watch

PORTFOLIO

Portfolio stock news

Google GOOGL +1.38% has acquired Titan Aerospace

Titan's home page today

Titan’s home page today

Google has acquired aerospace startup Titan Aerospace which makes solar atmospheric satellites (solar-powered drones). Google plans to build a fleet of Solara 60 drones to provide an internet service to “dark” areas of the Southern hemisphere (Project Loon). The Salara drones can carry a 100KG payload and fly for 5 years without landing. More On 4 Mar 2014 we reported a similar intention from Facebook. More

Titan Aerospace Solara 60 atmospheric satellite. (Image: Titan Aerospace)

Titan Aerospace Solara 60 atmospheric satellite. (Image: Titan Aerospace)

Google’s current Project Loon strategy, piloted in New Zealand in 2013, is based on “a network of balloons traveling on the edge of space, designed to connect people in rural and remote areas, help fill coverage gaps, and bring people back online after disasters“. More A key issue with that 30-balloon pilot was that most of its coverage was provided to the ocean. More

Portfolio indices Thumbs Up

:-| About square Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.300 +0.58% 1.399 -7.07%
Valuation Rate USD/AUD 0.94712 +0.27% 0.89789 +5.48%
Portfolio Index AUD 1.373 +0.31% 1.558 -11.90%

Portfolio stock prices

Stock Ticker P/E h P/E f Today Change 31 Dec 13 YTD
Apple AAPL 12.94↑ 12.11↓ $521.68 +0.40% $561.02 -7.01%
Amazon AMZN 545↑ 178↓ $315.91 +1.34% $398.79 -20.78%
Ebay EBAY 24.76↑ 20.96↓ $53.98 +0.97% $54.865 -1.61%
Facebook FB 99.81↑ 57.95↓ $58.53 +0.62% $54.649 +7.76%
Google A GOOGL 14.30↑ 23.66↓ $545.20 +1.38% $560.365 -2.70%
Google C GOOG N/A N/A $532.52 +0.36% $560.365 -4.97%
Linkedin LNKD 721 NE $165.78 0.00% $216.83 -23.54%
VMware VMW 42.89↑ 38.92↓ $100.78 +1.55% $89.71 +12.34%

FX: USD/AUD

The AUD continues to rise against the USD (Chart: xe.com)

The AUD continues to rise against the USD (Chart: xe.com)

Week: 7-13 Apr 2014

CALENDAR

The earnings reporting season commences this week for our portfolio companies. As usual there’s likely to be a response to the earnings, but the real focus will be on outlooks. Thomson Reuters reports that “Profit growth for Standard & Poor’s 500 companies now is expected to have increased just 0.9 percent in the first quarter from a year ago, down from a January 1 forecast for 6.5 percent growth.More

Date Event / Information Release
Mon 14 Apr Advance retail sales – Mar 2014 | Census
Mon 14 Apr Manufacturing and trade: Inventories and sales – Feb 2014 | ESA
Tue 15 Apr Consumer price index (CPI) and real earnings – Mar 2014 | BLS 8:30am ET
Wed 16 Apr Janet Yellen speaks at the Economic Club of New York More
Wed 16 Apr New residential construction – Mar 2014 | Census
Wed 16 Apr Industrial Production and Capacity Utilization – G.17 | Federal Reserve 9:15am ET Here
Wed 16 Apr Beige Book | Federal Reserve 2:00pm ET Here
Wed 16 Apr China: Monthly Report on Industrial Production Operation | National Bureau of Statistics of China cn18
Wed 16 Apr China: Monthly Report on Investment in Real Estate Development | National Bureau of Statistics of China cn18
Wed 16 Apr China: Monthly Report on Total Retail Sales of Consumer Goods | National Bureau of Statistics of China cn18
Wed 16 Apr China: Quarterly Business Climate Index | National Bureau of Statistics of China cn18
Wed 16 Apr Google: Q1/2014 earnings report
Thu 17 Apr Unemployment Insurance Weekly Claims Report – week to 12 Apr 2014 | Department of Labor 8:30am ET
Fri 18 Apr Regional and State employment and unemployment – Mar 2014 | BLS 8:30am ET
Fri 18 Apr Good Friday: Non-trading day for NASDAQ, NYSE and ASX

USA

US Treasury notes and bond yields

Term 11 Apr 14 4 Apr 2014 28 Mar 2014 21 Mar 14 14 Mar 14
2-year T-Note 0.359% 0.415% 0.454% 0.429% 0.346%
5-year T-Note 1.577% 1.702% 1.748% 1.707% 1.536%
10-year T-Note 2.628% 2.726% 2.721% 2.744% 2.656%
30-year T-Bond 3.489% 3.587% 3.547% 3.609% 3.597%

US market indices Thumbs Down

Index 11 Apr 2014 Week 4 Apr 2014 Month 31 Mar 2014 Year 31 Dec 13
S&P 500 1,815.72 -2.65% 1,865.09 -3.02% 1,872.34 -1.77% 1,848.36
DJIA 16,027.84 -2.34% 16,412.71 -2.61% 16,457.66 -3.31% 16,576.66
NASDAQ 3,999.73 -3.10% 4,127.73 -4.75% 4,198.99 -4.23% 4,176.59

PORTFOLIO

Portfolio index

USD and AUD indices since 28 Jun 2013

USD and AUD indices since 28 Jun 2013

This week’s performance Thumbs Down

:-| Our USD-denominated index outperformed the market this week, but it’s hardly a victory. Our portfolio has already taken its lumps this year. The rising AUD continues to erode the AUD-denominated index. :-(

Index 11 Apr 2014 Week 4 Apr 2014 Month 31 Mar 2014 Year 31 Dec 13
USD Index 1.293 -2.09% 1.320 -3.98% 1.346 -7.61% 1.399
Trading USD/AUD 0.94460 +1.20% 0.93338 +1.26% 0.93282 +5.20% 0.89789
AUD Index 1.369 -3.26% 1.415 -5.18% 1.443 -12.17% 1.558

Portfolio stocks

Apple AAPL -2.30%

AAPL share price – week to 11 Apr 2014

AAPL share price – week to 11 Apr 2014 (Chart: Yahoo Finance)

Amazon AMZN -3.49%

AMZN share price – week to 11 Apr 2014

AMZN share price – week to 11 Apr 2014 (Chart: Yahoo Finance)

Ebay EBAY -1.00%

EBAYshare price – week to 11 Apr 2014

EBAY share price – week to 11 Apr 2014 (Chart: Yahoo Finance)

Facebook FB +3.14%

FB share price – week to 11 Apr 2014

FB share price – week to 11 Apr 2014 (Chart: Yahoo Finance)

Google

Class C shares are underperforming Class A share price – week to 11 Apr 2014

Class C underperforms Class A share price – week to 11 Apr 2014 (Chart: Yahoo Finance)

Google Class A GOOGL -1.37%

GOOGL share price – week to 11 Apr 2014  (Chart: Yahoo Finance)

GOOGL share price – week to 11 Apr 2014 (Chart: Yahoo Finance)

Google Class C GOOG -2.31%

GOOG share price – week to 11 Apr 2014  (Chart: Yahoo Finance)

GOOG share price – week to 11 Apr 2014 (Chart: Yahoo Finance)

Linkedin LNKD -0.03%

LNKD share price – week to 11 Apr 2014  (Chart: Yahoo Finance)

LNKD share price – week to 11 Apr 2014 (Chart: Yahoo Finance)

VMware VMW -4.56%

VMW share price – week to 11 Apr 2014  (Chart: Yahoo Finance)

VMW share price – week to 11 Apr 2014 (Chart: Yahoo Finance)

  • Friday close: $99.24 -4.56% from $103.98.
  • Market value: $42.751bn -$2.042bn from $44.793bn
  • P/E (historical): 42.23 ↓ from 44.25
  • P/E (1 year fwd): 40.07 ↓ from 41.67
  • Latest financial reports: 10-K (Dec 2013)
  • Target (1 year): NASDAQ consensus $110, range $61 ↔ $130.
  • Analyst recommendations: 16 strong buy, 2 buy, 9 hold, 1 under perform, 1 sell.
  • SEC filings (CIK 0001124610): Edgar Search (New, Beta)

USD/AUD

USD/AUD for the week to 11 Apr 2014

USD/AUD for the week to 11 Apr 2014

Friday 11 Apr 2014

CHINA

Economy

Monthly Report on Consumer Price Index (CPI) – Mar 2014

China CPI to Mar 2014 (Chart: NBS China)

China CPI to Mar 2014 (Chart: NBS China)

In March, the consumer price index (CPI) went up by 2.4 percent year-on-year. The prices grew by 2.5 percent in cities and 2.1 percent in rural areas. The food prices went up by 4.1 percent, while the non-food prices increased 1.5 percent. The prices of consumer goods went up by 2.2 percent and the prices of services grew by 2.8 percent. On average from January to March, the overall consumer prices were up by 2.3 percent over the same period of the previous year.

In March, the month-on-month change of consumer prices was down by 0.5 percent, of which, prices decreased 0.5 percent in cities and 0.6 percent in rural areas. The food prices went down by 1.6 percent, while the non-food prices went up by 0.1 percent. The prices of consumer goods decreased 0.6 percent, and the prices of services went down by 0.1 percent.

National Bureau of Statistics of China, “Consumer Prices for March 2014“, 11 Apr 2014 More

Monthly Report on Producer Prices for the Industrial Sector – Mar 2014

China Producer Price Index to Mar 2014 (Chart: NBS China)

China Producer Price Index to Mar 2014 (Chart: NBS China)

In March 2014, Producer Price Index (PPI) for manufactured goods decreased 2.3 percent year-on-year, and decreased 0.3 percent month-on-month. The purchasing price index for manufactured goods went down by 2.5 percent year-on-year, and went down by 0.2 percent month-on-month. On average from January to March, the PPI decreased 2.0 percent year-on-year, the purchasing price index for manufactured goods went down by 2.1 percent year-on-year.

National Bureau of Statistics of China, “Producer Prices for the Industrial Sector for March 2014“, 11 Apr 2014 More

USA

Economy

Producer Price Index – Mar 2014 | BLS

The Producer Price Index for final demand advanced 0.5 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed a decline of 0.1 percent in February and a rise of 0.2 percent in January. On an unadjusted basis, the index for final demand moved up 1.4 percent for the 12 months ended in March, the largest 12-month advance since a 1.7-percent increase in August 2013.

In March, the 0.5-percent increase in final demand prices can be traced to the index for final demand services, which rose 0.7 percent. Prices for final demand goods were unchanged.

Department of Labor – Bureau of Labor Statistics, “Producer Price Indexes – March 2014“, 11 Apr 2014 (8:30am EDT) More

Consumer confidence (Thomson Reuters – University of Michigan) – Apr 2014 Prelim Thumbs Up

Index Prelim Expect Mar 2014 Feb 2014 Apr 2013
Consumer Sentiment 82.6 81.0 80.0 81.6 76.4
Consumer Expectations 73.3 71.4 70.0 72.7 67.8
Current Economic Conditions 97.1 96.3 95.7 95.4 89.9

The confidence that we had going into 2014 got pushed back a couple months, but now we’re going to see it blossom in the spring. Expectations are high for the second quarter to really rebound from the first quarter.
Jay Morelock, Economist, FTN Financial More

Stock market indices Thumbs Down

You need to shake out some of the speculative money and throw water on the irrational exuberance. It’s a good reminder that markets don’t go straight up. While the long-term is positive, we need to have these steps back along the way. We need this kind of pullback.
Randy Frederick, Managing Director, Trading and Derivatives, Charles Schwab Corp SCHW. ($2.2 trillion) More

So far, exposure reductions have been measured and at least for the time being, there has been no mass rush for the exits. Unsurprisingly, we have seen exposure being trimmed the most in information technology where the popular longs have underperformed significantly over the last few weeks.
Jon Kinderlerer, Credit Suisse More

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX 1,815.72 -0.95% 1,848.36 -1.77%
DJIA INDU 16,027.84 -0.88% 16,576.66 -3.31%
NASDAQ IXIC 3,999.73 -1.34% 4,176.59 -4.23%
Nightly Business Report: 11 Apr 2014 More

PORTFOLIO

Portfolio indices Thumbs Down

:-| About square Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.293 -1.09% 1.399 -7.61%
Valuation Rate USD/AUD 0.94460 -0.19% 0.89789 +5.20%
Portfolio Index AUD 1.369 -0.90% 1.558 -12.17%

Portfolio stock prices

Some of our stocks managed to rise above their opening prices (Ebay, Facebook, Google A, Linkedin), but got dragged down into the ongoing tech selldown.

P/E ratios continue to fall – this being a side effect of the current rotation.

Stock Ticker P/E h P/E f Today Change 31 Dec 13 YTD
Apple AAPL 12.89 12.20 $519.61 -0.74% $561.02 -7.38%
Amazon AMZN 537 181 $311.73 -1.70% $398.79 -21.83%
Ebay EBAY 24.52 21.21 $53.46 -1.15% $54.865 -2.56%
Facebook FB 99.20 58.57 $58.53 -1.06% $54.649 +7.10%
Google A GOOGL 14.10 24.02 $537.76 -1.63% $560.365 -4.03%
Google C GOOG N/A N/A $530.60 -1.91% $560.365 -5.31%
Linkedin LNKD 721 NE $165.78 -2.48% $216.83 -23.54%
VMware VMW 42.23 40.07 $99.24 -2.88% $89.71 +10.62%

AUSTRALIA

Economy

Australia: Lending Finance 5671.0 – Feb 2014

February 2014 Compared With January 2014:

Housing Finance for Owner Occupation
The total value of owner occupied housing commitments excluding alterations and additions rose 0.9% in trend terms, and the seasonally adjusted series rose 1.9%.

Personal Finance
The trend series for the value of total personal finance commitments rose 0.6%. Fixed lending commitments rose 0.6% and revolving credit commitments rose 0.6%.
The seasonally adjusted series for the value of total personal finance commitments rose 3.0%. Revolving credit commitments rose 5.9% and fixed lending commitments rose 0.9%.

Commercial Finance
The trend series for the value of total commercial finance commitments rose 1.6%. Revolving credit commitments rose 1.7% and fixed lending commitments rose 1.6%.
The seasonally adjusted series for the value of total commercial finance commitments fell 2.5% in February 2014, after a rise of 2.1% in January 2014. Revolving credit commitments fell 4.9%, after a rise of 1.7% in the previous month. Fixed lending commitments fell 1.8%, after a rise of 2.2% in the previous month.

Lease Finance
The trend series for the value of total lease finance commitments rose 2.7% and the seasonally adjusted series rose 0.9%, following a rise of 4.7% in January 2014.

Australian Bureau of Statistics, “5671.0 – Lending Finance, Australia, Feb 2014“, 11 Apr 2014 (11:30am AET) More

FX: USD/AUD

USD/AUD over the last 2 years (Chart: xe.com)

USD/AUD over the last 2 years (Chart: xe.com)

Thursday 10 Apr 2014

USA

Economy

US import and export price indexes – Mar 2014

U.S. import prices advanced 0.6 percent in March, after a 0.9-percent increase in February, the U.S. Bureau of Labor Statistics reported today. Higher fuel prices and nonfuel prices each contributed to the rise in import prices in March. U.S. export prices increased 0.8 percent in March following a 0.7-percent advance the previous month.

US Department of Labor, Bureau of Labor Statistics, “U.S. Import and Export Price Indexes – March 2014“, 10 Apr 2014 (8:30am EDT) More

Unemployment Insurance Weekly Claims Report – week to 5 Apr 2014 Thumbs Up

Jobless claims last week fell to the lowest level since May 2007.

In the week ending April 5, the advance figure for seasonally adjusted initial claims was 300,000, a decrease of 32,000 from the previous week’s revised level. The last time initial claims were this low was May 12, 2007 when they were 297,000. The previous week’s level was revised up by 6,000 from 326,000 to 332,000. The 4-week moving average was 316,250, a decrease of 4,750 from the previous week’s revised average. The previous week’s average was revised up by 1,500 from 319,500 to 321,000.

The advance seasonally adjusted insured unemployment rate was 2.1 percent for the week ending March 29, a decrease of 0.1 from the previous week’s unrevised rate of 2.2 percent. The advance number for seasonally adjusted insured unemployment during the week ending March 29 was 2,776,000, a decrease of 62,000 from the previous week’s revised level. The last time insured unemployment was this low was January 19, 2008 when it was 2,770,000. The previous week’s level was revised up 2,000 from 2,836,000 to 2,838,000. The 4-week moving average was 2,824,250, a decrease of 18,500 from the previous week’s revised average. The last time this average was this low was February 9, 2008 when it was 2,817,750. The previous week’s average was revised up by 500 from 2,842,250 to 2,842,750.

U.S. Department of Labor, Employment and Training Administration “Unemployment Insurance Weekly Claims“, 10 Apr 2014 (8:30am EDT) More

Stock market indices Thumbs Down

:-( Uh Oh … good economic news. This will get analysts betting that the Fed may decide to be less accommodative (raise interest rates) this year. It also causes fund managers to switch from last year’s growth and momentum stocks to under-priced stocks with upside potential in an improving economy.

We’re more focused on the beginning of earnings season and what companies are telling us. It seems with the lack of big risk-on, risk-off stories and movements, the markets are more focused on company-specific issues. It’s a stock picker’s market this year.
Drew Wilson, Investment Analyst, Fenimore Asset Management ($2bn) More (Before market open)

The market is coming to its senses in some of the high-flying tech names; it looked like there were some pretty hefty amounts being paid for the prospect of eventual earnings. Any of us in the market more than 15 years feels the hot breath on the backs of our necks when we see such high prices being paid for tech stocks. One of the interesting ironies is when you see a shift towards stocks with pretty low prices and away from momentum that tends to happen when the underlying economy is still growing.
Jerry Webman, Chief Economist, Oppenheimer Funds More

The market is very skittish. You see very sharp love and hate on a day-to-day basis. Today is a very strong preference for cheap stocks. Higher growth stocks get really hit hard.
David Pavan, Portfolio Manager, ClariVest Asset Management ($3.5bn) More

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX 1,833.09 -2.09% 1,848.36 -0.83%
DJIA INDU 16,170.22 -1.62% 16,576.66 -2.45%
NASDAQ IXIC 4,054.11 -3.10% 4,176.59 -2.93%

PORTFOLIO

Portfolio indices Thumbs Down

Well, today’s selloff is about as ugly as you’re ever likely to see, and we’re likely to see more of the same. And we haven’t yet seen the Mar 2014 quarterly reports (with their polar vortex damage). And then there’s May coming up (“sell in May and go away, come back on St Leger day”).

There’s still a continual rotation out of the high-flying momentum stocks of 2013 into more value-driven opportunities. This will continue in the coming weeks as investors look for consistency in earnings. You have concerns about high valuations and flat revenue growth, which is a perfect cocktail for a sector rotation out of growth and into value.
Chad Morganlander, Portfolio Manager, Stifel Nicolaus & Co. ($150bn) More

:-| About square Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.307 -2.24% 1.399 -6.59%
Valuation Rate USD/AUD 0.94636 +0.27% 0.89789 +5.40%
Portfolio Index AUD 1.381 -2.50% 1.558 -11.38%

Portfolio stock prices

This is a pretty dramatic selloff, but it’s not entirely unexpected. Momentum names have been driving this market higher. A lot of these names have been trading at stratospheric valuations, and on long-term outlooks, that may or may not materialize. The question is, ‘At what point do they get too expensive?’ Right now, I think they’re looking a little expensive.
Randy Frederick, Managing Director, Active Trading and Derivatives, Charles Schwab More

With the focus on P/E, we thought we’d show historical P/E (P/E H) and 1-year forward P/E (P/E F) at today’s closing prices. Bear in mind, there are likely to be some sad earnings stories during the reporting season.

The selldowns look awesome, but consider that some recently hit record highs: Linkedin: 11 Sep 2013, Amazon: 26 Dec 2013, Google: 26 Feb 2014, and Ebay: 6 Mar 2014.

With very high P/Es and recent record high prices, Amazon and Linkedin have been obvious targets – the high YTD losses are caused by the fact that their record highs were achieved before the 31 Dec 2013 benchmark date. And Facebook is an exemplar of a high P/E momentum stock, also the focus of sellers.

Stock Ticker P/E h P/E f Today Change 31 Dec 13 YTD
Apple AAPL 12.98 12.36 $523.48 -1.29% $561.02 -6.69%
Amazon AMZN 547 190 $317.11 -4.43% $398.79 -20.48%
Ebay EBAY 24.81 21.92 $54.08 -3.24% $54.865 -1.43%
Facebook FB 100 61.8 $59.16 -5.21% $54.649 +8.25%
Google A GOOGL 14.34 24.76 $546.69 -3.59% $560.365 -2.44%
Google C GOOG N/A N/A $540.95 -4.11% $560.365 -3.46%
Linkedin LNKD 739 NE $169.99 -3.51% $216.83 -21.60%
VMware VMW 43.48 41.73 $102.18 -3.97% $89.71 +13.90%

AUSTRALIA

Labor Force 6202.0 – Mar 2014 Thumbs Up

Australia’s seasonally adjusted unemployment rate decreased by 0.2 percentage points to 5.8 per cent in March, as announced by the Australian Bureau of Statistics (ABS) today.

The seasonally adjusted labour force participation rate decreased by 0.2 percentage points to 64.7 per cent in March.

The ABS reported the number of people employed increased by 18,100 to 11,553,200 in March. The increase in employment was due to increased female and male part-time employment, up 40,200 people to 3,524,000, offset by decreased full-time employment, down 22,100 to 8,029,100.

The number of people unemployed decreased by 29,900 to 713,200 in March, the ABS reported.

The ABS monthly seasonally adjusted aggregate hours worked series increased in March, up 8.0 million hours to 1,617.2 million hours.

Australian Bureau of Statistics, “6202.0 – Labour Force, Australia, Mar 2014: Australia’s unemployment rate decreased to 5.8 per cent in March 2014“, 10 Apr 2014 More

The improvement in a range of forward-looking labour demand indicators suggests that employment growth will remain solid in coming months. The key uncertainty is by how much the strengthening in jobs growth will be held back by job shedding as mining projects wind up.
Justin Fabo, Head of Australian Economics, ANZ Bank More

The positive tone in the breadth of the labour market data and ongoing signs of strength in the broad activity indicators may well prompt a discussion over whether we have see the peak for the unemployment rate for this cycle
Su-Lin Ong, Royal Bank of Canada Capital Markets More

FX: USD/AUD

The AUD continues its rise against the USD (Chart: xe.com)

The AUD continues its rise against the USD (Chart: xe.com)

Wednesday 9 Apr 2014

USA

Economy

Wholesale trade – Feb 2014

Sales: The U.S. Census Bureau announced today that February 2014 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $436.1 billion, up 0.7 percent (+/-0.4%) from the revised January level and were up 3.1 percent (+/-1.6%) from the February 2013 level. The January preliminary estimate was revised downward $0.1 billion. February sales of durable goods were up 0.1 percent (+/-0.5%) from last month and were up 2.9 percent (+/-1.1%) from a year ago. Sales of nondurable goods were up 1.2 percent (+/-0.5%) from January and were up 3.3 percent (+/-2.6%) from last February. Sales of petroleum and petroleum products were up 4.0 percent from last month and sales of beer, wine, and distilled alcoholic beverages were up 1.9 percent.
Inventories: Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $518.3 billion at the end of February, up 0.5 percent (+/-0.4%) from the revised January level and were up 4.7 percent (+/-0.7%) from the February 2013 level.

US Department of Commerce – US Census Bureau, “Monthly Wholesale Trade: Sales and Inventories – February 2014“, 9 Apr 2014 More

Stock market indices Thumbs Up

Yesterday Alcoa AA +3.75% opened the reporting season with its Mar 2014 quarter results, which were better than expected. Fears of an increase in interest rates were eased by comments in Federal Reserve minutes (see FX: USD/AUD below)

Earnings will really help give this market some forward direction, but they are in front of us and haven’t really hit yet
Rick Meckler, President, LibertyView Capital Management More

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX 1,872.18 +1.09% 1,848.36 +1.29%
DJIA INDU 16,437.18 +1.11% 16,576.66 -0.84%
NASDAQ IXIC 4,183.90 +1.72% 4,176.59 +0.18%
Nightly Business Report: 9 Apr 2014 Watch

PORTFOLIO

Portfolio indices Thumbs Up

:-| About Square Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.337 +1.63% 1.399 -4.46%
Valuation Rate USD/AUD 0.94382 +0.32% 0.89789 +5.12%
Portfolio Index AUD 1.416 +1.30% 1.558 -9.10%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 13 YTD
Apple AAPL $530.32 +1.32% $561.02 -5.47%
Amazon AMZN $331.805 +1.45% $398.79 -16.80%
Ebay EBAY $55.89 +1.99% $54.865 +1.87%
Facebook FB $62.41 +7.25% $54.649 +14.20%
Google A GOOGL $567.04 +1.71% $560.365 +1.19%
Google C GOOG $564.14 +1.67% $560.365 +0.68%
Linkedin LNKD $176.18 +4.19% $216.83 -18.75%
VMware VMW $106.40 +1.19% $89.71 +18.60%

FX: USD/AUD

The USD weakened on release of Fed minutes (Chart: xe.com)

The USD weakened on release of Fed minutes (Chart: xe.com) More

People are taking solace in the idea that the Fed may be more accommodative than previously thought, for longer than previously thought.
Steve Sosnick, Equity-Risk Manager, Timber Hill/Interactive Brokers Group More

These minutes are calming for the markets. It was clearly stated that the projections overstated the likely shift in rates. A slower pace of interest rates seems more likely here than from the statements.
Jeffrey Kleintop, Chief Market Strategist, LPL Financial LLC ($414bn) More