May 17, 2013
Wall Street Ends Another Week On Big Gains
 On Friday, Wall Street awoke still smarting from the previous day’s losses, and promptly seized on the University of Michigan’s consumer confidence survey to send stocks straight back to their recent position at all-time highs. The University’s broadly recognized index was up to 83.7, from last month’s 76.4, the highest reading since July of 2007, and well ahead of Economists’ expectations of 77.9. The economic conditions sub-component increased from 89.9 to 97.5, and the economic outlook sub-component was up from 67.8 to 74.8. The news helped soften the blow of Thursday’s greater than expected increase in jobless claims, as well as renewed talk from the Federal Reserve that a pull-back in bond and asset purchases could be seen as early as this summer. JPMorgan Chase (JPM) added to the day’s momentum when it upped its full-year price target for the (more)…
Icahn and Transocean Come to Terms Over Board of Directors, Dividend Payment
 Legendary activist investor Carl Icahn has been tireless in 2013. The year kicked off with the unusually public conflict with fellow billionaire Bill Ackman over Herbalife (HLF), when the latter accused the company of being a pyramid scheme and devoted a whole presentation to explaining why the nutritional supplement company deserved to be shorted. Shortly thereafter, Icahn revealed a 13 percent stake in Herbalife, potentially saving the company’s shares. More recently there has been the as-yet unresolved battle over PC-maker Dell Inc. (DELL), whose founder Michael Dell has partnered with Silverlake Management in an attempt to take the company private in order to have greater control over a much-needed turnaround process. Icahn, who has a 4.5 percent stake in the company, has teamed up with Southwestern Asset Management, who has an 8.2 percent stake, to propose his second counter-offer to (more)…
ViaSat Up 16 Percent on New Satellite, Strong Earnings
 Shares for wireless and satellite communications provider ViaSat (VSAT) jumped early on Friday, holding to an increase of nearly 16 percent and hitting an all-time high of $71.64, fueled by a strong earnings report released in late trading the previous day. The San Diego, California company on Thursday reported net profits for the first quarter of 2013 of $1.9 million, or $0.04 per share on revenue of $308.7 million, compared to the prior year period during which it lost $7.4 million, or $0.17 per share on revenue of $240.5 million. Analysts had expected earnings of $0.02 per share on revenue of $286 million. ViaSat cited strong sales growth across in satellites and commercial networks. Sales in the government systems division were also up, even in the face of drastic cuts to the federal budget that has affected other companies who (more)…
Consumer Confidence Swells to Almost Six-Year High in May
 The preliminary May reading of the Thomson Reuters/University of Michigan consumer sentiment index skied to 83.7 from a 76.4 reading in April, besting economist predictions of a 78 mark on optimistic views of the future, lower gas prices and better housing market. The initial May reading represents the highest level of the index since July 2007, lifting stocks yet again on Friday to test new all-time highs. The index, which is correlated to consumer spending and can be volatile, is pushing back near pre-recession levels, where it averaged 89 in the five years to the start of the recession in December 2007. The current conditions index, a measure of how Americans view their personal finances, increased to 97.5 from 89.9 in April, marking the highest reading since October 2007. The biggest gains in the index came from respondents in the (more)…
Stage Stores Unexpectedly Swings to Q1 Net Loss, Still Backs 2013 Outlook
 Stage Stores, Inc. (SSI) said Friday that its department store sales were impacted by unseasonably cool spring weather during the first quarter and spending on consolidating its South Hill operations cut into GAAP profits. Expenses rose for the quarter, swinging the company to a net loss for the quarter against expectations of a profit by analysts. Stage Stores operates 872 department stores targeting price-conscious consumers in small and mid-size cities under the brands Bealls, Goody’s, Palais Royal, Peebles, Stage and Steele’s. For the quarter ended May 4, Houston-based Stage Stores reported revenue of $378.64 million, up 3.5 percent from $365.7 million in last year’s first quarter. Net loss for the quarter totaled $6.86 million, or 21 cents per share, compared to a net loss of $418,000, or 1 cent per share, in Q1 2012. The net loss included special items (more)…
As Sam Sees It: A Comparison of Sector Earnings Yields Suggest Stocks May Sustain Strength
 Each week, we tap the insight of Sam Stovall, Chief Equity Strategist for S&P Capital IQ, for his perspective on the current market. EQ: In this week’s Sector Watch, you examined the earnings yield of the S&P 500 versus that of the 10-year Treasury bond, and found that stocks are yielding almost three times as much as Treasury bonds right now. How rare is this occurrence? When was the last time that ratio was this high? Stovall: The earnings yield is the inverse of the P/E ratio, meaning that its earnings divided by price rather than price divided by earnings. Right now, the earnings yield on the S&P 500 is 5.4 percent, which is almost three times as high as the 1.9 percent that the 10-year Treasury note is yielding. Going back to 1945, the average multiple is 1.6, as (more)…
Danny Werfel Named Acting Head of IRS in the Wake of Scandal
 By now, most people are familiar with the scandal that erupted on Tuesday as the Treasury Inspector General for Tax Administration released a report titled “Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review.” The report is as matter of fact in its language and findings as its title suggests. At the same time, given the political climate that currently prevails in the U.S., it was tailor-made for politicization, a fact that was underscored on Wednesday by the firing of IRS commissioner Steven Miller, a career IRS employee who was appointed as the acting head of the organization in November of last year. Miller was not heading the organization during the period covered by the TIGTA report. The job during the 2010-2012 period in question actually belonged to Bush administration appointee Douglas Shulman, who himself had previously denied that (more)…
JCPenney: Just When Wall Street Thought They Couldn’t Do Any Worse…
 Beleaguered department store operator J.C. Penney (JCP) reported earnings late on Thursday, indicating that the company had lost more than expected during the first quarter of the year. In the first quarter of 2013, Penney lost $348 million, or $1.58 per share on revenue of $2.64 billion, compared to the first quarter of 2012, when the company lost $163 million, or $0.75 per share on revenue of $3.15 billion. The company was hampered by $72 million in expenses related to the restructuring of stores and changes to management that, when excluded, bring the Q1 loss to $289 million, or $1.31 per share, while analysts had expected the company to report an adjusted loss of $0.89 per share on revenue of $2.74 billion. Last month, Penney ousted former Apple executive Ron Johnson after his attempt to drastically reorganize the store’s image (more)…
Geopolitical Journey: Europe, the Glorious and the Banal
 Standing at the edge of the old world and the beginning of the new one, at the tip of Portugal, Stratfor’s George Friedman is moved by the exploits of 15th-century European explorers and dismayed by the present fear pervading the Continent that “any decisive action will tear the place apart.”Europeans wreaked much havoc as they spread throughout the world, but they also “left as [their] legacy something extraordinary: a world that knew itself and all of its parts.” But now, George asks, with “the death of hubris and of risk-taking … what follows, what is left?” The Europeans are “now reduced to finding a way to resume the comforts of the unexceptional…. Europe has chosen comfort, and now has lost it. It sought transcendence and tore itself apart.” This is an unusual Outside the Box, not focused on markets per (more)…
Putin’s Power Play: How It Will Change the Uranium Sector
 The last time Vladimir Putin was president, he laid the foundation to pull Mother Russia from the wreck of economic chaos to a world power once again. This time, he’s ready to extend that influence to counter the West. His tools: Russia’s abundant resources of energy, including uranium. There’s a new war developing on the continent, and the weapons this time will be oil wells, gas fields, and uranium mines, pipelines and ports, processing facilities, and supply deals. Led by Russia’s vast resource wealth and China’s massive bank account, the countries of Asia and those along the Eurasian divide are realizing they do not want or need help from the West to achieve their goals. They are settling their differences, negotiating closer relations, and advancing their plans without as much as a phone call to Washington or Brussels. After years (more)…
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