JT’s DAILY BLOG for Month Of September 2013
Note: All previous month's posts are available in the archives, as noted above.
All postings for the month are available here, sorted in descending order - i.e. most recent at the top.
All times are Eastern Time - same as the NYSE
1st Posting for Monday 09/30/2013 09:00 AM
As I noted in my prior post, the stand-off in Washington and the potential for collateral damage to the economy was likely to be noticed soon by the market, and so it seemed on Friday, with the major averages all experiencing declines. Still, the market actually slowly recovered as the day wore on, after the initial opening drop, and the limited nature of the sell off tells me that the market does not really believe any of the worst case scenarios will occur. Or should I say, it did not really believe it as of last Friday. The fear gauge may ratchet up a notch or two this week. More on this later. Overnight, Asian markets mostly ended with losses, with Shanghai being the lone gainer. European markets are all trading in the red at this hour, as the Continent has its own political crisis in Italy. U.S. futures are indicating a major drop will occur at the open.
Several of my stocks have received upgrades / downgrades this morning:
Colgate Palmolive (CL) was upgraded from Equal Weight to OverWeight at Morgan Stanley.
NextEra Energy (NEE) was initiated at Neutral at UBS.
J.M. Smucker (SJM) was upgraded from Neutral to Buy at Citigroup.
PVR Partners (PVR) was initiated at Buy at Citigroup.
Only a few of my stocks will be going ex-dividend this week:
First, Realty Income (O), yield 5.42%, went ex-dividend Friday, 9/27/2013. O had not announced yet as of the cutoff for preparation of last week’s list, so it was not listed on Monday, 9/23/2013. O is a monthly payer.
Raytheon (RTN), 9/30/2013, yield 2.79%.
Cisco Systems (CSCO), 10/1/2013, yield 2.91%.
Kimco Realty (KIM), 10/1/2013, yield 4.12%.
Medtronic (MDT), 10/2/2013, yield 2.11%.
Sysco (SYY), 10/2/2013, yield 3.50%.
The only stock on my lists scheduled to report earnings this week will be Paychex (PAYX), on 9/30/2013, after the close.
Kayne Anderson Energy Development Company (KED), which holds a basket of energy MLPs, reported Thursday, 9/26/2013, that as of 8/31/2013, the NAV was $28.84 per share. This is slightly less than Friday’s closing price of $28.59. The firm also announced a small dividend increase, and released a list of their top 10 holdings, which includes some of the largest and most successful MLPs. KED represents an option for investors wanting exposure to MLPs without the tax hassles. KED yields 6.16%, based on Friday’s closing price.
Ordinarily, the economics news flow of the first week of a new month would be dominated by the jobs situation, and all attention would be focused on the Friday Jobs report. This week, however, is likely going to be dominated by the Republican-Democrat stand-off in Washington, with the potential for a partial government shutdown. Even if a patchwork solution is cobbled together for the short term, the problem isn’t going away anytime soon, with the debt limit issue coming to the fore in mid-October, and the ominous threat of a partial default. There is a potential for a serious miscalculation, and a monster sell off in stocks if things really go south. I hope it doesn’t happen, but if it does, I will be buying some quality stocks at better prices than we have seen for a couple of years.
1st Posting for Friday 09/27/2013 08:30 AM
It was a little shaky at times, but stocks on Thursday managed to end the day with respectable gains on all the major averages, snapping the five day losing streak. Overnight, Asian markets ended mixed, with Hong Kong, Shanghai, and Singapore up, Japan and India down. European markets are all trading in the red at this hour. U.S. futures are negative, with a little over an hour to go to the open. Personal Income and Spending figures for August will be released shortly.
None of my stocks have received any upgrades / downgrades today.
I sold the shares of NuStar (NS) that I recently purchased when the stock swooned to barely $36. After a gain of over $4 in just a few days, it seemed like it was better to take the quick gain instead of waiting a month for the next distribution. I am still holding my original position in the stock. I bought the additional shares as a short-term speculation when the price hit the lows a few days ago, it was too tempting to pass up.
The first deadline is fast approaching for the risk of a government shutdown occurring, as described in a headline article on CNN Money. Per the article, if the funding impasse is not resolved by Tuesday, October 1, furlough notices will be sent out and things will get dicey. The market has basically ignored the issue to this point, believing it will just go away, but never underestimate the abilities of the U.S. Congress to really foul things up. The risk for market players is that the market may awaken at any time and see the risk and uncertainty the situation presents, and sell off dramatically.
1st Posting for Thursday 09/26/2013 09:30 AM
Stocks tried to rally Wednesday, but failed, as the market rolled over into a loss by early afternoon. By the end of the day, all of the major averages posted modest declines. Overnight, Asian markets were mixed, with Japan and India up, Hong Kong, Shanghai, and Singapore down. European markets are mostly trading in the red at this hour, led by Italy, down 1.45%. Britain and Spain are actually above the flat line, but just barely. U.S. futures are positive. The major economic releases of the day have already come out, with the Weekly Claims for Unemployment at 305K, slightly better than estimated, and the Third Estimate of Q2 GDP at 2.5%, slightly under the 2.6% estimate. Pending Home Sales for August will be out at 10:00 AM.
Only one of my stocks has received any upgrades / downgrades so far today, as American Capital Agency (AGNC) was initiated at Neutral at JP Morgan.
Barring any geopolitical or national news coming out to upset investor’s psyches, it may be time for a relief rally today. The S & P 500 Index, the best proxy for the market over-all, in my opinion, has been down every day since the Fed rally of Wednesday, September 18. The major immediate concern is the stand-off in Washington and the risks of a miscalculation somewhere along the way in the next few months, as Republican and Democrats duke it out. I sold the small position in Transocean (RIG) after just one day, as a quick run of over a dollar occurred, and I will usually take such a quick profit when it is available to me. .
1st Posting for Wednesday 09/25/2013 09:30 AM
Stocks posted losses just after the open Tuesday, recovered after an hour or so to show gains, but then rolled over in mid afternoon to end the day with modest losses on the Dow Industrials and the S & P 500, and only a slight gain on the NASDAQ, which did not retreat as much as the blue chip indexes. Overnight, Asian markets mostly posted modest declines, with only Hong Kong posting a small advance. European stocks are likewise mostly down, but not by much, and in fact Italy and Spain just moved into the green. U.S. futures are flat, with a positive bias. The most significant economic release scheduled for today has already come out, as Durable Orders for August fell short of expectations. New Home Sales data for August will be released at 10:00 AM.
None of my stocks have received any upgrades / downgrades so far today.
I am still evaluating Transocean (RIG). The risks are that the Deepwater Horizon liability could exceed the already-substantial cost in excess of $1B, Carl Icahn is involved, which could be a plus or a negative, depending upon what you think of his criticisms of management, and of course, the ever-present threat of a catastrophic drop in oil prices, making RIG’s massive offshore and forbidding terrain structures uneconomical to operate. Just to improve my interest and focus, I took a small position yesterday, buying in at $44.60. Short-term, it went well, recovering to go above $45 by the end of the day. I see this as a trade, maybe only lasting a few days, or as long as a year or more. I am aware, after my research, that RIG is not like buying Chevron (CVX) or ExxonMobil (XOM), which are definitely not available at a value price today, unlike RIG, which at least has the potential of being a value price. I also bought a few more shares of Realty Income (O), at less than $40. O pays monthly, and the next monthly ex-dividend date is Friday, 9/27/2013. Note that the date had not been announced yet when I put together my list of ex-dividend dates for Monday’s posting.
1st Posting for Tuesday 09/24/2013 09:00 AM
Stocks declined modestly to start the week Monday, with all of the major averages posting losses. Oil and Gold also declined. Overnight, Asian markets mostly declined as well, with only India posting a tiny gain. Conversely, European markets are all trading with gains at this hour. Economic releases on tap today are a couple of reads on the housing market, the Case Shiller Index and the FHFA Housing Index, and Consumer Confidence for September. U.S.futures are flat.
None of my stocks have received any upgrades / downgrades so far today.
A couple of articles came out yesterday predicting Gold will decline over the next couple of years, a view confirmed by noted economist Roubini in a presentation he gave yesterday. One reason cited is the absence of inflation thus far, in spite of the Fed QE policies. There are very few stocks trading at attractive buy prices just now. Selected utilities and property REITs are at decent levels, but off their lows reached over the last two months. Of course, mortgage REITs, with their unbelievable yields, seem like good buys, but that would only be true if the payouts continue at present levels, an iffy proposition. Numerous BDCs are likewise presenting attractive yields, but one must keep in mind the businesses these entities own are usually the weaker players in the economy, as we saw in the last turndown. The usual defensive names, including most consumer staples, are priced very high, with yields correspondingly unexciting. The best strategy, I believe, is to maintain a higher than usual cash position, awaiting better opportunities, while taking advantage of occasional mis-priced securities. I am investigating oil driller Transocean (RIG) just now, which is down somewhat from recent levels, to try and determine if it is a value, or a value trap.
1st Posting for Monday 09/23/2013 09:00 AM
Stocks swooned on Friday, as the Thursday reaction to the Wednesday Fed rally gained steam, with the result being the averages ended the week about where they were at the beginning. Overnight, Asian markets mostly finished lower, with only Shanghai posting a gain. European markets are universally trading with losses at this hour, even though Merkel won comfortably in the German election, in a vote in favor of continued stability. U.S. futures are negative, with about an hour to go until the open. There are no economic releases scheduled for today.
A few upgrades / downgrades of interest have come out this morning:
Darden Restaurants (DRI) was upgraded from UnderPerform to Neutral at Buckingham.
Darden Restaurants (DRI) was downgraded from OverWeight to Equal Weight at Stephens.
Walgreen (WAG) was upgraded from Equal Weight to OverWeight at Morgan Stanley.
American Electric Power (AEP) was upgraded from Market Perform to OutPerform at Wells Fargo.
Stocks on my lists going ex-dividend this week are:
ENI S P A (E), 9/23/2013, yield 5.91%, before Italian withholding of 20%. E pays twice a year, with the upcoming payment being the second one for 2013. The dividends are not necessarily six months apart. The first payment for 2013 was in June.
Nucor (NUE), 9/25/2013, yield 2.92%.
National Health Investors (NHI), 9/26/2013, yield 5.10%.
American Capital Agency (AGNC), 9/26/2013, yield 13.80%.
Windstream Holdings (WIN), 9/26/2013, yield 11.78%.
Prospect Capital (PSEC), 9/26/2013, yield 11.63%. PSEC pays monthly.
Annaly Capital Management (NLY), 9/27/2013, yield 11.74%.
The yields from Mortgage REITs (AGNC, NLY), Rural Telecoms (WIN), and Business Development Companies (PSEC) sure are enticing. If buying these names, the bet is that the payouts will continue long enough to compensate for the inevitable share price declines when things go South. And if the dividends are cut or eliminated, things will really go South in a hurry for these stocks.
None of my stocks are reporting earnings this week. Darden Restaurants did report last week, before the open on Friday. The firm reported that FQ1 EPS was $0.53, missing by seventeen cents. Revenue was $2.16B, up 6.1% Y/Y, but still missing estimates by $0.04B. The chain has been under pressure in recent months, with “soft” traffic resulting in same-restaurant sales declines. I’m not surprised when you consider the statistics on wage growth and employment patterns, not to mention severe competition from an excess of offerings in the space. DRI declined $3.52 on Friday.
After the up and down moves last week following the Fed “taper or no” fiasco, I’m afraid it isn’t going to get any better, as the focus will now be on the budget standoff between the House Republicans and Obama and the Senate Democrats. Sometimes I wish I could just take a long nap, and wake up after it is all resolved. But then, I would miss all the fun.
1st Posting for Friday 09/20/2013 09:00 AM
Stocks posted modest gains in the first few minutes of trading Thursday, after which a slow, steady decline ensued, with most of the major averages ending the day with modest losses. The NASDAQ was an exception, rising up in the middle of the afternoon to post a small gain. Overnight, Asian markets ended mixed, with Japan, India, and Singapore posting losses, while Hong Kong and Shanghai posted gains. European markets are consistent, all trading with modest losses at this hour. There are no economic releases scheduled for today. U.S. futures are slightly negative for the blue chips, and slightly positive for the NASDAQ.
ConAgra Foods (CAG) reported before the open Thursday that FQ1 EPS was $0.37, in-line with estimates. Revenue was $4.20B, up 27.2% Y/Y, but still missed by $0.1B. While the report did not seem all that bad, investors were apparently disappointed, as the stock declined $1.27, closing at $30.80. Pan American Silver (PAAS), Newmont Mining (NEM), and Barrick Gold (ABX) were all initiated at Neutral at Goldman. Goldman initiated coverage on 12 mining stocks today, with 3 at Buy, 3 at Sell, and 6 at Neutral. The three stocks above are mining stocks I added to my Tier3 speculative list, which all pay (or I should say used to pay) outsized dividends. ABX cut the dividend 75%, and I will be dropping it from my list for that reason.
The only other stock on my lists receiving analyst attention this morning was Cisco Systems (CSCO), initiated at Buy at Cantor.
Gold is down this morning, per Marketwatch. I took advantage of the Fed rally Wednesday to exit nearly all of my mining stock speculations, as these stocks, surprisingly, gained along with the rest of the market. If they get back down low enough, I may get back in to a couple of positions. Other than that, I don’t plan to do much today. This is option expiration Friday, and I have one covered call, on Paychex (PAYX), with a strike of $38, that is almost certain to be assigned. PAYX hit $41 this week, so even with a buck of call premium, I will lose some upside. But since I believe PAYX is substantially overvalued near $40, and my per-share cost is in the $20’s, my tears will be crocodile tears. Time to get ready.
1st Posting for Thursday 09/19/2013 09:00 AM
Stocks meandered along the flat line Wednesday until 2:00 PM, then took off like a rocket after the Fed surprised everyone with a decision to maintain the asset purchase program at current level for a while longer, citing economic concerns. All of the major averages set new records as the rally continued into the close. Overnight, Asian markets responded similarly, with outsized gains on most bourses. Shanghai was an exception, gaining only .29%. European markets are likewise trading with hefty gains at this hour. U.S. futures are positive, indicating the rally will continue today, at least at the outset.
The Weekly Claims for Unemployment came in slightly better than predicted, at 309K, and the Current Account Balance for Q2 did likewise. Later on today, at 10:00 AM, we will get the latest Philadelphia Manufacturing Index, Existing Home Sales for August, and Leading Indicators for August.
Three upgrades / downgrades have come out this morning on my stocks:
Cisco (CSCO) was initiated at UnderPerform at Credit Suisse.
General Mills (GIS) was downgraded from OutPerform to Market Perform at Wells Fargo.
Dr Pepper Snapple (DPS) was downgraded from Neutral to Sell at Goldman.
The question on the market’s collective mind this morning has to be, why did the Fed hold off on the universally expected “tapering” of asset purchases, especially when it appeared acceptance had been won, and a major negative reaction would not occur? The stated reason was because of less than exemplary economic readings lately, but the economic results have never been stellar during this recovery, and certainly had not turned down significantly. One article said it was over concerns about the upcoming budget battle, the threat of a government shutdown, or more severe sequestration being an outcome. That may be closer to the truth. Another month or two before “tapering” begins won’t matter much in the long term, but ending all forms of Fed “QE” support is kind of like going on a diet – you know it won’t be fun, you know you don’t want to, but at some point, you have to.
1st Posting for Wednesday 09/18/2013 08:45 AM
Stocks popped up modestly at the open Tuesday, then basically stayed put on into the close. Volume was low, and volatility was even lower, with no TICK readings above 750, nor below a minus 750, a fairly rare occurrence. Investors and traders are no doubt holding off until after the Fed announcement tomorrow. With a modest start to reduced Fed asset purchases priced in, I expect that the announcement will be tailored to meet expectations, with a goal of minimizing the market reaction. Still, it would not be a Fed announcement without some movement occurring. Overnight, Asian markets mostly ended with gains, with only Hong Kong finishing in the red. European markets are all trading in the green at this hour. U.S. futures are modestly positive, as the market awaits the numbers for August Housing Starts and Building Permits, due out at 8:30 AM.
Only two utility upgrades / downgrades to report this morning, as far as my stocks are concerned:
Public Service Enterprise Group (PEG) was upgraded from Sector Perform to OutPerform at RBC Capital.
Exelon (EXC) was downgraded from OutPerform to Sector Perform at RBC Capital.
General Mills (GIS) reported this morning that FQ1 EPS was $0.70, in-line, while revenue was $4.37B, up 8% Y/Y, beating by $0.07B. Previous guidance for FY14 was reaffirmed.
I have been watching NuStar Energy LP (NS) with some interest lately, as the stock has been hitting new lows recently. I sold some units purchased in the low 40’s some time ago, during the last NS swoon, upon a quick rise over $50. Unfortunately, as the most recent decline began, which I now see was just the beginning, I bought back what I had sold, at $45 or so, just before the most recent ex-dividend date, in August. I had resisted adding more upon the recent drop into the upper $30s, since my position was already at my maximum, but when it got down to barely above $36 yesterday, I had to buy at least a few more shares. After that, the stock gained about a dollar and change, so I guess I am vindicated, for the moment, at least. I follow the company, and based on the recent earnings report and a subsequent analyst meeting, I have to believe the sell off is overdone. Nothing has really changed, the re-focus on fee-based businesses continues, new expansion projects in the Eagle Ford Shale are progressing, and the dividend will either be maintained or reduced, depending upon how it all plays out. A cut is definitely priced in, and if it is avoided, I will have a winner. If not, it will likely be a long time before NS sees $50 or $60 again, but distributions at some level will continue, and NS is not going away. As per my article on NS, it is a speculation at this point, certainly nothing to bet the ranch on, but, in my opinion, one worth a small wager, at least. Stay tuned, we will know in a few months which way it goes, if not sooner. Valero and it’s offspring are similar to the Kinder Morgan group of companies, in that no one has gone broke yet betting on these energy firms.
1st Posting for Tuesday 09/17/2013 09:30 AM
Stocks roared out of the starting gate Monday on the news that Larry Summers was no longer a candidate for Fed Chairman. As the day wore on, the enthusiasm subsided some, but not much, as far as the blue chip indexes were concerned. The NASDAQ, however, declined all the way to the flat line, and then a little more, posting a small loss on the day. The blame was said to be mainly due to a decline in Apple (APPL), as the preliminary order data for the new iPhone was expected, but not released. Overnight, Asian markets ended mixed, with Japan, Hong Kong, and Shanghai down, India and Singapore up. European markets are all trading with losses at this hour. U.S. futures are modestly positive.
Several of my stocks have received upgrades / downgrades this morning:
ConAgra Foods (CAG) was downgraded from OverWeight to Neutral at JP Morgan.
Kellogg (K) was downgraded from Neutral to UnderWeight at JP Morgan.
Verizon (VZ) was upgraded from Sector Perform to OutPerform at RBC Capital.
Health Care Network (HCN) had coverage resumed at Neutral by Goldman.
Public Service Enterprise Group (PEG) was upgraded from Hold to Buy at Jeffries.
Mark Hulbert has an article out on MarketWatch this morning warning that investor sentiment is “dangerously exuberant”. I have to agree with him to a certain extent. There are just too many storm clouds on the horizon for the current bull run to be explainable. I’ll trade it a little, but mostly I’m “keeping my powder dry” for when “the big one” hits the market.
1st Posting for Monday 09/16/2013 09:00 AM
After dropping early, stocks recovered Friday, and ended the day, and also the week, with decent gains. Overnight, Asian markets mostly ended with gains, with only Shanghai posting a small decline. European markets are all trading in the green at this hour. U.S. futures are up, as the market cheers the news that Larry Summers has requested that the President withdraw his name from consideration for appointment as Fed Chairman. The modestly slowing U.S. economy has diminished the likelihood of significant Fed tightening anytime soon, or at least so it seems, per the market sentiment. Thus, for now, the rally is still on.
The only stocks on my list receiving analyst attention this AM are two REITs, one a mortgage REIT (MFA), and one a property REIT (KIM), as follows:
MFA Financial (MFA) was initiated at Buy at Compass Point.
Kimco Realty (KIM) was initiated at Strong Buy at Capital One.
Stocks on my lists going ex-dividend this week are as follows:
Gladstone Investment Corp (GAIN), 9/16/2013, yield 8.37%. GAIN pays monthly.
BlackRock Kelso Capital (BKCC), 9/17/2013, yield 10.51%.
Solar Capital (SLRC), 9/17/2013, yield 7.15%.
Greif (GEF.B), 9/18/2013, yield 4.80%.
Main Street Capital (MAIN), 9/18/2013, yield 6.43%. MAIN pays monthly.
PennantPark Investment Corp (PNNT), 9/18/2013, yield 9.59%.
General Electric (GE), 9/19/2013, yield 3.0%.
Total S A (TOT), 9/19/2013, yield 5.44%, before foreign tax withholding, which has recently been increased by France to 30%.
Also, three stocks on my lists will be reporting this week:
Darden Restaurants (DRI), 9/16/2013, before market hours.
General Mills (GIS), 9/18/2013, before market hours.
ConAgra Foods (CAG), 9/19/2013, before market hours.
This is a Fed meeting week, with most pundits expecting the Fed to announce that asset purchases will begin to be “tapered” in the near future. While some believe the market will react negatively, I doubt it, since it will not be a surprise. While the announcement of a new Fed Chair won’t be this week, I believe that the market will react strongly to that news, whenever it comes. Of course, it seems it will be reacting strongly today on who won’t be appointed, per the Summers withdrawal. CPI data for August will be released on Wednesday, which may affect the market. While there are a number of other data releases scheduled, as always, none are likely to move the market significantly. It will be interesting to see if the rally continues, after we get past today’s Larry Summers news. .
1st Posting for Friday 09/13/2013 09:00 AM
Stocks ended Thursday with modest losses on all the major averages. Gold made the headlines with a large drop, also. Overnight, Asian markets ended similarly, with most markets posting modest losses. Japan was an exception, posting a small advance. European markets are trading likewise at this hour, with only Germany putting up a tiny gain. U.S. futures are positive.
There are several significant economic releases due out today. At 8:30 AM, we will have Retail Sales and PPI, both for August. Then, around 10:00 AM, the first cut Michigan Sentiment for September will be out, along with Business Inventories for July.
Several of my stocks have received upgrades / downgrades this morning:
ConocoPhillips (COP) was initiated at Buy at Guggenheim.
Walgreen (WAG) was initiated at OutPerform at Cowen.
Verizon (VZ) was upgraded from Equal Weight to OverWeight at Evercore.
Vodafone (VOD) was upgraded from Equal Weight to OverWeight at Evercore.
Intel (INTC) was upgraded from Hold to Buy at Jeffries.
Retail Sales came in with a 0.2% increase, less than expected, while PPI came in at 0.3%, more than expected. Thus, both readings were worse than expected, so of course U.S. futures are higher after the data release. Go figure.
It appears gold and silver are swinging down again. I have had success swing trading the miners over the last several months. I had sold out nearly all positions, but this week I have gone back in on Newmont (NEM), Yamana (AUY), and Pan American Silver (PAAS). I will pass on Barrick (ABX) this time around, since the firm cut the divided by 75%.
Time to get the party started, so this week can be put into the record books.
1st Posting for Thursday 09/12/2013 08:30 AM
Stocks managed another positive session Wednesday, with the restructured Dow Industrials Index outperforming all of the other stock averages. No surprise there, when you drop three laggards from a 30 stock average, and replace them with three better performers, the stock average performs better. Overnight, Asian markets ended mixed, with Japan and India down, Hong Kong, Shanghai, and Singapore up. European markets are mostly trading in the green at this hour, with only France occasionally slipping into the red. U.S. futures are modestly positive, as the Syria situation remains in the news, a Fed meeting approaches, and budget battles are expected to begin soon.
On the economic front, the Weekly Unemployment Claims data will be released at 8:30 AM, as will Import and Export Prices for August. None of my stocks have received any upgrades / downgrades so far today.
I tried to add to my position in Coca Cola (KO) yesterday, just before the ex-dividend date, but the market wouldn’t cooperate, and my limit buy order did not fill. Once again, I’m seeing very little in the way of buy opportunities. Utilities and REITs are down somewhat from the highs reached a few months ago, but I have already taken advantage of these opportunities, and I own about as much as I can handle in these categories. If you do not own them, Realty Income (O), Health Care REIT (HCN), HCP Inc (HCP), Southern Company (SO), and American Electric Power (AEP) are in buy territory now.
I had a small position in Linn Energy (LINE), acquired right at $24, which I sold yesterday upon a one-day jump to $28. One reason I sold was that the good news, that the Berry Petroleum acquisition was back on, by itself, did not seem to me to mean all concerns / doubts surrounding LINE have been dispelled. At any rate, I bought LINE as a speculation too good to pass up, and when a speculation jumps like that in one day, the trader in me says SELL and don’t look back. It may go on up from here, or it may drop back down. If the latter, I will buy it back, unless the news is truly dire.
1st Posting for Wednesday 09/11/2013 08:30 AM
Stocks rallied strongly for a second day Tuesday, as the emergence of a possible diplomatic solution to the issue of chemical weapons use in Syria triggered a strong relief rally. Overnight, Asian markets ended mixed, with only small moves both ways. European markets are also mixed at this hour, with Britain and France down modestly, while Germany, Italy, and Spain are up, with the up markets showing larger percentage moves than the down markets. U.S. futures are slightly negative, with about an hour to go to the open.
Only a couple of upgrades / downgrades have come out so far today on my stocks:
Procter & Gamble (PG) was downgraded from Buy to Neutral at SunTrust.
ConAgra Foods (CAG) was upgraded from Neutral to Buy at Goldman.
Regarding the President’s address, I felt that it was impressive, as he succinctly stated the case for a limited response if the diplomatic solution fizzles. The rally will possibly continue for awhile yet, until such time as things break down, or other concerns take over the headlines. While the month is only one-third of the way, the doom-and-gloom crowd has to be somewhat disappointed by the action thus far, as the major averages have zoomed on up to new highs. The party may be ending, however, or at least pausing for a day or two.
1st Posting for Tuesday 09/10/2013 09:00 AM
Another day, another surprise, as stocks on Monday put in the best performance in eight weeks. The Dow Industrials gained 141 points, while the S & P 500 and the NASDAQ both gained even more, percentage-wise, than the Dow. An apparent hold on the U.S. response on Syria, along with some positive economic news from China, and new iPhone models about to be released from Apple generating some buzz, all contributed to the rally mood. Overnight, Asian markets all ended with substantial gains, and European markets are all trading similarly. U.S. futures are strongly positive, The catalyst seems to be a possible agreement around a Russian proposal to put Syria’s chemical weapons under UN control.
A few upgrades / downgrades have come out today on my stocks:
Kimco Realty (KIM) was initiated at Neutral at Janney Capital.
Medical Properties Trust (MPW) was initiated at Neutral at Janney Capital.
Realty Income (O) was initiated at Buy at Janney Capital.
Hercules Technology Growth Capital (HTGC) was downgraded from OutPerform to Market Perform at Wells Fargo.
It remains to be seen whether all is now well, and we can forget about all the negatives that seemed to portend a down September. The “What, Me Worry” market, also known as the Alfred E. Neuman market, is seemingly ignoring Syria, Egypt, Fed “tapering”, the debt ceiling/budget impasse, Bernanke’s retirement, the ObamaCare “train wreck”, and other problems. Of course, the current rally may become known as “the last tango on Wall Street” if reality intervenes. Unless the Syria “deal” falls apart, it looks like reality will have to wait for another day.
1st Posting for Monday 09/09/2013 09:00 AM
Stocks dropped at the open Friday, then quickly reversed to display a pretty decent gain. However, around 2:00 PM, the positive mood began to evaporate, and by the end of the day, the blue chips had drifted into the red, if only slightly, and the NASDAQ gain was minimal. Overnight, Asian markets registered solid gains, with Shanghai up over 3%, and Japan up over 2%. European markets, more affected by Syria, are trading in the red at this hour in most cases. U.S. futures are modestly positive, with less than an hour to go to the open.
The economic news starts off slowly this week, with Consumer Credit for July being the only release for Monday. Not much will be coming out until Thursday and Friday, when we will receive the Weekly Unemployment Claims numbers, Import and Export Prices for August, Retail Sales and PPI for August, Business Inventories for July, and the first Michigan Sentiment reading for September.
I have three upgrades / downgrades to report this morning:
Wal-Mart (WMT) had coverage resumed at Buy at Goldman.
Eaton (ETN) was upgraded from Equal Weight to OverWeight at Morgan Stanley.
Hercules Technology Growth Capital (HTGC) was downgraded from OutPerform to Market Perform at Keefe Bruyette.
A few of my stocks will be going ex-dividend this week, as follows, shown by date:
Triangle Capital (TCAP), yield 7.30%.
Mercury General (MCY), yield 5.42%.
Medical Properties Trust (MPW), yield 6.67%. This REIT, like all REITs lately, has sold off a lot, to produce a pretty good yield. I have owned MPW since before the financial crisis, and the REIT has never missed a payment. On the other hand, the dividend has never been increased since I have owned it.
Digital Realty Trust (DLR), yield 6.01%. Speaking of selling off, DLR has really taken a hit lately. Even before the recent REIT sell off, DLR had shown considerable volatility, with some pundits expressing concern about the long-term viability of the data center REIT business model.
Ventas (VTR), yield 4.36%. Another health facility REIT available at a lower price lately.
Fifth Street Finance (FSC), yield 10.92%. This BDC pays monthly.
Coca Cola (KO), yield 2.92%. KO has declined a bit recently, with a yield now approaching 3%, high for this bluest of blue chips.
Merck (MRK), yield 3.62%.
Altria (MO), yield 5.58%.
Dr Pepper Snapple Group (DPS), yield 3.42%.
Ares Capital (ARCC), yield 8.66%. One of the largest BDCs by market cap, ARCC has been paying out high dividends for a long time.
TICC Capital (TICC), yield 11.66%.
Potlatch (PCH), yield 3.22%.
None of my stocks will be reporting earnings this week.
With the Syria issue continuing to dominate the news, and the upcoming budget / debt battles, many if not most pundits are expecting a near-term market decline. I will admit, that certainly seems likely. But I have to point out, the market rarely delivers what most pundits are expecting. My advice is the same as always, have a plan for whatever comes along, and take the appropriate action when the time comes.
1st Posting for Friday 09/06/2013 09:00 AM
Stocks managed to post tiny gains Thursday, as a somewhat muted session took place, with market participants waiting for the monthly Payrolls report, to be released this morning. Overnight, Asian markets mostly posted gains, over 1.5% in the case of India. Only Japan lagged, with a 1.4% decline. European stocks are mostly trading in positive territory, with France and Germany flat, and occasionally slipping into the red. The Payroll release has come out, with the job counts slightly less than the anemic numbers expected, and an Unemployment Rate also slightly less than expected, coming in at 7.3%, probably due to further declines in labor market participation. U.S. futures are higher after the weaker than expected numbers, as the market sees these results as meaning the Fed is less likely to pull back support.
Several of my stocks have received upgrades / downgrades this morning.
Darden Restaurants (DRI) was initiated at Hold by Wunderlich.
Potlatch (POT) was initiated at Sector Perform at RBC Capital.
NuStar Energy LP (NS) was upgraded from UnderWeight to Neutral at JP Morgan,
Buckeye Partners LP (BPL) was downgraded from OverWeight to Neutral at JP Morgan.
The only earnings news this week, as far as my stocks are concerned, occurred Wednesday, as Greif (GEF, GEF.B) reported FQ3 EPS 0f $0.80, missing by nine cents. Revenue was $1.13B, missing by $0.02B. Greif shareholders have paid the price of the miss since then, as the “A” shares (GEF) declined over $3 Thursday, and the thinly-traded “B” shares, which pay a higher dividend, declined over $1.
We are apparently back to the conundrum where “bad news is good news”, as far as the economy and the markets are concerned, since if the economy is weak, the Fed is less likely to begin to “taper down” the monthly bond buying and other “easy money” supportive measures. These Payroll numbers certainly don’t suggest a robust economy is developing.
1st Posting for Thursday 09/05/2013 09:00 AM
Stocks managed to produce an unlikely rally Wednesday, with the Dow Industrials finishing just shy of a triple digit gain. Overnight, Asian markets mostly ended with gains, with only Shanghai posting a small decline. European markets are trading with modest gains at this hour. Gold is up, oil is up, the dollar is up, and so far, it looks like stocks will be up, as the U.S. futures are flat to positive. It is as if every market forgot about the myriad of problems on the plate.
In addition to the usual pre-jobs reports, i.e. Challenger Job Cuts and ADP Employment, we also have several other economic reports coming out today. At 8:30 AM, the Weekly Claims for Unemployment counts will be out, and also an updated read on Q2 Productivity and Unit Labor Costs. Then, at 10:00 AM, July Factory Orders and the August reading of ISM Services will be released. Finally, at 11:00 AM the weekly inventory numbers for crude oil, gasoline, distillates, and natural gas will come out. So, it will be a busy day as far as economic data is concerned.
After yesterday’s deluge, only one of my stocks has received an upgrade / downgrade today, as ENI S.p.A. (E) was downgraded from Buy to Neutral at Nomura.
Today should be a slow day, all the economic data notwithstanding, as traders await the key monthly Jobs report to be released tomorrow. Of course, geopolitical developments could break at any time, and affect the markets.
1st Posting for Wednesday 09/04/2013 09:00 AM
As the futures had predicted, stocks began strong on Tuesday, buoyed by better than expected readings on the ISM Index and Construction Spending. Things only went downhill from there, however, as the major averages finished well off the early highs, although they all managed to stay on the plus side when trading concluded for the day. Overnight, Asian markets ended mixed, with Japan, Shanghai, and India up, Hong Kong and Singapore down. European markets are all trading in the red at this hour, probably over concerns about Syria. U.S. futures are negative for the blue chips, but positive for the NASDAQ. The July Trade Balance came out at 8:30 AM, with a negative $39.1B being posted, slightly worse than expected.
A number of my stocks have received upgrades / downgrades today:
Verizon (VZ) was upgraded from Neutral to OutPerform at RW Baird.
ONEOK Partners LP (OKS) was initiated at Perform at Oppenheimer.
Williams Partners (WPZ) was initiated at Perform at Oppenheimer.
MicroSoft (MSFT) was downgraded from OverWeight to Equal Weight at Morgan Stanley.
Kinder Morgan Energy Partners LP (KMP) was initiated at Hold by Jeffries.
Williams Partners (WPZ) was initiated at Buy at Jeffries.
Spectra Energy (SE) was initiated at Hold by Jeffries.
Enterprise Products Partners LP (EPD) was initiated at Buy at Jeffries.
Amerigas Partners LP (APU) was initiated at Buy at Jeffries.
ONEOK Partners (OKS) was initiated at Buy by Jeffries.
Kinder Morgan Inc (KMI) was initiated at Hold by Jeffries.
Plains All American Pipeline LP (PAA) was initiated at Hold by Jeffries.
BlackRock Kelso (BKCC) was upgraded from UnderPerform to Market Perform at Keefe Bruyette.
Syria will likely be in the headlines today and all week, and it will likely not be good for stocks. Also, the Friday read on jobs will be more important than usual, and it is always important, as market pundits weight the effects on Fed policy.
1st Posting for Tuesday 09/03/2013 09:00 AM
This will be my first posting since last Wednesday, as I was away on a trip after that, and I encountered “technical difficulties” while on the road, and I was unable to post.
U.S. markets turned in a lackluster performance the last two days of August, posting modest gains on Thursday, followed by slightly larger declines on Friday, at least in most cases. August was definitely a forgettable month for stock investors, with the S & P 500 posting a decline of about 3% for the month. Also, while I was away Thursday and Friday, and on through the U.S. Labor Day holiday, Asian markets gained steadily overall, with Hong Kong especially responding positively to the delay of a possible U.S. strike in Syria. India did have a substantial decline overnight, in their most recent session. Looking at European markets over this time-frame, Britain rose on Thursday following the Parliament’s rejection of joining the U.S. in a Syria strike, and rose again on Friday as the U.S. action was delayed. In fact, all of the major European markets popped up on Friday in response to the news that the President would be holding off until Congressional backing for a strike could be obtained. At this hour, European markets are trading basically flat, with some up slightly, and some down slightly, as the European market day passes the half way mark.
A couple of economic reports will be coming out at 10:00 AM today, the ISM Index (purchasing manager’s survey) for August, and Construction Spending for July. The economic news will likely be less front-and-center than usual, as Syria dominates the news flow. Plus, many market participants will be standing aside until after the monthly Payrolls and Unemployment data report is released on Friday, which has the potential for affecting the Fed’s “taper” plans, or at least the market’s expectations regarding those plans. U.S. futures at this moment are strongly positive, suggesting an advance will occur today, at least initially.
Several of my stocks have received upgrades / downgrades today:
AT&T (T) was upgraded from UnderPerform to Neutral at Macquarie.
Vodafone (VOD) was upgraded from UnderPerform to Market Perform at Bernstein.
Coca Cola (KO) was downgraded from OutPerform to UnderPerform at CLSA.
Verizon (VZ) was upgraded from Sector Perform to OutPerform at RBC Capital.
Several of my stocks will be going ex-dividend this week, as noted by date below:
Newmont Mining (NEM), yield 3.15%. Note that the dividend payout for NEM is variable, and is pegged to the prior quarter’s realized average gold price experienced by the firm.
Enerplus (ERF). ERF pays $0.09 Canadian monthly, which produces a yield of about 6.50%.
CenturyLink (CTL), which yields 6.52% even after a much-criticized dividend cut some months ago.
Kimberly Clark (KMB), yield 3.47%.
Public Service Enterprise Group (PEG), yield 4.44%.
Pepsico (PEP), yield 2.85%.
Waste Management (WM), yield 3.61%.
Westar Energy (WM), yield 4.37%.
Frontier Communications (FTR), yield 9.24%. FTR is a classic tale of a high yield being due to a business in decline, with the prospects reflected in the stock price.
SCANA (SCG), yield 4.22%.
Reynolds American (RAI), yield 5.29%.
Linn Energy LLC (LINE), yield 12.02%. Numerous articles on Seeking Alpha have been published explaining the situation with LINE, which was selling for near $35 as recently as July, as opposed to around $24 currently. LINE is either a terrific bargain or a value trap at this point. Buying into LINE now is definitely a speculation, and it may pay off. I bought in at $24.05 a few days ago, but only a few shares. I just can’t go all-in when a situation like this comes up, I am too conservative.
Only one of my stocks will be reporting this week, as Greif Inc (GEF, GEF.B) will report on 09/04/2013, after the market close. The “B” shares pay a higher yield, although limit orders should be used if buying, due to low trading volume of the “B” shares.
Well, September is here. There are plenty of national and international concerns, along with the ever-present worries over the economy and what the Fed will do. There seems to be an increase in the volume of warnings coming from the “doom and gloom” crowd, and September is when things just might break to the downside. If so, I am ready, my cash levels are higher than they have been for several months. If great values come available due to a market decline, I will be ready to take advantage of them.