JT’s DAILY BLOG for Month Of October 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. For a time, the last week of the prior month will be retained here, for continuity.
All times are Eastern Time - same as the NYSE
1st Posting for Thursday 10/31/2013 09:00 AM
Stocks pulled back on Wednesday, as the rally seemed to run out of steam. Losses were contained, and the day was characterized as a slow, steady grind down. Overnight, Asian markets mostly posted declines, with only India defying the trend, posting a .62% gain. European markets are mostly trading in the green at this hour, with only Britain showing a loss, although Germany is right at the flat line, and at risk of going into the red. U.S. futures are down, indicating yesterday’s pullback may extend into today. The Weekly Claims for Unemployment will be the major economic release for today. Two oil giants will report today, Exxon Mobil (XOM) and ConocoPhillips (COP).
Three downgrades of note have come out this morning on my stocks:
Digital Realty (DLR) was downgraded from Buy to Hold at Stifel. As predicted, DLR had a rough day yesterday, dropping nearly ten dollars. The report was not that bad, in my opinion, but any reduction in previously announced guidance is going to be severely punished in this market, a sin committed by DLR.
Kraft Foods (KRFT) was downgraded from Buy to Hold at Canaccord.
Southern Company (SO) was downgraded from OutPerform to Market Perform at Wells Fargo. Cost overruns on new plant construction projects are the problem with SO.
Earnings reported yesterday were as follows:
Kraft Foods (KRFT) reported Q3 EPS of $0.70, beating by a penny. Revenue of $4.4B, down 4.2% Y/Y, missed by $0.16B.
Public Service (PEG) reported Q3 EPS of $0.76, beating by a penny.
Southern (SO) reported Q3 EPS of $1.08, missing by three cents. Revenue of $5.01B missed by $0.33B. Q3 earnings fell 12% Y/Y due to a $93M charge related to additional cost overruns and construction delays at its clean coal power project in Kemper County, Mississippi.
Statoil's (STO) Q3 net profit slipped to 14.3B Norwegian kroner ($2.4B) from NOK14.39B last year, but beat consensus of NOK11.67B. Revenue was NOK162.6B vs NOK165.3B last year, and expectations of NOK159.45B.
Diebold (DBD) reported Q3 EPS of $0.56, beating by thirteen cents. Revenue of $705.42M beat by $18.11M.
Eni (E) reported a 62% gain in Q3 net income, to €4B ($5.5B), mostly because of a one-time €3B gain from the sale of a stake in its Mozambique gas discoveries to China National Petroleum. Adjusted net profit, which excludes the changes in the value of oil inventories and special gains or losses, fell 29% to €1.17B from €1.66B a year earlier, beating the analyst consensus forecast of €1.01B.
Williams Partners LP (WPZ) reported Q3 EPS of $0.52, beating by twenty cents.
Solar Capital (SLRC) reported FQ3 adjusted net investment income of $0.53 per share, and net asset value of $22.25 per share.
This morning, we have a few additional reports:
Total's (TOT) adjusted Q3 net profit skidded 19% to €2.7B ($3.72B), missing forecasts of €2.78B, hurt by the "endemic problem" of "extremely weak" refining margins in Europe and increased exploration expenses. Revenue fell 6% to €46.7B, but topped consensus of €43.8B.
Shell's (RDS.B) Q3 adjusted profit fell 32% to $4.5B, missing consensus of $5.3B. Net income dropped to $4.7B from $7.1B.
Enterprise Products Partners LP (EPD) reported Q3 EPS of $0.64, missing by three cents. Revenue of $12.09B missed by $0.08B.
Martin Midstream Partners LP (MMLP) reported Q3 EPS of $0.01, and revenue of $359.61M.
ConocoPhillips (COP) reported Q3 EPS of $1.47, beating by two cents. Q3 earnings rose 38%, boosted by gains from asset sales.
SCANA Corp (SCG) reported Q3 EPS of $0.94, beating by a penny. Revenue of $1.05B missed by $0.07B.
Exxon Mobil (XOM) reported Q3 EPS of $1.79, beating by a penny.
These results and others will give the market something to think about as we get ready for a Halloween session, which hopefully won’t be too spooky.
1st Posting for Wednesday 10/30/2013 09:00 AM
Stocks managed further gains on Wednesday, as the rally continues unabated, helped by relatively decent earnings reports. There is green on the screen everywhere, as Asian markets all logged healthy gains, and European markets are likewise all trading up. U.S. futures are positive, as the CPI for September is due out today, plus the Fed announcement this afternoon.
Only one of my stocks has received new ratings so far today, as Digital Realty Trust (DLR) was downgraded by two firms, from OutPerform to Market Perform at Raymond James, and from OverWeight to Equal Weight at Evercore.
Now, about those earnings reports:
Merck (MRK) reported Monday that Q3 EPS was $0.92, beating by four cents. Revenue of $11.0B, down 4% Y/Y, missed by $0.19B.
Continuing from Monday, Boardwalk Pipeline Partners LP (BWP) reported Q3 EPS of $0.21, missing by five cents. Revenue of $275.5M, up 2% Y/Y, still missed by $19.45M.
Mercury General (MCY) reported Q3 EPS of $0.72, beating by eight cents. Revenue of $728.67M beat by $17.97M.
American Capital Agency (AGNC) reported Q3 EPS of -$1.80. Book value per share was $25.27, and the net interest spread was 1.20%, down 29 basis points from Q2. Reporting after the close Monday, the stock declined over $2 yesterday. While not a lot was expected, these results came in under those diminished expectations.
Now, moving on to Tuesday, several more of my stocks reported:
Pfizer (PFE) reported Q3 EPS of $0.58, beating by two cents. Revenue was $12.64B.
Waste Management (WM) reported Q2 EPS of $0.54, missing by a penny. Revenue of $3.53B missed by $0.02B.
Digital Realty Trust (DLR) reported Q3 FFO of $1.16, missing by four cents. Revenue of $379.46M beat by $3.9M. While the earnings numbers were OK, the guidance downward on full-year FFO from the $4.74-$4.83 range to $4.65-$4.67 resulted in the downgrades. DLR reported after the close yesterday, and is likely in for a rough day today.
Entergy (ETR) reported Q3 EPS of $2.41, beating by seventeen cents. Revenue of $3.35B beat by $0.2b. While these numbers seem OK, the fact that earnings fell 29% and operating expenses jumped 30% led to a down day yesterday for ETR.
Kimco Realty (KIM) reported Q3 FFO of $0.33, in-line. Revenue of $241.5M beat by $4.6M.
HCP (HCP) reported Q3 EPS of $0.79. beating by three cents. Revenue of $543.9M beat by $23M. Adjusted FFO per share of $0.79 was up 14%, while Y/Y. FAD of $0.67 is up 22%. What’s not to like? Evidently something, as the stock lost $0.70 yesterday, on a day when the market was up.
That gets me caught up through Tuesday. There will be a bunch more today, which I will review in the morning Thursday.
I bought back a small number of shares of AGNC, as the stock swooned yesterday. I had sold out at $24 after it got back up there following the last dividend. If it goes down more today, I will add to the position.
Time to post and get ready for the day’s action.
1st Posting for Tuesday 10/29/2013 09:00 AM
Stocks ended the day Monday about where they began, after a see-saw session. The S & P 500 index did manage to close up, to 1762, establishing yet another closing high. Overnight, Asian markets ended mixed, with Japan and Shanghai down, Hong Kong, India, and Singapore up. European markets are all trading in the green at this hour. There are a number of economic releases coming out today; Retail Sales and PPI for September, the 20 City Case Shiller Housing Index for August, Consumer Confidence for October, and Business Inventories for August. U.S. futures are positive, but that could change before the open, depending upon the economic data.
No upgrades / downgrades have come out so far this morning on my stocks.
Today is the ex-dividend date for Kinder Morgan Inc (KMI), which still has not fully recovered from the recent hatchet job from Hedgeye. I bought some more before today, seeing it as a reasonable choice for new money in a market that is getting more and more over valued with each passing day.
I will get caught up on earnings reports from my companies in the next posting. A preview is that drug companies and mortgage REITs did not fare well, while most of the others did OK.
1st Posting for Monday 10/28/2013 09:00 AM
Stocks ended the day Friday with modest gains on most of the major averages. Overnight, Asian markets mostly ended with gains, led by Japan, which gained over 2%. India was the only laggard, posting a modest loss. European markets are all trading in the red at this hour. U.S. futures are slightly positive, with over an hour to go to the open.
Only two of my stocks, both utilities, have received new analyst ratings this morning, so far:
Exelon (EXC) was downgraded from Neutral to Sell at Goldman.
Public Service Enterprise Group (PEG) was also downgraded from Neutral to Sell at Goldman.
A number of my stocks will be going ex-dividend this week, as shown by date, following:
Alliant Energy (LNT), yield 3.56%.
Conagra Foods (CAG), yield 3.15%.
Enterprise Products Partners LP (EPD) yield 4.28%.
Kinder Morgan Energy Partners LTD (KMP), yield 6.43%.
Kinder Morgan Inc. (KMI), yield 4.49.
Spectra Energy Partners LP (SEP), yield 4.64%.
Prospect Capital (PSEC), yield 11.53%. PSEC pays monthly.
Realty Income (O), yield 5.08%. O pays monthly.
Paychex (PAYX), yield 3.26%.
Norfolk Southern (NSC), yield 2.37%.
Plains All American LP (PAA), yield 4.49%.
Southern Company (SO), yield 4.78%.
Energy Transfer Partners LP (ETP), yield 6.69%.
Energy Transfer Equity LP (ETE), yield 3.92%.
HCP Inc (HCP), yield 4.88%.
ONEOK Partners LP (OKS), yield 5.32%.
The earnings parade continues this week, with quite a number of my stocks reporting. Following are the companies reporting, by date. Reports will be before market hours, unless otherwise noted.
Merck (MRK), Boardwalk Pipeline Partners LP (BWP), Mercury General (MCY), Safety Insurance Group (SAFT), and American Capital Agency (AGNC).
Pfizer (PFE), Waste Management (WM), Digital Realty Trust (DLR), Entergy (ETR), Kimco Realty (KIM), and HCP Inc (HCP). KIM will be reporting after the market close.
Kraft Foods Group (KRFT), Public Service Enterprise Group (PEG), Southern Company (SO), Statoil (STO), Unilever (UL), Diebold (DBD), ENI S P A (E), Williams Partners LP (WPZ), Solar Capital LTD (SLRC), and Martin Midstream Partners LP (MMLP). KRFT, WPZ, and MMLP will all be reporting after market hours, while SLRC did not specify a time.
ConocoPhillips (COP), Realty Income (O), SCANA (SCG), Exxon Mobil (XOM), Enterprise Products Partners LP (EPD), Magellan Midstream Partners LP (MMP), Total S A (TOT), and Newmont Mining (NEM).
Chevron (CVX), NextEra Energy (NEE), and Buckeye Partners LP (BPL),
With the S&P 500 posting yet another new high Friday, the Fed-fueled rally rolls on, with no end in sight. John Mauldin and co-author Jonathan Tepper have a new book coming out today, entitled “Code Red”, which describes the authors’ latest views on the eventual consequences of the Fed and other central banker’s policies since 2008. A synopsis on the web site Zero Hedge described the outlook presented in the book as moving from “muddle through”, the author’s previous expectation, to something much worse. The free email newsletter from Mauldin describes the book by presenting their case in the form of an analogy to the courtroom speech delivered by Jack Nicholson, playing Colonel Nathan Jessup, in the movie “A Few Good Men”, where Ben Bernanke is in the role of the Colonel, explaining to all that “they can’t handle the truth” about the world economy and the need for the massive QE program unleashed by the Fed. Fascinating stuff. I will definitely stay with my policy of cashing out on stocks making ridiculous highs, and maintaining a larger-than-usual cash position, awaiting opportunities.
1st Posting for Friday 10/25/2013 09:00 AM
After a mild down day on Wednesday, the rally was back on Thursday, as all of the major averages posted decent, though not huge, gains. Overnight, Asian markets all posted losses, with Japan leading, down by 2.75%, followed closely by Shanghai, down 1.45%. European markets are trading mixed at this moment, with Britain and Germany up, France flat, and Spain and Italy down. U.S. futures are flat for the blue chips, but positive for the NASDAQ, with about an hour to go to the open.
Only one analyst action on my stocks to report this morning, as Colgate Palmolive (CL) was upgraded from Sell to Hold at Canaccord. The rating must be because of severe over valuation, since CL is a top performing company.
Earnings continues as the top story affecting the market, which is a good thing, considering other possibilities. Reports from my stocks since my last posting are noted following.
First, from yesterday after the close, Microsoft (MSFT) reported FQ1 EPS of $0.62, beating by eight cents. Revenue of $18.53B, up 16% Y/Y, beat by $740M. This was a very positive report, and the stock reacted well in the after hours trading, trading up nearly 6%. We shall see if it carries over today.
Then, we have a few more this morning:
Eaton (ETN) reported Q3 EPS of $1.12, in-line. Revenue of $5.61B missed by $0.09B.
Procter & Gamble (PG) reported FQ1 EPS of $1.05, in-line. Revenue of $21.2B, up 2% Y/Y, beat by $0.11B.
Ventas (VTR) reported Q3 FFO of $1.04, beating by two cents. Revenue of $712.39M beat by $31.67M.
UPS (UPS) reported Q3 EPS of $1.16, beating by a penny. Revenue of $13.5B, up 3.4% Y/Y, missed by $0.01B.
The missed economic reports from the government shutdown have been trickling in all week, with no real surprises. They indicate that the economy continues to progress, albeit slowly. Today, for example, Durable Orders for September rose 3.7%, vs. 2.5% expected.
The Jobs Report for October will not be released until November 8, the Labor Department has announced.
There is a good chance that the rally will continue for another day, at least for the NASDAQ, as MicroSoft (MSFT) and Amazon (AMZN) both reported earnings that exceeded expectations.
1st Posting for Thursday 10/24/2013 09:00 AM
Stocks took a breather Wednesday from the rally that has gone on since the political crisis was resolved, at least temporarily. Still, the major averages closed off their mid morning lows, indicating that the selling was likely a bit of profit taking, and nowhere near any kind of a panic sell off. Overnight, Asian markets were down in Hong Kong, Shanghai, and India, up in Japan and Singapore. European markets are all trading in the green at this hour. U.S. futures are positive, indicating the market will bounce back today, at least at the outset.
Only one analyst action to report this morning, as Walgreen (WAG) was initiated at Market Perform by FBR Capital.
After the close Wednesday, AT&T (T) reported Q3 EPS of $0.66, beating by a penny. Revenue of $32.15B, up 2.2% Y/Y, missed by 40.01B.
Then this morning, we have a few more:
Unilever (UL) reported Q3 revenues dropped 6.5% to €12.5B ($17.2B), affected by currency swings.
Altria (MO) reported Q3 EPS of $0.65, beating by a penny.
Colgate-Palmolive (CL) reported Q3 EPS of $0.73, in-line. Revenue of $4.39B, up 1.5% Y/Y, missed by $0.07B.
Raytheon (RTN) reported Q3 EPS of $1.60, beating by $0.26. Revenue of $5.84B beat estimates by $0.03B.
3M (MMM) reported Q3 EPS of $1.78, beating by three cents. Revenue of $7.91B, up 5.6% Y/Y, beat by $0.06B.
Penn Virginia (PVR) reported Q3 EPS of a minus nine cents. Revenue of $288.96M, however, beat estimates by $11.26M.
That’s it for now. Time to get ready for the open.
1st Posting for Wednesday 10/23/2013 09:00 AM
Stocks advanced further on Tuesday, with all of the major averages notching healthy gains. Overnight, Asian markets plunged on news of bank write offs in China and expectations of higher interest rates there Declines exceeded 1% for Japan, Hong Kong, and Shanghai. European markets are following suite, with Italy and Spain down over 1.5% at this hour. U.S. futures are reacting to the declines overseas, and are currently indicating that the market here will open on a down note.
Only a couple of upgrades / downgrades of note to report on my stocks this morning:
Breitburn Energy Partners LP (BBEP) was initiated at Buy at Wunderlich, along with several other energy producers, even as the benchmark WTC oil price has slipped below $100 in the last couple of days, having been above $100 for a long while.
Medtronic (MDT) was upgraded from Hold to Buy at Deutsche Bank.
A few earnings reports of note have come out this morning:
Norfolk Southern (NSC) reported Q3 EPS of $1.53, beating by fourteen cents. Revenue of $2.82B beat by $0.05B.
Dr Pepper Snapple (DPS) reported Q3 EPS of $0.88, beating by five cents. Revenue of $1.54B, up 1% Y/Y, missed by $0.03B.
Northrop Grumman (NOC) reported Q3 EPS of $2.14, beating by thirty cents. Revenue of $6.10B beat by $0.14B.
GlaxoSmithKline (GSK) reported Q3 Core EPS of 28.9 pence.
General Dynamics (GD) reported: Q3 EPS of $1.84, beating by sixteen cents. Revenue of $7.78B, down -1.7% Y/Y, beat by $0.02B.
American Electric (AEP) reported Q3 EPS of $1.10, beating by two cents. Revenue of $4.2B missed by $0.41B.
Time to get ready for another exciting day.
1st Posting for Tuesday 10/22/2013 08:30 AM
Stocks started off the new week Monday with a whimper, ending effectively where they started after a dull trading session. The August Jobs Report will be released at 8:30 AM, a little over two weeks delayed, which should spice things up a bit today. Overnight, Asian markets were up in Japan and Singapore, down in Hong Kong, Shanghai, and India, by modest margins in all cases. European markets are mostly trading in the green, with Spain being the only laggard at this hour. U.S. futures are flat, waiting on the Jobs Report.
I have three upgrades / downgrades on my stocks to report this morning:
Crosstex Energy (XTXI) was downgraded from OutPerform to Sector Perform at RBC Capital. I guess RBC figured that after gaining over $14 in one day Monday, there is not a lot of upside remaining. A merger of Crosstex (XTXI) and its related MLP, Crosstex Energy LP (XTEX) with Devon Energy, announced yesterday, resulted in huge gains for both XTXI and XTEX. I own both, having acquired before the financial crisis, and had seen them recover, but still far below where they had been in 2007, until yesterday. Sometimes you get rewarded for sticking it out on a beaten-down stock.
Crosstex Energy LP (XTEX) was upgraded from Neutral to OutPerform at Credit Suisse. XTEX did not gain as much as XTXI, so maybe it still has some upside left.
Digital Realty (DLR) was downgraded from Buy to Hold at Jeffries.
Only one of my stocks reported yesterday, as McDonalds (MCD) reported Q3 EPS of $1.52, beating by a penny. Revenue was $7.32B, up 2% Y/Y, missing by $0.02B.
Then, so far this morning, we have several more reports:
Novartis (NVS) reported Q3 core net income was down 3.1% to $3.1B, almost in line with consensus of $3.12B. Core EPS was $1.26, below forecasts of $1.29. Sales were up 4% to $14.3B, in line. NVS raised annual forecasts for the second time this year, and now expects sales to increase at a low- to mid-single-digit percentage rate.
Potlatch (PCH) reported Q3 EPS of $0.54, missing by seven cents. Revenue of $157.9M missed by $3.75M.
Reynolds American (RAI) reported Q3 EPS of $0.86, beating by a penny. Revenue of $2.14B was in-line.
Kimberly-Clark (KMB) reported Q3 EPS of $1.44, beating by four cents. Revenue of $5.26B, up 0.3% Y/Y, beat by $0.03B.
Freeport-McMoRan (FCX) reported Q3 EPS of $0.79, and revenue of $6.16B, beating by $0.48B.
Time to post and get ready for the day.
1st Posting for Monday 10/21/2013 08:30 AM
Stocks extended their gains on Friday, with all of the major averages showing substantial gains, except for the Dow Industrials, which was held to only a modest gain, as a couple of under performers dragged down the venerable 30 stock average. Asian markets universally ended with gains, led by Shanghai, up 1.61%. European markets are trading mixed, with Britain up, the others down. Italy is experiencing continuing political upheaval, as former Prime Minister Berlusconi, whose party is needed to hold the coalition government together, fights various charges. U.S. stock futures are flat, with a huge week of earnings on tap.
Even though there are a large number of upgrades / downgrades out this morning, as is often the case on Monday, none are for any of my 128 stocks. My reference sources are E*Trade and MarketWatch, which I search each market day looking for analyst actions affecting my stocks.
The upcoming week is notable in that NONE of the 128 stocks I currently follow is going ex-dividend this week. I did, however, miss pointing out last Monday that RPM International (RPM) would be going ex-dividend on 10/17/2013, with a yield of 2.56%.
With earnings season now in high gear, there will be no such dearth of content as far as reporting earnings coming up this week on my stocks.
First, I have one report on a significant stock that I missed last week, with all the excitement over the political stand off – at least, that’s my excuse:
Johnson & Johnson (JNJ) reported on Tuesday, 10/15/2013, that Q3 EPS was $1.36, beating by four cents. Revenue was $17.6B, up 3.1% Y/Y, beating by $0.19B.
Next, the tally of earnings expected is as follows, by date. Note that unless otherwise specified, the report is expected before the market opens on the indicated date:
McDonalds (MCD), and Linn Energy LLC (LINE).
Kimberly Clark (KMB), Novartis A G (NVS), Potlatch (PCH), Reynolds American (RAI), and Freeport-McMoran (FCX).
American Electric Power (AEP), General Dynamics (GD), Northrop Grumman (NOC), AT&T (T), with T to report after market hours, Dr Pepper Snapple (DPS), and Norfolk Southern (NSC).
Colgate Palmolive (CL), 3M Company (MMM), Altria (MO), MicroSoft (MSFT), with MSFT to report after market hours, Raytheon (RTN), and PVR Partners LP (PVR).
Eaton (ETN), Procter & Gamble (PG), United Parcel Service (UPS), and Ventas (VTR).
Speaking of my 128 stocks, I realize it is time once again to update my prices and buy / sell levels, plus make a few additions and deletions. I will note here in my Daily Blog when this has been accomplished. Until then, I will add a caveat to my introductory comments in my Stocks Selection, to the effect that my data is somewhat stale. It is amazing how much the market can move in just a few months.
With the earnings back in focus, it should make for an interesting week, with at least some action that we can make some sense of, as the stocks go up or down based more on their own business performances than on macro developments and news flow.
1st Posting for Friday 10/18/2013 09:00 AM
Stocks managed to keep the rally going Thursday, with all of the major averages posting healthy gains, with the exception of the Dow Industrials. The venerable 30 stock index lagged all day because of a significant decline in one of its most heavily weighted components, IBM, which caused the index to finish with a small loss. Overnight, Asian markets mostly ended with gains, with Japan being the lone exception, posting a small decline. European markets are all trading with gains at this hour. The long delayed Monthly Jobs Report for September will be released next Tuesday, according to MarketWatch. As for the other numerous reports that were missed, I have no information regarding their availability, but I suspect many will just be skipped. U.S. stock futures are positive, suggesting the good mood will continue for awhile yet.
Three upgrades / downgrades of note have come out this morning:
Sanifi (SNY) was downgraded from OutPerform to Market Perform at Leerink.
Verizon (VZ) was upgraded from Hold to Buy at Deutsche Bank.
Total SA (TOT) was downgraded from Buy to Neutral at UBS.
Moving on to earnings, we have two of my companies reporting since yesterday’s posting:
First, yesterday, Nucor (NUE) reported Q3 EPS of $0.46, beating by seven cents. Revenue was $4.94B, up 6% Y/Y, beating by $0.17B.
Then, General Electric (GE) reported this morning that Q3 EPS was $0.36, in-line. Revenue was $35.73B, missing by $3.11B.
At this point, I’m ready for the week to be over, and I suppose I’m glad that the crisis in DC is tamed for the moment. Like most observers, the fact that the resolution was a typical “kick the can down the road” agreement, with nothing really solved, leaves me with little to feel good about. The agreement to use the next three months to get a more permanent resolution will likely be forgotten, until the next crisis, which will be soon, just after the first of the year.
1st Posting for Thursday 10/17/2013 09:00 AM
Fear came Tuesday and went away Wednesday, as a debt deal seemed imminent, at the last moment, as expected. Stocks presumed that result from the outset yesterday, and the rally continued all day, with all the major averages ending near the highs of the day. Overnight, Asian markets ended mixed, with Japan and Singapore up, Hong Kong, Shanghai, and India down. European markets are universally trading with losses at this hour. U.S. futures are negative. One would think the conclusion of the political stand off had hit a snag, but no, the House did indeed follow the Senate in approving the stop gap measure agreed to, and Obama is praising the leaders for seeing it through. It seems to be a classic case of the old Wall Street saying, to “buy the rumor, sell the news”. Lackluster earnings, mostly ignored until now, likely are also a factor.
A few upgrades / downgrades on my stocks have come out this morning:
Enerplus (ERF) was upgraded from Sector Perform to OutPerform at RBC Capital Markets.
Breitburn Energy LP (BBEP) was downgraded from OutPerform to Neutral at Robert W Baird.
Norfolk Southern (NSC) was downgraded from OutPerform to Sector Perform at RBC Capital Markets.
Westar Energy (WR) was initiated at Hold by Wunderlich.
Speaking of earnings, recall that we are just getting under way with earnings season this week. Notable reports from stocks I track are as follows:
Kinder Morgan Inc (KMI) reported late Wednesday that Q3 EPS was $0.27, and revenue was $3.65B, missing by $0.05B. A dividend increase of a penny, to $0.41 per share, was also announced, with an ex-dividend date of 10/29/2013.
Kinder Morgan Partners LP (KMP) reported Q3 EPS of $0.51, missing by ten cents. Revenue of $3.28B beat by $0.21B.
Verizon (VZ) reported, just this morning, that Q3 EPS was $0.77, beating by three cents. Revenue of $30.28B, up 4.4% Y/Y, beat by $0.11B.
Nucor (NUE) is expected to report this morning, but it has not been released yet.
Well, the huge budget/debt flap is over, or at least suspended for a few months. Don’t worry, it will be back, probably right after New Year’s Day. I hope we get to see a roll call vote on exempting the politicians from ObamaCare. A Republican Senator, I forget who, has plans to force it, but Harry Reid will probably keep it from happening. I would love to see some politicians defending that vote to their constituents. Back to business, it looks like a down day is in store, at least at the outset.
1st Posting for Wednesday 10/16/2013 09:00 AM
Fear returned to the stock market Tuesday, as a solution to the stand off in Washington seemed to be getting nowhere. All of the major averages posted substantial declines. Overnight, Asian markets were down in Hong Kong, Shanghai, and India, and up in Japan and Singapore. European markets are mostly trading down at this hour, with only Italy in positive territory. U.S. futures are, inexplicably, strongly positive at the moment, as the market refuses to believe that a deal will not be reached.
Upgrades / downgrades of note this AM are:
Cisco Systems (CSCO) was downgraded from Buy to Neutral at MKM Partners.
Intel (INTC) was upgraded from Neutral to Buy at B Riley.
Nucor (NUE) was initiated at OutPerform at Credit Suisse.
Triangle Capital (TCAP) had coverage resumed at Market Perform at JMP Securities.
Catching up on earnings reported this week on stocks I follow, we have:
Intel (INTC) reported yesterday that Q3 EPS was $0.58, beating by five cents. Revenue came in at $13.48Bm beating by $0.01B. Q4 revenue guidance was light, while Q3 gross margin was strong.
Coca Cola (KO) reported Q3 EPS of $0.53, missing by a penny. Revenue of $12.03B missed by $0.04B. Soft drink sales are under pressure, with a secular decline in progress because of health concerns. All of the affected firms are trying to diversify into more healthful products, but it will be a long while before sales in these categories become comparable to the mainstay soda categories.
PepsiCo (PEP) reported Q3 EPS of $1.24, beating by seven cents. Revenue was $16.91B, missing by $0.12B. PEP is more diversified than KO, with snack foods included in the product portfolio, along with soda. Probably most snack foods are equally unhealthy, but sales don’t seem to be suffering here in the rotund nation.
As noted in the first paragraph above, stock index futures are strongly positive. When I saw that, I expected that there was some positive news regarding the situation in DC. But, if there is, I cannot find it. All I can say is, go figure. I would expect a big sell off to happen today, and every day from now on until things get resolved. This truly is a “what, Me Worry” market. I wonder if Mad magazine is still being published? I haven’t read one in decades, but I used to find them humorous and enlightening.
1st Posting for Tuesday 10/15/2013 09:00 AM
Stocks did indeed start off the day Monday on a down note, and the decline extended on into around midday. But, as the news flow began to turn more positive, stocks rebounded, and ended the day with gains on all he major averages. Overnight, Asian markets ended mixed, with Japan and Hong Kong positive, Shanghai, India, and Singapore down.
European markets are all trading with decent gains at this hour. U.S. futures are flat.
Several of my stocks have received upgrades / downgrades this morning:
Diebold (DBD) was downgraded from Neutral to Sell at Compass Point.
QRE Energy LP (QRE) was initiated at Buy at UBP.
Linn Energy LLC (LINE) was initiated at Buy at UBS.
BreitBurn Energy Partners LP (BBEP) was also initiated at Buy at UBS.
MicroSoft (MSFT) was upgraded from Hold to Buy at Jeffries.
The latest news is that no deal has been agreed to yet, but the Senate leaders are making progress. The various pundits have stated all along that the market is taking the whole episode too lightly, and that certainly seems to be the case at present. A “black swan” event could still occur. I have said all along that brinksmanship could lead to a miscalculation, with things spinning out of control even though both sides say they don’t want that to happen.
1st Posting for Monday 10/14/2013 07:30 AM
The stock rally which began on Thursday continued on into Friday, although with a little less intensity. Unfortunately, the news since then suggests that the champagne was indeed broken out prematurely, as no deal is in sight, and the clock is ticking. According to Secretary Lew, if nothing happens by October 17th, the carriage will turn into a pumpkin, and all sorts of bad things will happen. Overnight, ahead of Monday here, Asian markets mostly ended with gains, with Singapore being the only laggard among the five major Asian markets shown on MarketWatch. European markets are trading mixed at this hour, with Britain and Spain up slightly, while Germany, France, and Italy are down slightly. There are no economic reports scheduled for today. Of course, if some were scheduled, they would not be out, if the government was the source of the data. U.S. futures are way down, based on the latest news of progress on ending the stand off, which is that there is none. Stocks are set to have a down day as of this posting, with about two hours to go.
Three upgrades / downgrades of note have come out so far this morning on my stocks:
Merck (MRK) was downgraded from OutPerform to Market Perform at Bernstein.
PVR Partners LP (PVR) was downgraded from Buy to Hold by BBT. I sold my units Friday, since the rise had stalled, and there was no guarantee that the distributions would be paid on schedule while the merger approval process takes place over the next few months. Time to take the money and run, I decided.
Buckeye Partners LP (BPL) was upgraded from Hold to Buy at Deutsche Bank. Any thoughts I had about buying in were dashed as the stock moved up dramatically Friday, out of my buy range.
Several of my stocks will be going ex-dividend this week:
Procter & Gamble (PG), 10/16/2013, yield 3.07%.
Main Street Capital (MAIN), 10/17/2013, yield 6.22%. MAIN pays monthly.
Colgate Palmolive (CG), 10/18/2013, yield 2.21%.
Gladstone Investment (GAIN), 10/18/2013, yield 10.06%. GAIN also pays monthly.
Earnings season finally gets under way this week for stocks I follow, as tallied by date, below:
Intel (INTC), after market hours.
Coca Cola (KO), before market hours.
Pepsico (PEP), before market hours.
Kinder Morgan Inc. (KMI), no time specified, but see next item.
Kinder Morgan Energy Partners LP (KMP), after market hours.
I assume KMI and KMP will be reported together.
Verizon (VZ), before market hours.
Nucor (NUE), before market hours.
General Electric (GE), before market hours.
As hinted in the opening comments above, it may have been a premature relief rally that we saw last week. As of Saturday evening, as I write this, the talks have stalled, and no deal is imminent. It could be a real see saw ride this week. The real risk, as I see it, is that a miscalculation could occur, no deal is reached in a timely manner, and we veer off into uncharted waters. Some Republicans may possibly dislike Obama enough to be willing to go down with the ship, taking everyone with them, as long as the President is among those on the list. Further, the Democrats, sensing victory, appear to be pressing their presumed advantage, now wanting to eliminate sequester reductions previously agreed to. I’m wondering if the approval ratings of Congress and the President can go any lower than zero. Based on the latest polls, zero is not far away from where the approval numbers are right now.
1st Posting for Friday 10/11/2013 08:30 AM
Stocks staged a monster rally Thursday, as the Republicans floated a proposal for an interim, no strings attached, extension of the debt ceiling, and Obama did not reject the idea out of hand. No strings, that is, other than an agreement to meetings to see how spending can be reduced. All of the major averages gained over 2%, in the strongest up day we have seen for a long while. Overnight, following the lead of the rally here, Asian markets rallied as well, with all major bourses up over 1%. European markets are trading mixed at this hour, with Britain, Germany, and France up, Italy and Spain down.
With the government shut down, only economic readings not compiled by the Federal Government are still being issued. Yesterday Claims for Unemployment spiked in the most recent week, but tat was overshadowed by the developments regarding the stand off. Today, the University of Michigan Consumer Survey will be out around 10:00 AM.
Several upgrades / downgrades of interest have come out this AM:
Realty Income (O) had coverage resumed at Stifel at Hold.
Crestwood Equity LP (CEQP) was initiated at OutPerform by Wells Fargo. CEQP was created by the merger of Crestwood and Inergy (NRGY), a Tier3 stock that was temporarily a terrific bargain. I will be deleting NRGY from the list when I get around to updating it, and CEQP will not replace it, with a yield too low for an MLP, in my opinion.
Digital Realty Trust (DLR) was upgraded from Hold to Buy at Cantor.
Intel (INTC) was downgraded from OutPerform to Neutral at Macquarie.
Dr Pepper Snapple (DPS) was downgraded from OutPerform to Market Perform at Wells Fargo.
Johnson & Johnson (JNJ) was upgraded from Sell to Neutral at Goldman. It must have been a sell because of extreme valuation, since the company is a solid performer, business-wise.
With all the excitement, I missed that RPM International (RPM) reported on Wednesday that FQ1 EPS was $0.77, beating by six cents. Revenue was $1.16B, up 11.3% Y/Y, beating by $0.04B. After that fine report and yesterday’s rally, the low yield is even lower, only 2.43% as of yesterday’s close of $37.06.
As of late Thursday evening, no shut down / debt ceiling deal was imminent, but at least the two sides are still talking. I had always expected a monster rally when a solution was reached, but I wonder if the champagne has been broken out prematurely. If the anticipated progress does not materialize, here we will go, back down the roller coaster.
1st Posting for Thursday 10/10/2013 08:30 AM
Stocks basically went nowhere Wednesday, with the blue chips finishing with small gains, while the NASDAQ and the Russell 2000 small cap indexes ended with small losses. Overnight, Asian markets ended mixed, with Japan, India, and Singapore up, Hong Kong and Shanghai down. European markets are all trading with substantial gains at this hour. U.S. futures are way up this morning, as the broad outlines of a deal seem to be forming, according to news reports.
Only one of my stocks received analyst attention this morning, as GlaxoSmithKline (GSK) was downgraded from Neutral to UnderPerform at Credit Suisse.
While not on my lists, but notable because of its sheer size, Hewlett Packard (HPQ) received several upgrades today. The stock jumped up almost $2 yesterday following positive comments from the CEO, Meg Whitman, to the effect that the turnaround is progressing on schedule. I still have some HPQ as a “legacy” holding. I bought in when it first made a huge drop, thinking “value here”, which was way too early, it turned out.
Time to see if the positive mood lasts throughout the day, or if it all collapses in bitter recriminations.
1st Posting for Wednesday 10/09/2013 08:30 AM
Stocks steadily declined all day Tuesday, although the sell off never reached panic levels, reminiscent of 2008. By the end of the day, the Dow Industrials Index was down 159 points, and all of the major averages were down by comparable margins. Overnight, Asian markets were mostly positive, with only Hong Kong posting a loss. European markets are all trading in the green at this hour. The big news this morning is that Obama has decided to nominate Janet Yellen to replace Bernanke as Fed Chair. Resolving at least one uncertainty would normally be expected to give the market a boost, but in the current environment, it is unlikely to amount to much. Still, the U.S. stock index futures are positive, with over an hour to go to the open. Maybe the announcement will stem the slide for a short while, at least.
We continue to miss most economic reports that come from the Federal Government. Of course, the big miss was the August Jobs Report, missed last Friday. Yesterday, the Trade Balance report was AWOL.
None of my stocks have received any upgrades / downgrades so far today.
I have been trying to add to my position in the Southern Company (SO), a blue chip utility that has declined along with all utilities because of the expectation of rising interest rates, exacerbated in the case of SO by concerns over cost overruns on new nuclear plant construction projects. I was close with my bid until yesterday, when all utilities rallied, even as the market swooned. REITs are still bargain priced, my favorites being Health Care REIT (HCN), HCP Inc (HCP), and Realty Income (O). HCP has dropped more than most over an unexpected ousting of the long time CEO recently. I do not see this as a sell catalyst to an extent that a panic sell is required, although the situation needs to be monitored. I say, give the new CEO a chance, and only sell if you don’t like how the new CEO is running things, after a reasonable probationary period.
1st Posting for Tuesday 10/08/2013 08:30 AM
Stocks began the week by posting substantial losses on Monday, as the stand off in Washington continued into the new week, with no resolution in sight. Overnight, Asian markets all posted gains. European markets, conversely, are all trading in the red at this hour. U.S. futures are flat , with a slight positive bias.
Several upgrades / downgrades on my stocks came out yesterday after I posted:
Kimberly Clark (KMB) was initiated at Market Perform by Wells Fargo.
Procter & Gamble (PG) was upgraded from Market Perform to OutPerform at Wells Fargo.
Walgreens (WAG) was initiated at Hold by Jeffries. WAG was also upgraded from UnderPerform to Peer Perform at Wolfe Research.
Sysco (SYY) was initiated at Hold by Jeffries.
The only one of my stocks receiving analyst attention so far today is Novartis (NVS), which was downgraded from OverWeight to Neutral at JP Morgan.
The headlines continue to get scarier and scarier regarding the debt ceiling and the impacts it could have if a resolution is not found. The campaign approach to the stand off that the Obama Administration has followed, which is to ensure that whatever happens it is all on the Republicans, and hence a political gain for the Democrats, may need to be modified, and some willingness shown to discuss the issues. Otherwise, we may all go off the cliff together, as some Republicans seem to be that angry, such that they are effectively political suicide bombers, with the vests and explosives securely attached. At some point, the Democrats need to realize that the 52% President cannot ignore the 48% other party without sharing some of the blame for governmental failure. But anyway, back to business. We may see some good stocks available at better prices than we have seen for a long time, if things keep spiraling out of control.
1st Posting for Monday 10/07/2013 08:15 AM
Stocks managed a positive day Friday, ignoring the politicians for a change. All of the major averages finished near the highs of the day, advancing more than 0.5% in most cases. Overnight, Asian markets ended mostly in the red, with only Shanghai managing a gain. European markets are all trading in the red at this hour. U.S. futures are negative, indicating stocks are set to decline here when the market opens in a little more than an hour from now.
I only have noticed two analyst actions this morning affecting my stocks:
General Electric (GE) had coverage resumed at Neutral by Goldman.
ENI S.p.A. (E) was upgraded from UnderPerform to Neutral at Exane BNP Paribas.
Several of my stocks will be going ex-dividend this week, as indicated following, by date:
General Mills (GIS), yield 3.17%.
AT&T (T), yield 5.33%.
Verizon (VZ), yield 4.50%.
Darden Restaurants (DRI), yield 4.71%.
General Dynamics (GD), yield 2.61%.
Kayne Anderson (KED), yield 6.33%.
MFA Financial (MFA), yield 11.72%.
Universal (UVV), yield 3.90%.
Consolidated Communications (CNSL), yield 8.83%.
Freeport-McMoran (FCX), yield 3.70%.
Fifth Street Finance (FSC), yield 11.20%. FSC is a monthly payer.
I suppose market pundits still consider earnings season to be starting when Alcoa (AA) reports, which will be Tuesday, 10/8/2013, even though AA is no longer in the Dow 30 Index. No matter, for my stocks, it won’t really begin until next week, with one exception; RPM International (RPM) will be reporting on 10/09/2013, before market hours. RPM is on my Tier2 list, and has long been a steady dividend payer, but like many of my stocks, the price has gone up so much that the current yield of 2.41% is very unexciting.
As we move into the second week of the government shutdown, the accusations of malfeasance and the war of words are increasing, as the pressure builds. One can only hope that cooler heads will prevail at some point. My view is perhaps so, but probably not this week. I was surprised by the positive market on Friday, but I don’t expect it to carry over into this week.
1st Posting for Friday 10/04/2013 09:00 AM
Stocks declined yet again on Thursday, with the decline accelerating around noon, after which a partial recovery occurred. Still, it was a triple digit down day for the Dow Industrials Index, and all of the major indexes posted similar declines, as far as percentages are concerned. As noted, around noon it was looking like we might see a 300 to 400 point Dow down day, before a news story broke that Speaker Boehner was said to be flexible on allowing a debt ceiling vote. Overnight, Asian markets ended mixed, with Japan, Hong Kong, and Singapore down, while Shanghai and India were up. European markets are mostly positive at this hour, with only Germany showing a small decline. U.S. futures are slightly positive, with about an hour to go to the open.
The Jobs Report for September will not be coming out today, as compiling the report has evidently been categorized as a non-essential function. Ordinarily, the report on the first Friday of every month would be the key driver of market action on the day it is released, but not this first Friday of October.
Only one of my stocks has received analyst attention this morning, as Exxon Mobil (XOM) was upgraded from OutPerform to Strong Buy at Raymond James.
Ho hum, another shutdown day. It will be interesting to see if the current positive sentiment deteriorates into another significant drop. At this point, the market will be strongly news-driven, with any signs of conciliation causing stocks to go up, and any signs of it getting worse and possibly affecting the debt ceiling situation causing stocks to go down.
1st Posting for Thursday 10/03/2013 09:00 AM
Stocks dropped sharply at the open Wednesday, but regained much of the lost ground by the close, with the major averages posting only modest declines on the day. It will be interesting to see how long this complacency can last. Overnight, Asian markets were more positive than negative, as Hong Kong, Shanghai, and India posted substantial gains, while Japan and Singapore posted small declines. By contrast, European markets are mostly trading with losses at this hour, with only Britain showing a small advance. U.S. futures are negative, but not by a lot, as the political stand-off continues. The Unemployment Claims data will be coming out on schedule, as the data is compiled by the states.
There are minimal upgrades / downgrades of interest out this morning:
Unilever (UL) was downgraded from Conviction Buy to Buy at Goldman.
Tate& Lyle (TATYY) was upgraded from Sell to Neutral by Goldman. TATYY is not on my lists, having been dropped several months ago. One reason for the drop was lack of volume and information, so it seems noteworthy that it is even followed by Goldman.
It appears that the political impasse is going to go on for some time, with neither side willing to give an inch. As the drumbeat of pending doom continues, with the critical debt ceiling deadline fast approaching, the market complacency will likely evaporate, and a serious sell off will occur. I would hold off on new long positions until we see how low stocks can go, or at least only partake lightly, and only when true bargains appear. Just remember, if things really go south, even better bargains will become available soon. On the other hand, the situation could be resolved at any time, and a monster rally could result. That is one reason to go ahead and buy something sooner rather than later, as the attractive buy prices could disappear with barely a moment’s notice.
1st Posting for Wednesday 10/02/2013 09:00 AM
Stocks inexplicably gained on Tuesday, even as the government shutdown began. The sentiment was apparently that it would not last long, and the damage would be minimal. Overnight, Asian markets finished mixed, with Japan and Singapore down, Hong Kong, Shanghai and India up. European markets are likewise trading mixed, with Italy and Spain up, while Britain, Germany, and France are down. U.S. futures are down sharply this morning, as perhaps the reality of the situation is starting to sink in.
Only one upgrade / downgrade to report this morning on my stocks, as Unilever (UL) was downgraded from Buy to Neutral at UBS.
I apparently missed that Walgreen (WAG) would be reporting this week. Yesterday, before the open, WAG reported FQ4 EPS of $0.73, in-line. Revenue was $17.94B, up 5.1% Y/Y, missing by $0.01B.
Today may see the beginning of the expected sell off, one that could go on for awhile, giving us the long-awaited correction that is needed to purge out the weak hands and make for some attractive buy prices.
1st Posting for Tuesday 10/01/2013 09:00 AM
The stand-off in Washington was finally noticed Monday, with all of the major averages posting substantial declines. Still, the action was nowhere near what I would characterize as panic selling, such as occurred in 2008. Overnight, Asian markets mostly ended with gains, with Hong Kong being an exception by posting a 1.5% decline. European markets are mostly trading in the green at this hour, with only Britain showing a modest decline. U.S. futures are indicating the market has moved on past the fiasco in Washington, as the futures are inexplicably indicating a positive start to the trading day. When I first saw that, my immediate thought was that a deal had been reached, but that is not the case, and the shutdown is on. Go figure.
Economic releases scheduled for today are the ISM Index for September, and Construction Spending for August. Also, Auto/Truck Sales data for September will be trickling out all day from the various manufacturers.
Only one of my stocks has received any analyst action this morning, as Public Service Enterprise Group (PEG) was upgraded from Hold to Buy at Deutsche Bank.
Paychex (PAYX) reported after the close Monday that FQ1 EPS was $0.44, beating by a penny. Revenue was $607.9M, up 5% Y/Y, beating by $2.34M.
Today should be an interesting day, as we learn whether or not the market can ignore paralysis in Washington and a government shutdown.