Most investors are aware that the market undergoes times of strong trends and times of lateral ranging. Many investors employ a different trading system for each environment. But what happens in a period of extreme volatility? Any system a trader might use is susceptible to the increased market swings, which could wipe out previous gains and more. By using either a non-directional or a probability-based trading method, investors may be able to more fully protect their assets.
When Volatility Increases
It is important to understand the difference between volatility and risk. Volatility in the financial markets is seen as extreme and rapid price swings. Risk is the possibility of losing some or all of an investment. So as volatility increases, so does profit potential and the risk of loss, as the market swings from peaks to troughs. There is a marked increase in the frequency of trades during these periods and a corresponding decrease in the amount of time that positions are held. During times of increased volatility, a hyper-sensitivity to news is often reflected in market prices.
Directional Investing
Most private investors practice directional investing, which simply requires the markets to move consistently in the desired direction, which can be either up or down. Market timers, long or short equity investors and trend investors all rely on directional investing strategies. Times of increased volatility can result in a directionless or sideways market, repeatedly triggering stop losses. Gains earned over years can be eroded in a few days.
Non-Directional Investing
Non-directional investors attempt to take advantage of market inefficiencies and relative pricing discrepancies. Following are some strategies they deploy:
Equity Market Neutral - Here is where stock pickers can shine, because the ability to pick the right stock is just about all that matters with this strategy. The goal is to leverage differences in stock prices by being both long and short among stocks in the same sector, industry, nation, market cap, etc. By focusing on the sector and not the market as a whole, emphasis is placed on movement within a category. Consequently, a loss on a short position can be quickly offset by a gain on a long one. The trick is to identify the standout and the underperforming stocks. The principle behind this strategy is that your gains will be more closely linked to the difference between the best and worst performers than the overall market performance and therefore will be less susceptible to market volatility.
Merger Arbitrage - Many private investors have noticed that the stocks of two companies involved in a potential merger or acquisition often react differently to the news of the impending action and try to take advantage of the shareholders' reaction. Often the acquirer's stock is discounted while the stock of the company to be acquired rises in anticipation of the buyout. A merger arbitrage strategy attempts to take advantage of the fact that the stocks combined generally trade at a discount to the post-merger price due to the risk that any merger could fall apart. Hoping that the merger will close, the investor should simultaneously buy the target company stock and short the acquiring company's stock.
Relative Value Arbitrage - The relative value approach seeks out a correlation between securities and is typically used during a sideways market. What kinds of pairs are ideal? They are heavyweight stocks within the same industry that share a significant amount of trading history. Once you've identified the similarities, it's time to wait for their paths to diverge. A 5% or larger divergence lasting two days or more signals that you can open a position in both securities with the expectation they will eventually converge. You can long the undervalued security and short the overvalued one, and then close both positions once they converge.
Event Driven - This scenario is triggered by corporate upheaval, whether it be a merger, assets sale, restructuring or even bankruptcy. Any of these events can temporarily inflate or deflate a company's stock price while the market attempts to judge and value these newest developments. This strategy does require analytical skills to identify the core issue and what will resolve it, as well as the ability to determine individual performance relative to the market in general.
Trading on Volatility
Investors who seek profits from market volatility can trade ETFs or ETNs on a volatility index such as iPath S&P 500 VIX Short-Term Futures ETN (ARCA:VXX). The VXX tracks the movement of the CBOE volatiliy index (VIX). During the budget impasse and debt ceiling problem in 2013, VXX rose nearly 21%. After the problem was solved, it fell nearly 30%. If investors had bought VXX before it rose significantly and sold at the peak, they would have realized large profits.
Probability-Based Investing
Although investors' consensus opinion will usually result in a relatively efficient stock price that reflects all known information, there are obviously times when one or more key pieces of data about a company are not widely disseminated, resulting in an inefficient stock price that is not reflected in its beta. The investor is therefore taking an additional risk of which he or she is most likely unaware. Probability-based investing is one strategy that can be used to help determine whether this factor applies to a given stock or security. Investors who employ this strategy will compare the company's future growth as anticipated by the market with the company's actual financial data, including current cash flow and historical growth. This comparison allows calculating the probability that the stock price is truly reflecting all pertinent data. Companies that stand up to the criteria of this analysis are therefore considered more likely to achieve the future growth level that the market perceives them to possess.
The Bottom Line
Volatile times provide an opportunity to reconsider one's investment strategy. Although the approaches described here are not for all investors, they can be leveraged by the experienced trader and alternatively, each option is available through a professional money manager.
Wednesday, October 30, 2013
Tuesday, October 29, 2013
5 Stocks Ready to Break Out
DELAFIELD, Wis. (Stockpickr) -- Trading stocks that trigger major breakouts can lead to massive profits. Once a stock trends to a new high, or takes out a prior overhead resistance point, then it's free to find new buyers and momentum players that can ultimately push the stock significantly higher.
One example of a successful breakout trade I flagged recently was games and toy maker Jakks Pacific (JAKK), which I featured in Sept. 19's "5 Stocks Under $10 Set to Soar" at around $4.95 a share. I mentioned in that piece that shares of JAKK had been downtrending badly for the last two months, with the stock plunging from its high of $11.75 to its low of $4.82 a share. Following that downtrend, shares of JAKK had started to move sideways and trend within range of a triggering a major breakout trade above $5.08 to $5.27 a share. This sideways pattern was signaling that the downside volatility for JAKK was potentially over.
Guess what happened? Shares of JAKK triggered that breakout earlier this week with massive upside volume, after the company released its earnings report. This stock tagged an intraday high of $7.24 a share on Thursday, which represents a gain of close to 50% for anyone who bought this stock under $5 a share prior to this monster move.
Breakout candidates are something that I tweet about on a daily basis. I frequently tweet out high-probability setups, breakout plays and stocks that are acting technically bullish. These are the stocks that often go on to make monster moves to the upside. What's great about breakout trading is that you focus on trend, price and volume. You don't have to concern yourself with anything else. The charts do all the talking.
Trading breakouts is not a new game on Wall Street. This strategy has been mastered by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas. These pros know that once a stock starts to break out above past resistance levels, and hold above those breakout prices, then it can easily trend significantly higher.
With that in mind, here's a look at five stocks that are setting up to break out and trade higher from current levels.
Kythera Biopharmaceuticals
One stock that's quickly moving within range of triggering a major breakout trade is Kythera Biopharmaceuticals (KYTH), which is focused on the discovery, development and commercialization of novel prescription products for the aesthetic medicine market. This stock has been on a bullish run in 2013, with shares up by 48%.
If you take a look at the chart for Kythera Biopharmaceuticals, you'll notice that this stock has been trending sideways and consolidating for the last month, with shares moving between $40.55 on the downside and $47.85 on the upside. Shares of KYTH are now starting to spike higher off some near-term support at $42.54 a share. That move is quickly pushing KYTH within range of triggering a major breakout trade above the upper-end of its recent range.
Traders should now look for long-biased trades in KYTH if it manages to break out above some near-term overhead resistance at $47.50 to its all-time high of $47.85 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 199,029 shares. If that breakout hits soon, then KYTH will set up to enter new all-time high territory, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $57, or even $60 a share.
Traders can look to buy KYTH off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $42.54 a share, or at $40.55 a share. One can also buy KYTH off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
GSE Holdings
Another environmental services player that looks ready to trigger a near-term breakout trade is GSE Holdings (GSE), which provides geosynthetic containment solutions for environmental protection and confinement applications. This stock has been hammered by the bears so far in 2013, with shares down big by 55%.
If you take a look at the chart for GSE Holdings, you'll notice that this stock recently ripped sharply higher back above its 50-day moving average of $2.32 a share with heavy upside volume. Following that move, shares of GSE have started to trend sideways between $2.60 on the downside and $2.95 on the upside. Shares of GSE are now starting to move within range of triggering a near-term breakout trade above the upper-end of its recent range.
Traders should now look for long-biased trades in GSE if it manages to break out above some near-term overhead resistance levels at $2.79 to $2.95 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 221,545 shares. If that breakout hits soon, then GSE will set up to re-test or possibly take out its next major overhead resistance levels at $3.50 to $4 a share.
Traders can look to buy GSE off any weakness to anticipate that breakout and simply use a stop that sits right below support at $2.60 or below its 50-day moving average at $2.32 a share. One could also buy GSE off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Xerium Technologies
One cyclical consumer goods player that's starting to trend within range of triggering a near-term breakout trade is Xerium Technologies (XRM), a manufacturer and supplier of two types of consumable products, clothing and roll covers, used mainly in the production of paper. This stock has been on fire so far in 2013, with shares up sharply by 313%.
If you take a look at the chart for Xerium Technologies, you'll notice that this stock has been uptrending strong for the last two months and change, with shares moving higher from its low of $9.94 to its recent high of $12.97 a share. During that uptrend, shares of XRM have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of XRM within range of triggering a near-term breakout trade.
Traders should now look for long-biased trades in XRM if it manages to break out above some near-term overhead resistance at $12.97 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 100,685 shares. If that breakout triggers soon, then XRM will set up to re-test or possibly take out its 52-week high at $14.04 a share. Any high-volume move above that level will then give XRM a chance to tag its next major overhead resistance levels at $18 to $20 a share.
Traders can look to buy XRM off any weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $12.28, or near its 50-day at $11.35 a share. One can also buy XRM off strength once it takes out $12.97 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Key Energy Services
Another energy player that's starting to move within range of triggering a big breakout trade is Key Energy Services (KEG), which provides well services to oil companies, foreign national oil companies and independent oil and natural gas production companies. This stock is off to a modest start in 2013, with shares up by just 7.9%.
If you look at the chart for Key Energy Services, you'll notice that this stock has recently spiked higher back above both its 200-day moving average at $7.16 a share and its 50-day moving average of $7.28 a share. That move is quickly pushing shares of KEG within range of triggering a big breakout trade.
Traders should now look for long-biased trades in KEG if it manages to break out above some near-term overhead resistance levels at $7.75 to $7.96 a share and then once it take out more resistance at $8.04 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 2.03 million shares. If that breakout triggers soon, then KEG will set up to re-test or possibly take out its 52-week high at $9.55 a share. Any high-volume move above that level will then give KEG a chance to tag its next major overhead resistance levels at $10 to $11 a share.
Traders can look to buy KEG off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $7.14 a share or $6.83 a share. One can also buy KEG off strength once it takes out that breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Bluelinx
My final breakout trading prospect is Bluelinx (BXC), a distributor of building products including lumber, structural panels, hardwood plywood, roofing, insulation, metal products, vinyl siding and particleboard. This stock has been hit hard by the bears so far in 2013, with shares off by 31%.
If you look at the chart for Bluelinx, you'll notice that this stock has been trending sideways and consolidating for the last two months, with shares moving between $1.78 on the downside and $2.06 on the upside. Shares of BXC have now started to spike higher right off its 50-day moving average of $1.84 a share. That move is quickly pushing shares of BXC within range of triggering a breakout trade above the upper-end of its recent sideways trading chart pattern.
Traders should now look for long-biased trades in BXC if it manages to break out above some near-term overhead resistance levels at $1.93 to $2 a share, and then once it takes out more resistance at $2.06 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 103,903 shares. If that breakout triggers soon, then BXC will set up to re-test or possibly take out its next major overhead resistance levels at $2.29 to its 200-day moving average at $2.39 a share. Any high-volume move above those levels will then give BXC a chance to tag $2.60 to $3 a share.
Traders can look to buy BXC off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $1.80 to $1.78 a share. One could also buy BXC off strength once it clears those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point.
To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.
-- Written by Roberto Pedone in Delafield, Wis.
Monday, October 28, 2013
GBP/USD holding onto the 1.5500 handle
FXstreet.com (Barcelona) - There is little change in the pair from the European shift.
There is also little data on the cards today which the market will pay much attention to in respect of cable other than the Initial Jobless Claims (July 27) that printed 333k vs 336k consensus and 328k previous. There was very little reaction. The market is still digesting the Inflation report and indeed it seems we will have to wait for the BoE minutes next for more clarification in respect to the guidance on interest rates. As a result of the report, markets now understand unemployment at 7% is the target and threshold where base rates might be considered again. Until then, QE could be extended should the economic conditions require it, but for the time being, the UK economy is set to improve without it at the slowest rate in history and rates are expected to remain on hold for an extended period of time. "What we have (a promise to keep rates here at least until unemployment falls to 7%, subject to inflation not being above 2½%) risks being undone by a combination of weak growth, falling unemployment and stubbornly high inflation. What then?" – said Kit Juckes, Global Head of FX Strategy, Societe Generale.
GBP/USD testing 1.5500 handle
GBP/USD has been offered through the 1.5500 handle in London markets. The 20 dma is 1.5288, 50 dma 1.5330, 200 dma 1.5536. RSI (9) reads 66.22. Supports are ascending from 1.5205, 1.5259, 1.5310, 1.5375, and 1.5490. Spot I currently testing the 1.5500 handle and resistances come in at 1.5534, 1.5565, 1.5603 and 1.5680.
There is also little data on the cards today which the market will pay much attention to in respect of cable other than the Initial Jobless Claims (July 27) that printed 333k vs 336k consensus and 328k previous. There was very little reaction. The market is still digesting the Inflation report and indeed it seems we will have to wait for the BoE minutes next for more clarification in respect to the guidance on interest rates. As a result of the report, markets now understand unemployment at 7% is the target and threshold where base rates might be considered again. Until then, QE could be extended should the economic conditions require it, but for the time being, the UK economy is set to improve without it at the slowest rate in history and rates are expected to remain on hold for an extended period of time. "What we have (a promise to keep rates here at least until unemployment falls to 7%, subject to inflation not being above 2½%) risks being undone by a combination of weak growth, falling unemployment and stubbornly high inflation. What then?" – said Kit Juckes, Global Head of FX Strategy, Societe Generale.
GBP/USD testing 1.5500 handle
GBP/USD has been offered through the 1.5500 handle in London markets. The 20 dma is 1.5288, 50 dma 1.5330, 200 dma 1.5536. RSI (9) reads 66.22. Supports are ascending from 1.5205, 1.5259, 1.5310, 1.5375, and 1.5490. Spot I currently testing the 1.5500 handle and resistances come in at 1.5534, 1.5565, 1.5603 and 1.5680.
Saturday, October 26, 2013
AMR Corp. Surges 10% on Pending Announcement
The skies appear a bit clearer for AMR Corp. (AAMRQ) today.
EPA The big news: a press release that went out about an announcement regarding AMR’s merger with U.S. Airways (LCC) that would come at 1pm. Shares of AMR spiked about 6.6% when the press release hit the newswires at about 11:40 a.m.
That release followed other big news for AMR. After yesterday’s close, the beleaguered airline said that it turned a $71 million profit in August and that it would hire some 1,500 pilots during the next five years, while the DoJ is seeking to delay the merger trial because of the government shutdown.
AMR has gained 9.7% to $4.51 at 12:24 p.m., while U.S. Airways has risen 3.4% to $19.60. The news also appears to be giving other airlines a boost. United Continental (UAL) has gained 3.1% to $31.66, while Delta Air Lines (DAL) has advanced 1.5% to $23.94.
Friday, October 25, 2013
Hedge Fund Manager Says It's Time to Make a Bet on Bitcoin
By Hal M. Bundrick
NEW YORK (MainStreet) It may be time to make a bet on bitcoin. At least one Wall Street hedge fund manager thinks so. Michael Novogratz, co-chief investment officer of the Fortress Investment Group, made the surprising call at a UBS investor forum in New York this week, according to the Financial Times. He is perhaps the highest-profile Wall Street investor to endorse the crypto currency as an investment.
Bitcoin is an open-source method of payment that uses peer-to-peer technology to complete transactions. It has been called "cash for the Internet."
When asked to offer his best investment idea for the coming year, Novogratz said, "Put a little money in bitcoin. Come back in a few years, and it's going to be worth a lot." In fact, Bitcoin has doubled in value in just the last few weeks, following the raid by the U.S. Department of Justice on Silk Road earlier this month, and online black market that was a major global player in bitcoin merchant transactions. Novogratz said that he and a colleague took positions in bitcoins three months ago, but wouldn't say how much he has invested in the digital currency, though he did admit it was "Enough that I am smiling that it has doubled." Fortress has not made an investment in the currency for its portfolios, deciding it was too speculative. A division of the Chinese Internet service Baidu began accepting bitcoin payments October 14th, which spurred increased trading in the currency. A Chinese bitcoin exchange, BTC China, is now the third largest trading platform, based on 30-day volume, according to Bitcoinity.org. Online exchange Mt.Gox reports bitcoin has been trading at highs well over $200 this week. It is the second time this year that the currency has traded at such a level. Jason Williams, founder of BitPOS, a bitcoin exchange, told ZDNet this week that as the bitcoin price soars, investors are beginning to be concerned with a possible market bubble. --Written by Hal M. Bundrick for MainStreet
Thursday, October 24, 2013
401(k) Savers Go Deeper in Debt
By Hal M. Bundrick
NEW YORK (MainStreet) � One step forward, two steps back. While Americans are saving more for retirement, many are also going even deeper into debt. The treadmill is starting to run in reverse. Over 60% of workers participating in an employer sponsored retirement plan accumulated more debt than they contributed to their retirement savings between 2010 and 2011, according to research conducted by HelloWallet.com.
The study looked at data from the Federal Reserve and the U.S. Census Bureau and found that one in five participants in 401(k) retirement plans particularly added more credit card debt to their family balance sheet than they contributed to retirement savings.
"Through retirement plans and social security taxes, the average 401(k) participant now contributes over 11% of their paycheck to retirement savings every month, yet the typical worker near retirement has only about 2 years of replacement income saved," says HelloWallet founder and CEO Matt Fellowes. "The growth in household debt is one big reason why retirement readiness is so stubbornly low." The research also revealed that monthly debt payments for households nearing retirement increased by 69% between 1992 and 2010, and now totals $0.22 for every $1.00 earned by 401(k) plan participants close to retiring. Retirement plan participants who accumulate debt faster than retirement savings, called "debt savers" in the study, have 50% less of their annual income saved for retirement compared to participants who contribute more to their retirement funds than they accumulate in debt. That translates into two years of replacement income saved, compared to four years for non-debt savers. Participants who are mounting debt faster than retirement savings are typically over 40 years old, college educated, earn more than $50,000, and don't have adequate emergency savings. Nearly half (47%) are in the highest income quartile. About 44% of "debt savers" earn more than $91,000. And the tendency to acquire more debt than retirement savings does not seem to correlate with poor economic conditions, according to the research. "While there is no question about the fundamental value and importance of the 401(k), our research finds that it is just one piece of the puzzle," said Fellowes. "Until we work on improving all components of retirement readiness, it will be very hard for employers to fundamentally move the needle." --Written by Hal M. Bundrick for MainStreet
Wednesday, October 23, 2013
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Tuesday, October 22, 2013
Jim Cramer's 'Mad Money' Recap: Happy Bull Day
Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.
NEW YORK (TheStreet) -- When Washington is away, the bulls do indeed play, Jim Cramer said on "Mad Money" Tuesday after another up day on Wall Street.
Cramer said with interest rates once again determining stock prices -- this time for the better -- there are a whole host of stocks moving to the upside.
Many consumer staple stocks received downgrades in recent days, but Cramer said he's still a fan of high-yielding dividend names including Kellogg (K) and Kimberly-Clark (KMB). He also noted that Johnson & Johnson (JNJ), a stock he owns for his charitable trust, Action Alerts PLUS is also doing a fabulous job. Meanwhile, many shorts took down housing-related stocks after Stanley Black & Decker's (SWK) miserable results. However, Cramer noted stocks including Whirlpool (WHR), up 11.6% today, and Fortune Brands Home & Security (FBHS) and Toll Brothers (TOL) all rose. Lower interest rates and lower gas prices are also a win for travel and leisure stocks including Walt Disney (DIS) as well as restaurants such as Starbucks (SBUX) and retailers including Wal-Mart (WMT) and Action Alerts PLUS name TJX Stores (TJX), Cramer added. Other notable wins from today included Honeywell (HON), with a 10% dividend boost, along with Freeport McMoRan (FCX). Cramer also said that Alcoa (AA), up 8.8% today, is a buy, buy, buy. Among the few losers for the day were momentum names Netflix (NFLX) and Tesla Motors (TSLA), and Pioneer Natural Resources (PXD), all stocks that are taking a well-deserved breather. Off the Charts In the "Off The Charts" segment, Cramer went head to head with colleague Mark Sebastian over the overall direction of the markets and what, if anything, can be gleaned from watching the CBOE Volatility Index (VIX), commonly known by its symbol, the VIX. Looking at a daily chart of the S&P 500 as compared to the VIX, Sebastian's analysis noted the normal pattern, where the S&P rises and the VIX falls, and the reverse where the index falls and the VIX rises. Times when both rose in tandem, such as May into June and again in August, were a precursor to a sharp move to the downside.
That's why Sebastian was cautious about the market's recent action, with the VIX rallying alongside the S&P on Oct. 18, which is especially rare going into a weekend. Since then, both the S&P and the VIX have been soaring, causing Sebastian to predict a short-term top in the markets.
Cramer said he's not as pessimistic as Sebastian but he still advises taking some profits and using a little caution after the market's big run. From Worst to First
When a industry-leading company stumbles, don't be so quick to abandon ship, Cramer cautioned viewers. As some investors learned the hard way, it's possible to transform from a despised loser to a beloved winner in as little as a year.
That was certainly the case with Google (GOOG), whose shares jumped 13.8% in a single day, topping $1,000 a share. But few remember that just a year ago many analysts downgraded Google after a disappointing third quarter citing falling desktop ad revenue that would never be replaced in time by rising revenue from mobile advertising. Fortunately, Google's management was smart enough to also realize that it needed to pivot quickly from desktop to mobile; over the past 12 months it was able to do just that. Google answered all of the analysts' worries as it is selling more ads than ever across multiple screens, noted Cramer. Yet, even with the recent surge in its shares, Cramer said Google trades at just a scant 19 times earnings, equivalent to cereal-makers General Mills (GIS) and Kellogg. Backing out Google's current cash hoard and that multiple drops even further to just 16.4 times earnings -- and that's assuming earnings don't increase from current levels. That's why Cramer told viewers they shouldn't be so quick to abandon industry leaders like Google, or Apple (AAPL), an Action Alerts PLUS holding. If the analysts see major problems with a company's business model, then there's a good chance the company does as well. Lightning Round In the Lightning Round, Cramer was bullish on Walt Disney (DIS), Baxter International (BAX) and Laredo Petroleum (LPI). Cramer was bearish on Linn Energy (LINE) and Micron Technology (MU). Executive Decision: McAndrew Rudisill In the "Executive Decision" segment, Cramer sat down with McAndrew Rudisill, president and CEO of Emerald Oil (EOX), a small, speculative oil and gas driller with 65,000 acres in the Williston Basin region of the Bakken shale. Emerald currently has just two rigs in operation but plans to double its production over the next year. Rudisill said Emerald is having lots of luck drilling in the Williston Basin, which is why his company will be adding a third rig in April and a fourth before the end of 2014. He said new technology is allowing Emerald to increase the success of all of its wells. When asked about transportation, Rudisill said that currently Emerald trucks its oil out of the region, but noted that a pipeline will be installed by the first quarter of 2014, allowing over $1 per barrel in savings to the company. Turning to Emerald's finances, Rudisill noted the company now has $200 million in cash, with no debt thanks to a recent equity raise of $140 million. That's enough to more than fund Emerald's 2014 drilling plans, he said. Finally, when asked how big the Williston Basin actually is, Rudisill said estimates continue to grow and currently sit at 11.2 billion barrels or more. Cramer said that while many drillers have seen their shares already soar, the smaller Emerald may be the next way to play the American energy revolution. No Huddle Offense In his "No Huddle Offense" segment, Cramer said the only reason investors buy Netflix (NFLX) is because they hope someone else will buy it even higher. Cramer said even Netflix CEO Reed Hastings admitted his company's stock trades on "heart and culture" more than its fundamentals. For many investors, the decision to buy or sell Netflix is binary. If subscriber growth is up, they buy; if it's down, they sell. By traditional metrics, Netflix remains wildly expensive. But looking at the size of the opportunity Netflix could have in a few years, it's easy to see why some many investors still like the stock, Cramer concluded. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC
At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, HON, JNJ, LINE and TJX. Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC Universal or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money." None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser. Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.Monday, October 21, 2013
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Sunday, October 20, 2013
Kroger Beats on Earnings, Misses on Revenues
Cincinnati-based The Kroger Co. (NYSE: KR ) shares suffered mightily in the wake of Q1 earnings results, released Thursday.
Kroger shares slumped 6.1% in Thursday trading (rebounding slightly in the after-hours). This was despite the company announcing that it had increased sales 3.4% to $30 billion in Q1, and grown its profits 18% in comparison to last year's Q1 numbers, to $0.92 per share. That profits number topped analyst estimates by $0.04. However, investors didn't seem to like the company's admission that sales missed the analyst target of $30.2 billion.
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Going forward, the company promised to beat its own estimates once again -- for earnings, at least. New guidance for 2013 is $2.73 to $2.80 per share, up from the company's prior promise of $2.71 to $2.79. Even the new numbers, however, appear to only match what analysts were already expecting. Yahoo! Finance figures show the consensus among analysts following the stock is for Kroger to earn $2.77 per share this year -- right in the middle of the new targeted earnings range.
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Federal Debt Crisis? It's Over (And Overblown), So Stay With Stocks
First: Incomplete time period
While the 20-year span sounds long and meaningful, starting at 1993 leaves out the previous 30 years of significant changes in the U.S. Moreover, when examining the recent Great Recession and its repercussions, we must go back to the similarly problematic late-70s, early 80s to find relevant comparisons.
So, the first change is to reset the beginning date. I have chosen 1966 because 1965 was a key watershed year for a number of economic, financial and social changes. Major U.S. companies post-war superiority peaked, inflation and bond yields began their long ascents (the UST 10-year bond was 4-1/4%, a level not seen again until 2002), the Dow Jones Industrial Average hit ~1,000 (an all-time high not to be surpassed for 17 years), the sizeable Vietnam War expansion began and Medicare was born. Augmenting these items was growing social unrest, heightened by JFK's assassination (1963) and the Civil Rights Act's passage (1964).
So, let's see what happened from 1966 to today, using the WSJ's charting approach. (I have added my observations in the graphs, below.)
This graph's 55x growth is overstated because it includes inflation.
Second: Inflation-adjustment
We all know that today's dollar doesn't have the purchasing power of yesterday's – much less that of 1993 or 1966. Therefore, we need to adjust those nominal numbers for inflation to get comparable readings. Here's what happens when we do. (I used the Gross Domestic Product Implicit Price Deflator because the Federal Debt is often compared to GDP – as we will do later.)
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The inflation-adjusted numbers show the "real" 10x growth in Federal Debt. However, the graph is still misleading because of dollar scaling. This makes the 100% move from $0.3T to $0.6T look puny compared to the same percentage move from $1.5T to $3.0T.
Third: Logarithmic (log) scale adjustment
To allow for visual examination of percentage growth, analysts use log scaling. Any series being analyzed for growth (think Google's stock price) requires such an adjustment.
Now we get our first "Ah-ha!" moment, seeing that the past few year's Federal Debt growth is not historically large. This adjusted series raises another issue, though: How about the growth "rate" – i.e., the speed of change. In the graph, this rate is shown by the slope of the line. However, as can be seen, the line is rarely straight, meaning the growth rate is changing. So, we need to do something else to our graph.
Wednesday, October 16, 2013
7 Chinese ADRs That Are on Fire Right Now
CHARLOTTE, N.C. (Stockpickr) -- Chinese American depositary receipts were up big yesterday -- China New Borun (BORN) ran up 127%, for example -- while the market was down 1%. This tells me that the Chinese ADRs are on fire!
Here is a short list of stocks to watch for some very quick daytrades or swingtrades to the upside. Remember, the first leg of the move had BORN up 127%. The second leg could bring another big move, up to 80% for BORN -- and that could happen today!
China Finance Online (JRJC) gained 10% yesterday. Look for 5% to 10% more upside.
Mecox Lane Limited (MCOX) gained more than 13% yesterday. Look for 20% more upside.
Daqo New Energy (DQ) gained more than 13% yesterday. Look for 4% more upside.
VisionChina Media (VISN) gained almost 50% yesterday. Look for 20% more upside.
China Techfaith Wireless Communication Technology (CNTF) gained 16.5% yesterday. Look for 5% more upside.
Tri-Tech Holding (TRIT) gained 36% yesterday. Look for 10% more upside.
These are the best of the best Chinese ADR names I could find that weren't too thinly traded.
At the time of publication, author was not long any stocks mentioned.
Trader Ben Brinneman, featured on MarketWatch, Bloomberg and Reuters, resides in Charlotte, N.C., and is the owner of C Squared Trading. Brinneman started his career trading bonds for U.S. Bancorp and was an analyst for a wealth management firm. Brinneman and his team at C Squared Trading have taught hundreds in a one-on-one mentorship setting via Skype or live in Charlotte.
You can follow some of their free trades and tips on Twitter at @csquaredtrading.
Budget Battles Boost Generics
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We’re now into day 15 of the US government shutdown, as House Republicans stubbornly try to defund Obamacare. No matter what sort of deal is eventually struck, health care costs aren’t likely to come down any time soon. And that’s good news for generic drug makers.Dr. Reddy’s Laboratories (NYSE: RDY) is one of the biggest players in generic drugs, offering more than 200 off-brand medications in the areas of cardiovascular disease, pain management and oncology, among others. In fact, this India-based company has become one of the largest makers of generics in the world, helping to drive more than 20 percent annual compounded earnings growth at the company over the past decade.
Drug spending is a major cost center for the government, with more than $325 billion worth of pharmaceuticals purchased last year. Less expensive but just as effective generic medications accounted for nearly 84 percent of those prescriptions, as physicians try to treat lifestyle-related diseases without breaking the bank.
In the emerging markets, health care spending is experiencing a similar explosion, as incomes have grown and standards of living improve. It is estimated that there are now at least 350 million people suffering from diabetes around the world, as obesity becomes a growing concern in virtually every region.
According to data from the International Diabetes Foundation, India and China are running neck and neck for the most sufferers of diabetes. They’re followed by the US, which falls into third place with an estimated 30 million diabetes patients alone, to say nothing of other lifestyle related illnesses such as heart disease.
As life expectancies continue to lengthen both in the US and abroad, other age-related ailments such as dementi! a will also become a growing concern.
That’s why pharmaceuticals account for the lion’s share of growing health care spending, with drug sales expected to reach USD550 billion annually by 2020. The only way both national governments and patients can cope with those rising costs is to continue relying on less expensive but just as effective generic drugs.
Generic drugs are typically equivalent to a branded original in terms of efficacy, but often cost less than a third than the original. As a result, emerging market consumers who typically pay for medications out of their own pockets are increasingly opting for generic drugs while in the US, insurance companies are steering consumers in that direction.
While Dr. Reddy’s products are becoming increasingly popular in the US, where it offers generic versions of drugs such as Plavix and Lipitor, the bulk of its sales are in emerging markets.
The company benefits from the fact that, thanks to its home location of India, it can manufacture its products at an extremely low cost. Its gross margin typically runs in excess of 50 percent, as drug utilization rates continue to increase even as overall spending may be in decline.
The company also invests heavily in research and development, spending between 6 percent and 7 percent of its annual revenues on developing generic versions of popular drugs while also coming up with novel products of its own. It is increasingly working in areas where there is little existing competition to introduce new drugs, an advantage that will drive the company’s long-term profitability.
The company is now pushing its geographic reach, working to grow its presence in fast growing markets such as China by expanding its sales force and working with local regulators to help smooth the approval process.
With the recent budget battle in the US reflecting growing concerns over rising health care costs, companies such as Dr. Reddy’s will continue to grow earnings ! at an abo! ve-average pace. That’s a major reason why Dr. Reddy’s, which has more than doubled its earnings over the past three years, has outperformed major indexes over the past the year, even as consumer staple and health care stocks have increasingly become laggards in the market.
Monday, October 14, 2013
Should JPMorgan Chase Be in Your Portfolio?
With shares of JPMorgan Chase (NYSE:JPM) trading around $52, is JPM an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s MovementJPMorgan Chase is a financial holding company that provides various financial services worldwide. The company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, asset management, and private equity. Financial services companies like JPMorgan Chase are essential for well-functioning economies around the world.
JPMorgan Chase today reported its first net loss, under the current CEO, of $0.4 billion for the third quarter of 2013, compared with net income of $5.7 billion in the third quarter of 2012. Jamie Dimon, Chairman and Chief Executive Officer, commented on the Company's results.
“While we had strong underlying performance across the businesses, unfortunately, the quarter was marred by large legal expense. We continuously evaluate our legal reserves, but in this highly charged and unpredictable environment, with escalating demands and penalties from multiple government agencies, we thought it was prudent to significantly strengthen them. While we expect our litigation costs should abate and normalize over time, they may continue to be volatile over the next several quarters.”
T = Technicals on the Stock Chart Are MixedJPMorgan Chase stock has made positive progress in recent quarters. The stock has been trading sideways as it attempts to digests the flurry of news the company has received. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, JPMorgan Chase is trading between its key averages which signal neutral price action in the near-term.
(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of JPMorgan Chase options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| JPMorgan Chase Options | 24.40% | 6% | 4% |
What does this mean? This means that investors or traders are buying a small amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| October Options | Steep | Average |
| November Options | Steep | Average |
As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a small amount of call and put option contracts and are leaning neutral to bearish over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Mixed Quarter-Over-QuarterRising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on JPMorgan Chase’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for JPMorgan Chase look like and more importantly, how did the markets like these numbers?
| 2013 Q3 | 2013 Q2 | 2013 Q1 | 2012 Q4 | |
| Earnings Growth (Y-O-Y) | -112.14% | 32.23% | Top 10 Growth Companies To Watch For 201433.61% | 54.89% |
| Revenue Growth (Y-O-Y) | -7.67% | 13.67% | -3.57% | 10.16% |
| Earnings Reaction | -0.38%* | -0.30% | -0.60% | 1.01% |
JPMorgan Chase has seen mixed earnings and revenue figures over the last four quarters. From these numbers, the markets have not been happy about JPMorgan Chase’s recent earnings announcements.
* As of this writing
P = Weak Relative Performance Versus Peers and SectorHow has JPMorgan Chase stock done relative to its peers, Bank of America (NYSE:BAC), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), and sector?
| JPMorgan Chase | Bank of America | Citigroup | Wells Fargo | Sector | |
| Year-to-Date Return | 19.29% | 22.18% | 24.32% | 20.04% | 20.07% |
JPMorgan Chase has been a poor relative performer, year-to-date.
ConclusionJPMorgan Chase is a bellwether in the banking space that forms an essential part of the United States financial system. A recent earnings release saw the company post its first loss under current CEO, Jamie Dimon. The stock has made positive progress in recent months but is currently trading sideways. Over the last four quarters, earnings and revenues have been mixed which has not made investors happy. Relative to its peers and sector, JPMorgan Chase has been a weak year-to-date performer. WAIT AND SEE what JPMorgan Chase does this quarter.
Dow Recovers From Early Fall
After opening lower and then immediately dropping further, the Dow Jones Industrial Average (DJINDICES: ^DJI ) has climbed its way back up to breakeven. The index is hovering just above yesterday's new all-time-high closing. With some good news from the housing market, the Dow may have the support it needs to close at another high today.
Housing rebound continues
The weekly report for new mortgage and refinancing applications showed strong growth, with the index improving by 7% versus the prior week. Thought the improvement was driven mostly by refinancing activity, the index still shows an increase in demand for new mortgages, largely due to continued low interest rates.
This news has helped the financials within the Dow this morning, as both Bank of America (NYSE: BAC ) and JPMorgan (NYSE: JPM ) are on the rise. Bank of America, up 1.4% as of 11:30 a.m. EDT, has been looking to expand its presence in the mortgage market, with its first-quarter results showing some progress. The bank has been plagued with legal battles over its acquired Countrywide division, a stand-alone mortgage originator that fell into duress during the financial crisis. JPMorgan, on the other hand, has been in the No. 2 spot for mortgage origination since last year. During its first-quarter earnings call, CEO Jamie Dimon said that he expected to see some slowdown on the mortgage front, as the bank had seen a drop in mortgage revenue during the first three months of 2013.
JPMorgan has been dealing with some other issues lately, but some announcements today may have investors breathing a sigh of relief. After another top executive left the bank, many on Wall Street wondered how the bank would handle its succession plans. This morning, JPM announced that Erik Bisso would be the chief investment officer for North American operations, in what was called a demonstration of ongoing commitment to developing senior talent. While Bisso wouldn't be front-runner in the line of succession, it does give investors some sense that the bank has enough good talent to fill any vacancies easily.
A surprising loser
After announcing second-quarter earnings yesterday, Walt Disney (NYSE: DIS ) is down 1.63%, the biggest of the Dow's nine losers as of 11:30 a.m. EDT. What makes this surprising is that Disney had reported impressive increases in overall revenue, earnings, and EPS. With higher revenue from its theme parks, media companies, and movies, Disney had a 10% increase in revenue for its second quarter. And all of the company's operating units reported profit growth except the interactive segment, which has been struggling. The company has already announced cuts in the gaming unit, as well as a new collaboration with Electronic Arts to develop new Star Wars games. Though Disney's ABC network has had some declines due to higher prime-time programming costs and drops in advertising revenue, its ESPN networks have more than made up for it.
It's easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its monster collection of media networks, much of Disney's allure for investors lies in its diversity, and The Motley Fool's premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch as well as the opportunities and threats the company faces going forward. So don't miss out -- simply click here now to claim your copy today.
Sunday, October 13, 2013
Yahoo Shareholders’ Fortunes Hinge on Alibaba IPO
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For Yahoo's shareholders, the key for the remainder of 2013 can be summed up in one word: Alibaba.The Chinese e-commerce and auction house, in which Yahoo (Nasdaq:YHOO) owns about a 24% stake, is planning to hold a much-discussed initial public offering. That much is clear.
There is another word in the equation: uncertainty. In fact, there is lots of uncertainty hanging over Alibaba's prospects. This is what makes the story so compelling for journalists and maddening for Yahoo stockholders.
The question, which bedevils and tantalizes Yahoo holders, is: When, exactly, will it take place?
The timing of the IPO is now all-important. This was hammered home on July 17 when Yahoo's stock jumped 9% as it distributed financial information on its Alibaba investment. Year-to-date, Yahoo shares have added about 70%, with Alibaba playing a big factor in the rise.
If the timing isn't maddening enough to contemplate, there is more. Geography has been a puzzle, too. Reuters reported on Oct. 10 that Alibaba CEO Jonathan Lu said that Alibaba won't list its stock in Hong Kong but hasn't yet decided on any other exchange.
Founded in 1999 by billionaire Jack Ma, Alibaba had intended to list on the Hong Kong exchange in an IPO that could raise an estimated $15 billion.
Then there is also the subtle but potentially crucial point of how market psychology could play a role. Should we call this "The Facebook Effect?"
Leading up to Facebook's (Nasdaq:FB) May 18, 2012 IPO, Wall Street and the media all but waved pompoms at the site of CEO Mark Zuckerberg's trademark hoodie. Euphoria was in the air because Facebook, in its brief history, had already achieved an important place in the global popular culture. Everyone loved using Facebook, right? Naturally, the stock market would also drink the Facebook Kool-Aid, right?
But the Fa! cebook IPO was plagued on day one by trading glitches at the Nasdaq. Then the shares experienced a prolonged plunge, before staging a comeback. In the aftermath, it's fair to conclude, the investment community has chosen to be wary and cautious when it comes to making forecasts about IPOs.
"Sure, it's possible that there has been some residual taint from Facebook," that could affect an IPO of Alibaba, said Michael Holland, who heads the New York money management firm Holland & Co. "This can happen in the market when there is such a negative development that sticks in people's minds."
Of course, the revival of Facebook's stock has helped investors forget about the stock's early travails.
Since early last month, Yahoo's stock has registered a roughly 20% jump, versus marginal gains by the Standard & Poor's 500 Index. Brian Wieser, an analyst with Pivotal Research Group, noted in a recent investor report on Yahoo, that $6 of the $7 in gains during that period have stemmed from the possibility that Alibaba will go public and Yahoo will reap gains from the event (with the remaining $1 coming from progress in Yahoo's Japan operations).
There has been such a climate of confusion surrounding the Alibaba IPO - when will it happen, and where will it take place? The actual IPO event will finally remove the uncertainty that has clouded Yahoo's picture. The outcome of the IPO will make it easier for any Wall Street analyst to deliver a clearer evaluation of Yahoo. Pivotal analyst Wieser wrote that "there is a lot of 'fuzz' in any Alibaba valuation, given the limited information available on the company at this time, the remainder of gains seems potentially aggressive."
Wieser pointed out that he has upped his year-end 2014 Yahoo price target to $30 from $27 because he feels optimistic that an Alibaba IPO, whenever it takes place, will improve Yahoo's prospects.
The other big Yahoo news is the prospect that it will be buying back a chunk of its shares. As of the third quarter, Yahoo had 1.095 billion shares outstanding and about $6 billion in cash and investments, notes S&P's Kessler.
Since Marissa Mayer's arrival last year as CEO, Yahoo has been on an acquisition binge. The deals have ranged in size and scope from $30 million for Summly – a mobile-app operation founded by British teenager Nick D'Aloisio -- to $1.1 billion for the blogging site Tumblr.
The plot thickened when hedge fund Third Point agreed in July to sell two-thirds of its Yahoo holding back, equaling 40 million shares, to the company for $29.10 a share.
Wieser noted in his report that Yahoo Chief Financial Officer Ken Goldstein had "implied" at an investor conference not ! long ago that the company would most likely be using its cash on hand on buying back some shares of its stock. Yahoo's media relations department hadn't responded to a call for elaboration at press time.
The Bottom Line
So, where does all of this speculation and intrigue leave Yahoo's shareholders? They certainly can't complain about the returns they've been getting. It always feels sweet to trounce the S&P 500. And considering Yahoo's recent history of chaos and confusion in the executive suite, they can also feel vindicated that the stock market is recognizing the potential of Yahoo.
But is that sufficient to impress Wall Street? It would seem that the prospect of Alibaba going public – whenever that happens – and the likelihood of buying back Yahoo stock might not be enough to count on.
Until Yahoo delivers a coherent operating growth strategy, shareholders must remain content to watch and wait.
Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.
Friday, October 11, 2013
Apple Continues To Win Smartphone Maker Race
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For all of its trouble, based on worries that Apple (NASDAQ: AAPL) has lost its magic and can no longer build iPhones which will create huge sales, there is a strong case that it has lost very little ground in the smartphone business, at least in the U.S.
New data from Comscore shows that:
145 million people in the U.S. owned smartphones (60.8 percent mobile market penetration) during the three months ending in August, up 3 percent since May. Apple ranked as the top OEM with 40.7 percent of U.S. smartphone subscribers (up 1.5 percentage points from May). Samsung ranked second with 24.3 percent market share (up 1.3 percentage points), followed by HTC with 7.4 percent, Motorola with 6.9 percent and LG with 6.7 percent.
There is, of course, an army of Google (NASDAQ: GOOG) Android smartphones which want to knock Apple from its perch, but, for the time being, if the new iPhone 5S and iPhone 5C do well, it may be able to hold its own. The early evidence of whether this will work is mixed. Sales have begun well, but discounting has begun to spread, and in some cases is steep.
The OS battle in another thing altogether. Given that it only makes iPhones, Apple’s market share is impressive. However, the multiplying impact of Google sales has begun to overwhelm the old “House of Jobs”
Android ranked as the top smartphone platform in August with 51.6 percent market share, followed by Apple with 40.7 percent (up 1.5 percentage points), BlackBerry with 4 percent, Microsoft with 3.2 percent (up 0.2 percentage points) and Symbian with 0.3 percent.
To Apple’s credit, it is still a race. Android has done well, but not well enough. Apple may actually have fewer problems and more advantages than the market wants to admit
| Top Smartphone OEMs 3 Month Avg. Ending Aug. 2013 vs. 3 Month Avg. Ending May 2013 Total U.S. Smartphone Subscribers Age 13+ Source: comScore MobiLens | |||
| Share (%) of Smartphone Subscribers | |||
| May-13 | Aug-13 | Point Change | |
| Total Mobile Subscribers | 100.0% | 100.0% | N/A |
| Apple | 39.2% | 40.7% | 1.5 |
| Samsung | 23.0% | 24.3% | 1.3 |
| HTC | 8.7% | 7.4% | -1.3 |
| Motorola | 7.8% | 6.9% | -0.9 |
| LG | 6.7% | 6.7% | 0.0 |
Tuesday, October 8, 2013
Tech stocks: Nuance surges on Icahn deal
Carl Icahn strikes again.
The billionaire investor revealed through Twitter he reached a deal with tech company Nuance Communications to place two representatives from his company on their board of directors.
Nuance shares have jumped more than 2% in pre-market trading minutes after the announcement.
This isn't the first time Icahn has fueled a small stock surge through his Twitter account. In August, Icahn revealed his stake in Apple, which generated a 4% spike in the company's shares.
Nuance is best known for its speech-based software such as Dragon, and has been credited for the creation of personal assistant Siri. Icahn is confident the board change will greatly boost Nuance's value on Wall Street.
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Icahn had been battling plans by personal computer maker Dell to accept a buyout offer from founder Michael Dell that will take the company private. Last week, Icahn said he would abandon his effort to have Dell shares appraised.
"Based on our returns on capital, we believe we have better uses for $2 billion," said Icahn on Twitter.
Follow Brett Molina on Twitter: @bam923.
Sunday, October 6, 2013
3 Big Dividend Payers With Rising Share Prices
NEW YORK (TheStreet) -- Finding top dividend stocks trending higher in price is the standard you should set for investing. This is especially true when the Federal Reserve is buying $85 billion in paper a month and effectively removing savings accounts from viable investing options.
While you may think it's not easy to find high-yielding stocks also soaring in price, I have a list of three for you.
I have a few rules that any given company's stock must pass before I allow it on the list. To make the cut of separating the zeros from the heroes, they must meet, at a minimum, the following criteria: A stock must be highly liquid and trade with a small bid-ask spread to avoid slippage. The company must have a history of dividend payments and increases in payments. The company needs to demonstrate the ability to continue paying the current dividend or more. The stock chart must be in a bullish uptrend; there is no point in looking for an oversized yield if the shares are expected to drop as much or more in the next year.
How can you take advantage of the following list of dividend stocks? Make sure the industry and the company matches your investment objectives. Use your current professional knowledge as applicable to garner a market edge when entering or exiting a position. Remember, your greatest edge is your ability to limit investments to industries you already understand. 
Ford (F)
Price To Book: 3.5
Earnings Payout Percentage: 20% Background: Ford Motor produces cars and trucks. The company and its subsidiaries also engage in other businesses including Ford Motor Credit Company. Ford trades an average of 37 million shares per day with a market cap of $68 billion. Here's a fact you may not know, based on market cap: Ford is bigger, or at least more valuable than General Motors (GM). GM has a valuation of $51 billion. I've always viewed GM as the larger company, and I'm correct based on revenue. GM outsells Ford by about $10 billion a year, but even that difference is narrowing. What's even more startling is Tesla Motors (TSLA) with a valuation of $22 billion. To put the numbers in perspective, currently Ford sells more Focuses in about a week than total Tesla sales for a year. Adding insult to injury, unlike Telsa, Ford is profitable. Either Ford is heavily undervalued or Tesla is overvalued. I'm thinking both. The bigger concern for now is Toyota Motors (TM) as they go toe-to-toe fighting for bragging rights for the number one-selling car in the world. The previously mentioned Ford Focus was named the number one-selling car in 2012, but Toyota disputes the methodology in the count. There's no debate the stock is rewarding investors. About a year ago I wrote several articles describing Ford as a bargain in the $10 area. So far so good, but Ford has massive upside, in my opinion. It may not feel comfortable buying a stock near its 52-week high but revenue and earnings growth justify a price far north of $20 a share. The best part is that while waiting for $20 or more investors receive 40 cents a year in dividends for a yield of 2.3%. Admittedly, 2.3% is on the low side to make the list, but Ford is such a compelling stock right now that it makes the cut. 
Corning (GLW)
Price To Book: 1
Earnings Payout Percentage: 27% Background: Corning manufactures optical fiber, cable and photonic products for the telecommunications industry and high-performance displays and components for television and other communications-related industries. Corning trades an average of 10 million shares per day with a market cap of $21 billion. Corning is the clear leader in its space, with the next largest competitor having revenue less than 30% of Corning's. Corning is essentially a stock you can buy, throw in the back of the drawer and forget about it, only to get reminded you own it four times a year when the dividend check arrives. The dividend is an attractive 2.7%. Unless you think display screens are going the way of the horseless carriage, Corning should have a strong future -- a future that likely belongs in your portfolio. The stock appreciated 12% in the last year, and the average analyst target price is $16.44. Also, based on the float the short interest is unimportant and not a worry. The small amount of short interest is 2.2%. 
Saturday, October 5, 2013
Top 10 Wall Street Crooks: Insider Trading
Insider trading cases have grabbed the headlines over the last few years, shaking hedge funds, the financial world and even celebrities.
In fact, in the last five years, there have been more than 70 convictions for insider trading in the U.S. The list of individuals and companies caught up in the crackdown by the SEC and the Justice Department seems almost endless, from SAC Capital to Raj Rajaratnam.
Is it any wonder that 70% of Americans think those who work on Wall Street would break the law just to earn a lot money, Knut Rostad writes in his blog on ThinkAdvisor: 5 Years On, Americans See Wall St. as “Foreign ... a Culture Apart”.
Of course, the urge to use a little secret info to make a mint is nothing new. When ThinkAdvisor went to compile a who’s who of insider trading miscreants, it wasn’t hard to find cases from the 1990s, the 1980s and one we couldn’t resist from way back in the Roaring ’20s, though he wasn’t convicted.
Check out our Top 11 Wall St. Crooks: Insider Trading. We’ve counted them down from the lowest to highest amount stolen in terms of 2013 dollars.
(Honorable Mention, since everything he did was legal, but he had a law named after him--in a bad way)
Albert H. Wiggin: $4 million ($54.7 million today) in 1929
Kind of like the modern godfather/figurehead of insider trading, Wiggin is the one man on our list who got away with his “crime.” Still, his misdeeds created such public outrage that the practice of shorting your own company’s stock provoked the passage of a namesake law outlawing it, thw Wiggins Act. Wiggin, the head of Chase National Bank, shorted 40,000 shares in the company, giving him every reason to see the bank fail. October 1929 might have been a black month for most investors, but Wiggin made out like, well, a bandit. Looking for a place to vent its anger, the public settled on Wiggin. Although, at the time what he did wasn’t illegal, public pressure forced Wiggin to forgo his $100,000 ($1.3 million today) annual pension. And his name does live on in the law books.
10. Marilyn Star, $88,135 ($128,000 today) in 1997-98
She might be at No. 10 on our list, but Marilyn Star is our favorite insider trader. After all, she is the only porn star we’ve come across who was convicted of illicit stock trading. Star, who was born Kathryn Gannon, first came to public notice in a series of X-rated films in the early ’90s. That work led to high-end strip club appearances. After a divorce she started “dating” James McDermott, a banking exec with Keefe, Bruyette & Woods. A little pillow talk later and Star had some insider information about bank mergers with which to purchase stocks. In 2002, she pleaded guilty to insider trading charges and served three months in prison. She has been quoted as saying she was a naive young woman who listened to an older man. McDermott pleaded guilty to stock fraud, served five months in jail and agreed to pay $230,000 to victims of the scheme.
9. Martha Stewart: $280,000 ($360,000 today) in 2004
No list of insider trading cases would be complete without the queen of baking, home decorating and crafts products. Stewart created a cottage industry around her television show and magazine that seemed unstoppable. Unstoppable until she was charged with insider trading in 2004. The amount involved might be chump change – $280,000 worth of ImClone stock – but the media attention on the case was around the clock. Stewart spent five months in prison and agreed to a ban on serving on the boards of public companies in 2006 and paid $195,000 ($226,000 today) in fines and penalties. The ban ended in 2011 and she returned to the head of her namesake company. After her stint in the big house, Stewart maintained her sense of humor, exchanging barbs with David Letterman about her time away.
8. Donald Johnson: $755,000 ($846,000 today) in 2007
Being an executive of a stock exchange ought to fund a very nice lifestyle, but that apparently wasn’t enough for the Nasdaq’s chief, Donald Johnson. Johnson was convicted in 2011 of using insider information to trade shares of United Therapeutics, Honda and other companies from 2006 to 2009. Johnson’s job on the market intelligence desk made him privy to all kinds of secrets that could move markets. He used the info to hi advantage and, ultimately, to his detriment. He pleaded guilty to one count of insider trading and was sentenced to three and a half years in prison and ordered to make restitution. The Wall Street Journal reported that after his arrest Johnson said he was gratified by support he received from colleagues and would not ask them to write letters to the court on his behalf. What a guy.
7. Doug Whitman, $935,000 ($1 million today) from 2006-09
Whitman managed more than $100 million through his Whitman Capital hedge fund. Whatever his reasons, and in two days of sometimes emotional testimony he denied any wrongdoing, Whitman walked a path that led him to two years in prison. He was convicted in August 2012 of insider trading charges involving stocks of Google, Polycom and Marvell Technology Group. In January, he was sentenced two years in the big house and fined $250,000.
6. Raj Rajaratnam, $53.8 million ($56 million today) in 2011
Some have reported that the man who received the longest insider trading sentence in history is living like a king in prison. The truth seems more nuanced. Sure, the former head of Galleon Capital lives on the best floor in his prison, but according to CNBC, the entire prison is a hospital and Rajaratnam is quite ill with Type II diabetes that is under “poor control.” In any case, the convicted trader received 11 years in prison for securities fraud and five counts of conspiracy. He was also ordered to pay back the $53.8 million plus a $10 million fine. His convictions were upheld earlier this year. Rajaratnam is scheduled to be released when he is 65. Others from Galleon, once among the largest hedge funds in the world, have also been convicted. They include Zvi Goffer who received a 10-year sentence and Rajat Gupta, convicted of leaking info to Rajaratnam, who was sent up the river for two years.
5. & 4. Garrett Bauer and Matthew Kluger, $37 million (about $45 million today) from 1994-2011
It sounds like something only Hollywood could make up. Bauer, Kluger and a middleman, Kenneth Robinson, used burner phones to discuss insider tips gleaned by Kluger from law firms for which he worked. Over 17 years, authorities said the pair turned a tidy profit of $37 million (Bauer estimated the take at $23 million) by trading shares in Sun Microsystems, 3Com and others. For his part, Bauer hit the lecture after he was nabbed in 2011, urging students not to follow his crooked path. Alas, U.S. District Judge Katharine Hayden didn’t buy his contrition and sentenced Bauer to nine year in prison. Kluger got a dozen years. So much for the fancy Manhattan apartment and other luxuries purchased with the illicit profits.
3. Joe Nacchio: $52 million ($68.7 million today) in 2001
Qwest Communications grew by leaps and bounds after its 1996 founding. Through mergers and acquisitions it provided services to 14 states west of the Mississippi, including its home state of Colorado. Sure, there were bumps along the way. But why would anyone have been worried about a $250 million SEC fine because of accounting irregularities, including a deal with Enron that may haled that company hides its own fraud? Then, in 2007, CEO Nacchio was convicted of insider trading relating to the sale in 2001of company stock based on non-public knowledge. He served 70 months in a federal prison camp and in home detention before being released on Sept. 21, 2013, according to the Denver Post. The newspaper reported that Nacchio has not divulged his plans.
2. Jeff Skilling, $60 million ($79.2 million today) in 2001
Enron jumped on the energy trading market and was riding high. The ink that was spilled writing about the company would have to be measured by the barrel. The ink flowed faster as the truth about company’s finances became public. In 2004 Skilling was charged with 35 counts of insider trading, fraud and other crimes, including selling more than $60 million in company stock based on insider knowledge of the company’s faltering position, which resulted in a bankruptcy filing shortly afterward. In 2006, Skilling was found guilty on 19 counts and sentenced to 24 years and four months in prison. He was ordered to pay a $45 million fine. In June of this year, a judge cut his sentence to 14 years. He agreed to pay $41 million in restitution.
1. Ivan Boesky, $200 million ($1.6 billion today) in the early ’80s
The early 1980s were rife with cases. None was more spectacular than that of Boesky who used information from Wall Street insiders to time his trades and manipulate markets. Prosecutors said he received $3 billion in leverage from junk bond king Michael Milken. The scheme worked until the feds caught up with Boesky who gave up his pals, even recording conversations with Milken in 1986. Boesky’s profits came from trades from deals including Philip Morris’ acquisition of General Foods and Chevron’s purchase of Gulf. Boesky served 22 months in prison and paid a $100 million fine. Half went to his victims and the rest to the U.S. Treasury. As of last year, Boesky had a new wife and was living in San Diego.
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Friday, October 4, 2013
Running Windows XP? Time to Think of Alternatives
From The Kiplinger Letter, Sept. 13, 2013
If your computers use Microsoft's Windows XP operating system, take note:
As of April 8, 2014, Microsoft will no longer provide technical support for it, despite the popularity of the venerable software. So users will no longer receive fixes for glitches or updates to ward off the latest security threats, as they have for years. Most businesses will upgrade to Windows 7, one of three operating systems currently sold by Microsoft. But before upgrading, make sure your current computers are powerful enough to run the newer software. Many users will need new machines for Windows 7 or the more advanced Windows 8, meant for devices with touch screens.
Watch for more and more touch screens to pop up in business applications, as folks used to smart phones and tablets in their personal lives increasingly prefer to tap and swipe rather than click and type. Tablets and other touch screen devices let office workers instantly share files, work together online and do other group tasks in ways that PCs can't, making the offices more collaborative...and more productive.
Also sure to catch on: "Coauthoring software," which allows multiple workers to edit and/or write documents simultaneously. Versions from Google, Microsoft and others will track each worker's changes and keep everyone on the same page, even folks based in different physical locations. That promises to boost efficiency… no more e-mailing Word files back and forth or keeping track of the latest version.
Modest Growth for Southeastern States -- From The Kiplinger Letter, Sept. 13, 2013
Moderate economic improvement next year for most of the Southeast U.S.
North Carolina. Buoyed by gains in the leisure and hospitality sectors, as well as by business and professional services and software companies, growth will accelerate by half a percentage point or so, nearing the 4% mark. Look for hiring to pick up enough to lop half a percentage point off the state's high 8.9% jobless rate.
South Carolina. Similar improvement for N.C.'s sibling state in 2014… about 4% economic growth, spurred largely by continued expansion in construction, manufacturing and financial services. The Palmetto State's 8.1% unemployment rate isn't as high as N.C.'s, and at the end of next year, it will likely hover around 7.5%.
Georgia. More jobs in aircraft assembly, business and financial services, and production of construction equipment will lower the Peach State's 8.8% jobless rate to 8.3% or so by year-end 2014. Economic growth…rising from 3.3% in 2013 to 4%.
Florida. More improvement in the state's hospitality and tourism industries plus the convalescence of the Sunshine State's devastated housing market spell jobs. Unemployment will dip from 7.1% to about 6.7% by the end of 2014, as the pace of economic growth climbs from about 3.3% this year to the 3.7% neighborhood, next.
Alabama. Already enjoying the lowest jobless rate in the Southeastern states, Ala. can look forward to unemployment touching 6% by the time 2014 closes. The push will come mainly from the state's auto and auto parts manufacturers, makers of transportation equipment and technology businesses. Still, Ala.'s economy won't see much better than average growth…say 2.2% in 2013 and 3.2% in 2014.
Tennessee. A more moderate pickup in the pace of manufacturing growth for the Volunteer State this year and next. But help from mining, natural resources and professional and business services will bolster it, allowing about 3.7% growth in 2014, up from 2.5% this year. From 8.5% now, joblessness will slip below 8%.
New Technologies for Cars, Trucks Coming -- From The Kiplinger Letter, Sept. 13, 2013
A slew of automotive innovations are on the way: An electronic clutch from Germany's Bosch…the mechanical simplicity and lower fuel usage of a manual transmission combined with the easy-driving appeal of an automatic.
Solid tires, in the works at Bridgestone of Japan and other tire suppliers. Built as a single unit, the wheel and tire reduces weight, eliminates flats and saves gas.
And energy-generating shock absorbers, being developed by Levant Power of Mass. in partnership with German equipment maker ZF. Special fluid-filled valves greatly decrease vibration...helping trucks ride more smoothly and cars handle better... while using the suspension's motion to produce electricity. Look for it in a few years.
How India's Slowdown Affects the U.S., World -- From The Kiplinger Letter, Sept. 13, 2013
India's deepening economic crisis is troublesome, if only because the country is huge. The 10th-largest economy, it dominates the Asian subcontinent and ranks second only to China in importance to Asia as a whole. With growth now running at about half of the brisk 9% or so it averaged from 2003 through 2007…
The potential to dampen global growth and, with it, U.S. exports is very real, though key Indian policymakers are determined to push through the reforms needed.
The main impact for now is the hastening of capital flows into the U.S. Tarnished prospects for emerging market growth, combined with investor expectations that U.S. interest rates are headed higher, are spurring increased investment here.
The dollar's value will continue to strengthen, and not just against the rupee.
Shipping Crude by Rail Booming, But New Regs Loom -- From The Kiplinger Letter, Sept. 13, 2013
Booming oil output will be a boon to freight railroads for years to come. Refiners are finding rail shipping, once viewed as a temporary stopgap till sufficient pipelines were built to get crude to markets, as fast, flexible and affordable.
Look for more investment in rail infrastructure…new terminals at refineries on the East, West and Gulf coasts as well as inland, especially in N.D. and Texas.
Orders for tank cars will keep mounting, to handle the rising volumes of crude being pumped from southern Texas to western Canada. Railcar manufacturers figure to keep busy for years delivering enough tank cars to meet the flood of orders.
But surging use of rail to move crude will spur more regulatory scrutiny, especially in the wake of July's fatal tank car derailment and explosion in Canada. Multiple federal agencies are mulling the need to impose tougher rules on shippers.
Among likely new safety requirements to prevent spills: Better crew training, to ensure rail personnel can spot developing problems. Stepped-up federal inspections, focusing on rail control rooms. And stipulating that existing tank cars be hardened. The feds say 77,000 existing tank cars aren't strong enough to withstand a collision or derailment. The cost: Up to $1 billion if regulators adopt stringent standards.
Coatings Will Let Phones, Other Electronics Shed Water -- From The Kiplinger Letter, Sept. 6, 2013
Waterlogged electronics will soon be a thing of the past. Ultrathin coatings will render smart phones, radios and other sensitive gear all but waterproof in a few years, leading to a new generation of rugged but lightweight mobile devices. That'll be a boon for businesses that have workers who face harsh environments. Now they often must make do with a handful of custom-built, weatherized products.
Existing gear can be waterproofed, too. California-based Liquipel, for instance, will treat smart phones and tablets with its protective coating. The cost: $60 and up.
More Private Satellites to Improve Phone, Data Services -- From The Kiplinger Letter, Sept. 6, 2013
It'll soon be easier for private companies to launch commercial satellites, thanks to a series of rule changes by the Federal Communications Commission.
Agency streamlining of regulations should lead to more private satellites in the sky.The result: Better, less expensive cellular phone and Internet services in remote areas that don't have coverage now. And more investment in technology that can help terrestrial businesses. One example: Real-time images from above, which are valuable to real estate agents, insurance underwriters and researchers.
South Central State Economies to Ride Energy Boom -- From The Kiplinger Letter, Sept. 6, 2013
A mostly solid outlook for the economy of the South Central U.S. next year. Strength in the oil and gas industries will buoy growth in several states, while at least one state will continue to struggle, lagging behind the U.S. as a whole.
Mississippi. Gains in the state's durable goods manufacturing businesses and health care companies will help whittle unemployment to near 8% next year. But, little chance that the Magnolia State's economic growth will climb over 2.5%.
Louisiana. Rising profits and productivity in natural gas, petroleum refining and petrochemical industries will keep Louisiana growing faster than the average in 2014…about 4%, after a 3% gain in 2013. Unemployment next year…below 7%.
Arkansas. The Natural State might just as well be called the Norm State, economically speaking, with unemployment and growth paralleling the U.S. average. Joblessness, now at 7.4%, will tick toward 7%, while output gains climb from 2% this year to about 3% in 2014. Give the improving outlook for home construction much of the credit in both cases. Also helping Arkansas…chemicals manufacturing, production of lumber and wood products, and the leisure and hospitality industries.
Oklahoma. Also getting a boost from construction, leisure and hospitality, the Sooner State will benefit mostly from gains in the energy sector. Joblessness is likely to slip below the 5% mark next year, from 5.3% now, with economic growth notching up by a percentage point or so…from about 3.5% this year to 4.5% in 2014.
Texas. The Lone Star State's economy will remain the brightest in the region, with a booming housing market and a fast-growing energy sector. A respectable rate of economic growth this year…about 3.5%...will accelerate next year to a robust 5%. Now 6.5%, unemployment will end 2014 down an additional few tenths of a point.
Sequester Cuts Reach Down to the States -- From The Kiplinger Letter, Sept. 6, 2013
State governments will face another round of program cuts later this year, part of the pass-down pain from sequester cuts in the next federal budget. Uncle Sam's temporary spending plan will be finished by Oct. 1. State budgets have largely been in place since July 1, when a new sequester round wasn't certain and state officials could only guess at the program cuts they'd need to make later. Look for the sequester to cost states a total of nearly $4.4 billion in 2014. Rather than gut some programs, the pain will be spread wide. 75% of grant projects will be cut: public housing, some education initiatives, rural economic development, community development block grants and state help for businesses of all sizes. States receive about 30% of their funding from the U.S., 90% in the form of grants.
Work for the Government, Get Student Debt Relief -- From The Kiplinger Letter, Sept. 6, 2013
Government job recruiters are playing up a benefit of public sector work: Relief from the mountain of debt that follows some job seekers from college.
The private sector can't forgive government loans, giving state and federal agencies a chance to compete when trying to attract top candidates entering the workforce. The recruiting efforts will target teachers, nurses, emergency responders and others. In addition to attracting workers to positions that usually offer lower salaries than many comparable jobs in the private sector, the loan relief efforts will help to retain employees. Anyone who leaves a job before a minimum commitment is met… often a decade…will lose the benefit and will have to start making full loan payments.
Finding Value in Social-Media Advertising -- From The Kiplinger Letter, Aug. 30, 2013
Consider low-cost ads on Facebook and Twitter to tout goods or services. The most effective ads on the two social media sites appear in news feeds… updates from friends and family posted on users' Facebook or Twitter home pages.
A $5 ad on Facebook can put your firm in front of as many as 2,000 people. For $100...at least 28,000 viewers. Twitter ads will be billed only when users engage. The typical cost to the sender: $1.50 to $2.20 per tweet. Both Facebook and Twitter are also looking at targeting ads to users by ZIP code…a boon to small businesses.
Midsize Cities Tout Appeal to Tech Start-Ups -- From The Kiplinger Letter, Aug. 30, 2013
Move over, Silicon Valley. The boom in high-tech start-ups is spreading out. Several midsize cities around the country are luring new ventures in fields ranging from software and biotech to pharmaceutical research. Low living expenses, cheap office space and friendly climates are proving powerful magnets for new firms.
Among the new hot spots: Sioux Falls, S.D. Missoula, Mt. And Cheyenne, Wy. All offer ample space for manufacturing facilities and access to high-speed Internet, supercomputing facilities or data centers…key resources for aspiring tech ventures. Other locations to watch: Raleigh, N.C., Bend, Ore. and Provo, Utah. Big data centers that need lots of air-conditioning will be especially drawn to areas with cool climates.
Central States to Post Above-Average Growth -- From The Kiplinger Letter, Aug. 30, 2013
For much of the central U.S., better 2014 growth than the national average.
North Dakota. Once again, a front-runner, propelled by the state's shale gas and oil industries plus a strengthening agricultural sector. Economic growth next year is likely to top 7%, while unemployment slides below this year's already enviable 3%.
South Dakota. Far behind its northern cousin's, S.D.'s 2014 economic growth of 4% will top the national average, buoyed by the hospitality and leisure industry and financial services. Also…improved prices for the state's farmers and ranchers.
Nebraska. Strength in its service industries, particularly hospitality and health care, will keep the Cornhusker State at or above average 2014 growth… about 3.5%, following a 2.5% gain this year. Unemployment, now 4.2%, won't change.
Kansas. The state's below-average 5.9% unemployment rate will tick lower next year, as growth in economic activity tops the 4% mark, after a 3% gain in 2013. Higher cattle prices and rising farm productivity will help bring in more revenue.
Missouri. Manufacturing will give this state a lift in late 2013 and 2014, while job gains in hospitality and leisure, plus trade, transportation and utilities push joblessness below 7%. Economic growth near 3% in 2014, closer to 2% in 2013.
Iowa. Look for the economy in the Hawkeye State to pick up a bit more steam next year, 3.3% or so, with both manufacturing and service industries on the upswing. Agriculture, too. Unemployment, at 4.8% now, won't drop much more, though.
Minnesota. Improvement in educational and health services will help the state finally hit its stride this year, pushing unemployment to about 5% by year-end, 2014. Economic activity…gaining close to 4% next year. This year, less than 3% growth.
Rubio, Too, Will Back Off Immigration Reform -- From The Kiplinger Letter, Aug. 16, 2013
The next big sign that comprehensive immigration reform is dead this year? Sen. Marco Rubio (R-FL), a key proponent of change, will temper his push for a major overhaul in favor of taking smaller, less conspicuous steps toward reform. Rubio, who has designs on the presidency in 2016, is getting off the reform bandwagon after realizing he has little chance of winning over the far right if he stays the course.
Moreover, neither political party will budge from its entrenched position. The majority of House Republicans and many of their constituents remain opposed to a law that would pave the way for more foreigners to live and work in the U.S., because they see it as giving amnesty to more than 10 million undocumented workers. Senate Democrats and a handful of GOP allies are determined to have a new law include a pathway to citizenship for law-abiding people who are in the country illegally.
Rental Market Will Continue to Grow -- From The Kiplinger Letter, Aug. 16, 2013
Expect to see fewer vacancy signs on rental properties for a few years or so as the rental market heats up. About two-thirds of newly finished apartment units were rented in the first quarter of 2013, up from 50% four years ago and on a par with prerecession norms. 35% of U.S. residents live in rental units instead of buying.
Driving the increase in renters: A gradual hike in mortgage loan rates, which will make owning less affordable, especially after the Federal Reserve pulls back on quantitative easing. Higher interest will continue to cool off some potential buyers. For now, tenants will see their payments to landlords grow faster than their incomes.
Watch, too, for more investors to see rentable units as attractive investments. The buy-to-rent market will grow quickly, from $17 billion to over $50 billion over the next three to five years. Wall Street will join the action, packaging shares of rental units. Blackstone is an early player. Other big names will be sure to follow.
Court: Ohio Must Recognize a Same-Sex Marriage -- From The Kiplinger Tax Letter, Aug. 16, 2013
An Ohio death certificate must reflect the decedent's same-sex marriage, a federal court says. Two men living in Ohio had been together for over 20 years. When one of them was close to death, the couple flew to Md., where they married on the airport tarmac and then returned to Ohio. Same-sex marriage is legal in Md., but Ohio doesn't allow the unions, nor does it recognize such marriages as legal if performed in other states. The couple asked a court to require the Ohio registrar to list on the eventual death certificate of the terminally ill spouse that he was married. The court told the registrar to do so, noting that the state OK'd opposite-sex marriages from other states and must do so for same-sex ones.
Americans' Appetite for Burgers to Stay Strong -- From The Kiplinger Agriculture Letter, Aug. 9, 2013
Though per capita beef consumption in the U.S. will keep slipping overall… Americans aren't about to let go of hamburgers.
A survey found 95% of consumers report eating burgers at least once a month…51% at fast-food restaurants, up from 43% since '11. Leading the beef patties surge are premium choices…think Five Guys Burgers and Fries and the like…as consumers grow more picky. Over half of people surveyed want burgers from never-frozen beef, and 64% want multiple choices in toppings and such.
More Pain Ahead for European Economies -- From The Kiplinger Letter, Aug. 16, 2013
Europe's slight growth in the second quarter isn't much more than a glimmer of light in what's likely to be a long, dark tunnel of economic misery ahead… not the beginning of a sharp turnaround. The economies of most peripheral nations will continue to shrink, as France and Germany manage to eke out modest growth.
As a whole, the region will lose more ground this year. In 2014…a slim gain.
What's more, the euro zone's debt woes are worsening. Austerity measures intended to rein in government debt aren't working. The region's total debt rose by $200 billion in the first quarter of the year, hitting a record 92.2% of GDP. Odds are the slender second-quarter GDP gain won't be enough to improve on that. Indeed, for many euro zone countries, GDP is shrinking faster than their debt.
New Applications for Space-Based Technology -- From The Kiplinger Letter, Aug. 16, 2013
On the way: Earthbound roles for hardware designed for use in space. Remote ultrasound devices, much smaller than those used in hospitals. Pressure monitors that can be used in minisubmarines, planes and diving gear. Cold-plasma systems, shown in trials to promote wound healing and kill germs.
Better robots, too, modeled on the robotic arm on the International Space Station. Many of the devices, already sized to fit tight spaces, will shrink even more for portability and access. The new gear will join first-generation space inventions that have long been absorbed into everyday activities and are now taken for granted: Scratch-resistant lenses. Cordless tools. Photovoltaic cells. Aircraft de-icing systems.
Government Buying Sugar for Fuel Production -- From The Kiplinger Agriculture Letter, Aug. 9, 2013
USDA will soon begin buying raw sugar and reselling it to make ethanol, a backup plan established by Congress to avoid excess sugar stocks. So far, USDA is trying to stem a surplus by paying firms to re-export sugar, but stocks will weigh in at a bulky 2 million tons in Sept., and refined sugar has slid to 25¢/lb. So the Ag Dept. will buy some sugar in an effort to keep prices high enough so that farmers' sugar beet and cane co-ops won't just keep their USDA-financed loans and forfeit their sugar to the Dept. of Agriculture…allowed when prices fall too low.
IRS Looking Closely at Worker Misclassification -- From The Kiplinger Tax Letter, Aug. 2., 2013
The IRS is focusing a lot of resources on contractor-vs.-employee classifications. It'll step up its efforts to make sure that workers are classified correctly. A recent review of 5,000 cases by U.S. Treasury inspectors found that in 15% of them, employers kept on issuing Form 1099-MISC to the workers instead of giving W-2s. Misclassification by employers potentially costs millions in lost taxes.
Major League's Fans Will Return to the Parks -- From The Kiplinger Letter, Aug. 16, 2013
Don't read too much into Major League Baseball's recent dip in attendance.
Odds are fans will be back next year. Though crowds are down about 2% from a year ago, the drop-off is likely the result of a confluence of unusual factors: Foul spring weather. Struggling big-market teams. And the renewed flap over steroids.
Minor league games still draw…a good sign for merchants catering to fans.
And don't fret about a boycott of the Winter Olympics in Sochi, Russia. Moscow's granting of asylum to U.S. leaker Edward Snowden and its antigay views are ruffling feathers, but that's not enough to keep American athletes home in Feb.
Decent Growth for Midwest Economies in '13, '14 -- From The Kiplinger Letter, Aug. 16, 2013
A middling outlook for much of the U.S. Midwest this year and next.
Ohio. The strengthening auto industry and solid growth in health care will help push Ohio unemployment below 7% by year-end and nudge wages up by about 3.5% in 2013 and in 2014, when that'll top the average raise in the U.S. About 2.6% economic growth this year and a bit over 3% next for the Buckeye State.
Kentucky. Stagnating coal production will be more than offset by gains in the business services industry, pushing economic growth over 3% this year. Come next year…a percentage point or so higher. Better than average, both years.
Indiana. About the same as Kentucky, with growth boosted by a revival in manufacturing and strength in the pharmaceuticals industry. Nevertheless, the state's unemployment rate, now 8.4%, will likely remain somewhat above average.
Illinois. Less impressive employment growth than some of its neighbors this year and next…about 2%. The state's lone bright spot, manufacturing growth, won't be enough to lower the 9.2% jobless rate...second highest in the U.S...by more than a few percentage points. Overall growth this year…2.5%. Next year…about 3%.
Michigan. The boon from a pickup in vehicle sales, particularly light trucks, will continue to buoy growth, pushing it from about 2.2% this year to just over 3% in 2014. Unemployment will decline but still top 8% as 2014 draws to a close.
Wisconsin. A recovering housing sector plus job growth in leisure, mining and other natural resources industries spell growth of about 1.7% this year. Nearly double that next year, as gains in these industries continue to pick up steam.
Verizon to Facilitate Texting Charitable Donations -- From The Kiplinger Letter, Aug. 16, 2013
Charities that receive donations by text message will get a lift by mid-2014, when Verizon joins other mobile carriers that allow digital gifts of up to $25. That's critical because Verizon is the service provider for about 33% of U.S. customers. Now, texted donations for $5 or $10 can be repeated, but that's too time consuming to be popular. As more folks get the $25 option, nonprofits will start talking it up.
10 Best Biotech Stocks To Buy Right Now
Donation-by-text pitches are especially common after natural disasters.
Economic Growth in "BRICS" Countries Slowing -- From The Kiplinger Letter, Aug. 9, 2013
Steam is rapidly leaking from the economic engine called the BRICS nations. The economies of all five…Brazil, Russia, India, China and South Africa... are growing more slowly than they have been, with consequences for global gains.
For Brazil…only about 2% growth this year and not much more in 2014. The big agricultural and commodity producer is feeling the strain of reduced exports to China. Street protests by unhappy union members aren't likely to go away soon.
Not much better for Russia…about 2.5% this year, but gathering strength in 2014 to rack up a 3.5% or so gain. President Putin plans to pour nearly $14 billion into infrastructure and small business lending to give the country's economy a jolt. Longer term, Russia's hostile climate toward overseas capital clouds growth potential.
About 5% growth for India...a huge, swift decline from the 8% rate posted for most of the past decade. That, plus a stubbornly high 10% inflation rate, a decline of about 10% in the value of the rupee so far this year, and a slide in investment and savings rates, casts doubts on whether India can turn the situation around.
For China, figure on 7% this year and perhaps a bit more next. With wages on the rise and the economy slowing, maintaining the massive government investment that has fueled much of China's amazing growth in recent years will be tough. South Africa...dipping from 2.5% growth to 2% this year, mildly better next.
Squeezing Power Generation from Existing Dams -- From The Kiplinger Letter, Aug. 9, 2013
Hydroelectric power is getting a boost from Congress. New legislation streamlines the permitting process, making it easier and faster to install turbines in existing dams and other water infrastructure. Just 3% of dams generate electricity. The vast majority of dams were built only for flood control and irrigation purposes.
Most power projects will be small, generating 5 megawatts or less of juice by incorporating turbines into large water mains, canals and other water networks. Many projects will be done as part of regular pipe replacement and other maintenance. But the legislation also frees up work on some bigger projects…allowing owners of large flood control dams to develop generating stations rivaling small power plants.
Hundreds of potential sites could be affected, particularly in the Northwest. Unlike many federal energy efforts, this one will cost taxpayers little or nothing.
U.S. Energy Output on the Rise -- From The Kiplinger Letter, Aug. 9, 2013
There's even more oil and gas underground in the U.S. than thought: Huge upward revisions in reserve tallies as new deposits are discovered and new drilling technologies make recovering them economically feasible. Crude oil: 3.8 billion additional barrels, about 7 months' worth of domestic consumption. Natural gas: 31 trillion cubic feet, more than the U.S. burns in an entire year.
So expect production to keep rising. At 7.5 million barrels per day, crude oil is flowing at a 22-year high. By year-end, it figures to hit 8 million barrels per day. And U.S. gas production, already the highest in the world, will keep setting records.
Airline Merger May Not Bode Well for Travelers -- From The Kiplinger Letter, Aug. 9, 2013
The merger of US Airways and American Airlines will create turbulence, once regulators approve the deal this fall. The two carriers have very different cultures and business models, making integration tough. Passengers can expect some snafus, such as lost luggage and dropped reservations, while the new company irons out the wrinkles.
Travelers should be proactive during the transition phase. Confirm tickets booked online with a follow-up call. And check up on frequent-flier-account balances. Also, look out for attractive deals from competitors trying to poach disgruntled fliers.
Student Loan Fix Is Congress' Only Sure Thing -- From The Kiplinger Letter, July 3, 2013
Though six months remain in 2013, there's little time for big moves by Congress this year, thanks to two nearly month-long recesses. The year will end the same way it started: In a huge traffic jam bottling up major deals, with lawmakers having to settle for piecemeal solutions.
Student loan interest rates are the lone sure-to-pass bill. Congress will tie rates to market rates and do so retroactively, canceling the doubling that occurred July 1.
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