The big news last week was the Senate passing the Patient Protection and Affordable Care Act, its version of a healthcare reform bill, along strict party lines on Christmas Eve by a vote of 60-39 (Republican Jim Bunning, the baseball Hall of Fame pitcher and lameduck junior senator from Kentucky, had family commitments, of all things, and missed the vote). While both House and Senate are off until the week of January 5, much of the first month of the New Year will be taken up with a conference committee trying to come up with legislation that will pass muster in both chambers and, ideally, not add to your clients' tax burden or the federal deficit.
The Congressional Budget Office on December 19th estimated that if enacted, the legislation would increase to 94% (from 83%) the number of nonelderly Americans covered by some form of health insurance.
On December 23, the CBO director's blog released an estimate on what the Senate bill would mean for Medicare funding; it said the legislation would cut growth in Medicare payments to roughly 6% annually rather than at the 8% clip at which it has been growing.
This last holiday-shortened week of the year will also see reports on retail sales, the Conference Board consumer confidence index, the State Street Investor Confidence Index, the Case-Shiller home price index, and weekly jobless claims.
Saturday, February 4, 2012
Friday, February 3, 2012
Boeing Refurbishes 500th Super Hornet Fighter Jet, Makes Plans for Looming Dubai Air Show
There’s a war against the bulls. A reconsideration of the four-month optimism. A regression to the mean. It’s a hiccup. The start of a long campaign of the kinds of dreary losses experienced in 2008. The beginning of the end. The pause that refreshes.
It’s certainly one of them.
The fact is, Wall Street has arrested the campaign of relentless losses that got launched back in March, when the S&P 500 (GSPC)vaulted 40% from its 12 1/2-year lows. Since then, it’s declined 7%. Which doesn’t, frankly, seem like much, given that anybody would anticipatethatthere’d be a retracement off that kind of rally.
Ifthe S&P goes back to 666, which is where it traded at its intraday lows March 6, we’ve got something else to talk about. Between here and the return of the demonic numerology, we’ve got a lot of ground to cover.
Some of which will be determined by the earnings reports that get underway in earnest on Tuesday, when Goldman Sachs (GS)posts its quarter. And there’s some reason for the bulls to be enthused, ifonly about that bank’s numbers. Goldman typically blows through its bogey, thanks to the leverage to its robust trading operations, and in a campaign in which trading – as well as equity underwriting – couldprovide some record-settling ballast, Goldman has a bright chance to surprise to the upside.
Something Meredith Whitney suggested herself on Monday.Whitney, the financial analyst, boosted her firm’s rating on the stock of Goldman, saying that she expected the quarter to come in well ahead of analysts’ forecasts: at$4.65 instead of the $3.48 that has been projected. Shares have risen 4% in premarket.
Investorsalso have kept an eye on shares of CIT Group (CIT). The business lender has struggled with insolvency concerns, and has spoken with regulators about means of improving its liquidity. Shares have declined another 18% in Mond! ay’ ;s premarket.
The biggest issue confronting Wall Street figured to be the challenge to risk appetite, something that’s been sorely lacking in recent sessions, as traders frightened by the downturn in energy prices, and scared by talkof another stimulus package, reflected some worries about lingering economic weakness by heading into safe havens like the Treasuries market and the dollar.
It’s certainly one of them.
The fact is, Wall Street has arrested the campaign of relentless losses that got launched back in March, when the S&P 500 (GSPC)vaulted 40% from its 12 1/2-year lows. Since then, it’s declined 7%. Which doesn’t, frankly, seem like much, given that anybody would anticipatethatthere’d be a retracement off that kind of rally.
Ifthe S&P goes back to 666, which is where it traded at its intraday lows March 6, we’ve got something else to talk about. Between here and the return of the demonic numerology, we’ve got a lot of ground to cover.
Some of which will be determined by the earnings reports that get underway in earnest on Tuesday, when Goldman Sachs (GS)posts its quarter. And there’s some reason for the bulls to be enthused, ifonly about that bank’s numbers. Goldman typically blows through its bogey, thanks to the leverage to its robust trading operations, and in a campaign in which trading – as well as equity underwriting – couldprovide some record-settling ballast, Goldman has a bright chance to surprise to the upside.
Something Meredith Whitney suggested herself on Monday.Whitney, the financial analyst, boosted her firm’s rating on the stock of Goldman, saying that she expected the quarter to come in well ahead of analysts’ forecasts: at$4.65 instead of the $3.48 that has been projected. Shares have risen 4% in premarket.
Investorsalso have kept an eye on shares of CIT Group (CIT). The business lender has struggled with insolvency concerns, and has spoken with regulators about means of improving its liquidity. Shares have declined another 18% in Mond! ay’ ;s premarket.
The biggest issue confronting Wall Street figured to be the challenge to risk appetite, something that’s been sorely lacking in recent sessions, as traders frightened by the downturn in energy prices, and scared by talkof another stimulus package, reflected some worries about lingering economic weakness by heading into safe havens like the Treasuries market and the dollar.
Wednesday, February 1, 2012
College football gets richer
NEW YORK (CNNMoney) -- Penn State likely will be playing before more empty seats than full ones when it takes the field for its bowl game on Monday -- just one sign of tougher financial times ahead for one of the nation's richest teams.
But big-time college football is likely to only get richer.
Penn State was No. 6 in revenue among college football teams last season, $72.7 million. And it was No. 2 in profit, behind only the University of Texas, with $53.2 million.
But following the child abuse scandal and the firing of iconic coach Joe Paterno, experts said the school could expect to lose millions in sponsorship, ticket and merchandise sales in coming years. Donations from alumni could also be hurt. Moody's put Penn State's debt rating under review for possible downgrade.
The first hit to Penn State's bottom line could come Monday with its appearance in the TicketCity Bowl in Dallas.
Penn State ended up in the game after some late season losses killed its chance of getting into one of the big dollar BCS bowls, and other higher-profile bowl spots reserved for Big 10 schools went to other teams.
Missing out on the bigger bowls won't hurt revenue too much, since the conference shares bowl money pretty much equally among the schools. But in going to a lower-profile bowl game far from home, Penn State was only able to sell about 4,000 of the 6,000 tickets it was allocated for the game, and will have to eat the rest.
Tom Starr, executive director of the bowl, said he doesn't think that the scandal hurt as much as the overall economy, adding that bowl game ticket sales are down nationwide.
"Fans don't have the money to travel to see a game," he said Friday. "And where we also are getting hurt is midlevel corporate sales."
But the bowls aren't the major source of revenue for the 122 teams in the Football Bowl Division. Instead the main dollars come from television rights, and revenue from sponsorships, ticket sales and licensed mercha! ndise.
An analysis by CNNMoney of figures filed by the schools with the Department of Education shows that revenue for the major football programs in the 2010-11 school year was up 5% to $2.7 billion.
Profit growth was a more modest 2%, but that still came to $1.1 billion in profits, for a 41% margin that any pro sports team would kill to have.
Revenue and profits should only grow as the big dollar conferences play a game of musical chairs to grab new schools. When the dust of the reorganization finally settles, the moves are expected to bring in even more revenue, especially from television deals.
Dan Fulks, a professor at Kentucky's Transylvania University who consults for the NCAA, said the additional money isn't going to flow evenly to all schools. It will mean that most of the major football programs are only going to get richer.
"It'll widen the gap between the haves and havenots," he said. "The new TV money is certainly going to help, but it's going to help Ohio State, not Bowling Green."
But big-time college football is likely to only get richer.
Penn State was No. 6 in revenue among college football teams last season, $72.7 million. And it was No. 2 in profit, behind only the University of Texas, with $53.2 million.
But following the child abuse scandal and the firing of iconic coach Joe Paterno, experts said the school could expect to lose millions in sponsorship, ticket and merchandise sales in coming years. Donations from alumni could also be hurt. Moody's put Penn State's debt rating under review for possible downgrade.
The first hit to Penn State's bottom line could come Monday with its appearance in the TicketCity Bowl in Dallas.
Penn State ended up in the game after some late season losses killed its chance of getting into one of the big dollar BCS bowls, and other higher-profile bowl spots reserved for Big 10 schools went to other teams.
Missing out on the bigger bowls won't hurt revenue too much, since the conference shares bowl money pretty much equally among the schools. But in going to a lower-profile bowl game far from home, Penn State was only able to sell about 4,000 of the 6,000 tickets it was allocated for the game, and will have to eat the rest.
Tom Starr, executive director of the bowl, said he doesn't think that the scandal hurt as much as the overall economy, adding that bowl game ticket sales are down nationwide.
"Fans don't have the money to travel to see a game," he said Friday. "And where we also are getting hurt is midlevel corporate sales."
But the bowls aren't the major source of revenue for the 122 teams in the Football Bowl Division. Instead the main dollars come from television rights, and revenue from sponsorships, ticket sales and licensed mercha! ndise.
An analysis by CNNMoney of figures filed by the schools with the Department of Education shows that revenue for the major football programs in the 2010-11 school year was up 5% to $2.7 billion.
Profit growth was a more modest 2%, but that still came to $1.1 billion in profits, for a 41% margin that any pro sports team would kill to have.
Revenue and profits should only grow as the big dollar conferences play a game of musical chairs to grab new schools. When the dust of the reorganization finally settles, the moves are expected to bring in even more revenue, especially from television deals.
Dan Fulks, a professor at Kentucky's Transylvania University who consults for the NCAA, said the additional money isn't going to flow evenly to all schools. It will mean that most of the major football programs are only going to get richer.
"It'll widen the gap between the haves and havenots," he said. "The new TV money is certainly going to help, but it's going to help Ohio State, not Bowling Green."
Tuesday, January 31, 2012
FedEx Delivers Another Good Quarter
In September, I told you about FedEx's (NYSE: FDX ) fiscal-first-quarter earnings' growth story. In the second quarter, the company reported a bombastic 76% income growth compared to its previous-year quarter. The world's second-largest packaged delivery company posted better-than-expected results thanks to strong Thanksgiving weekend online sales and a better price/volume mix, sending the shares up after the announcement.
Let's dig deeper.
The quarter
Profits increased to $497 million, a 76% year-over-year rise. The company earned $1.57 per share, beating the Street expectation of $1.53 per share. FedEx also improved its operational margins to 7.4%, from 4.9% last year, helped by fewer flights and frequencies.
Overall sales inched up by 10%, to $10.59 billion. Sales at FedEx's largest business -- FedEx Express -- grew 10% and helped the company push up its revenue. Although international priority daily package volume was lower due to a weaker Asian market, the company still logged higher international priority revenues per package due to higher fuel surcharges, rate per pound, and weight per package.
Shopping and holiday mix
With an increase in online shopping during the Thanksgiving weekend, demand for residential delivery services shot up. The fact that online retailer Amazon.com is expected to have a strong holiday season is certainly good news for shipping companies like FedEx.
Looking beyond the quarter
Despite being hurt by a weak Asian market, FedEx has opened its largest express facility in China. The company sees China as an important market for express offerings as it can account for the bulk of FedEx's future growth. Rival United Parcel Service (NYSE: UPS ) is also increasing capacity in Asia.
Apart from expanding in Asia, FedEx has been conscious of lowering its c! osts. Th e company is buying 27 new 767-300 freighter planes from Boeing (NYSE: BA ) to replace its aging MD-10 planes. The new planes will be 30% more fuel-efficient and more reliable. The order is valued at $4.7 billion. This investment will reduce unit operating costs by 20%.
The Foolish bottom line
FedEx posted bright numbers this quarter due to a combination of strong Thanksgiving weekend e-commerce and higher margins. With well-planned investments in Asia and cost-efficient strategies, FedEx looks intriguing. The company expects to earn $1.25 to $1.45 per share this quarter as compared to the Street expectation of $1.31 per share.
FedEx looks to be a solid bet going into 2012, but if you'd like to take a look at the one company our chief investment officer has picked for tremendous growth in 2012, check out The Motley Fool's brand-new report, "The Motley Fool's Top Stock for 2012." It highlights a company that is revolutionizing commerce in Latin America. You can get instant access to the name of this company by?clicking here -- it's free.
Navjot Kaur does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of FedEx, United Parcel Service, and Amazon.com. Motley Fool newsletter services have recommended buying shares of FedEx and Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Let's dig deeper.
The quarter
Profits increased to $497 million, a 76% year-over-year rise. The company earned $1.57 per share, beating the Street expectation of $1.53 per share. FedEx also improved its operational margins to 7.4%, from 4.9% last year, helped by fewer flights and frequencies.
Overall sales inched up by 10%, to $10.59 billion. Sales at FedEx's largest business -- FedEx Express -- grew 10% and helped the company push up its revenue. Although international priority daily package volume was lower due to a weaker Asian market, the company still logged higher international priority revenues per package due to higher fuel surcharges, rate per pound, and weight per package.
Shopping and holiday mix
With an increase in online shopping during the Thanksgiving weekend, demand for residential delivery services shot up. The fact that online retailer Amazon.com is expected to have a strong holiday season is certainly good news for shipping companies like FedEx.
Looking beyond the quarter
Despite being hurt by a weak Asian market, FedEx has opened its largest express facility in China. The company sees China as an important market for express offerings as it can account for the bulk of FedEx's future growth. Rival United Parcel Service (NYSE: UPS ) is also increasing capacity in Asia.
Apart from expanding in Asia, FedEx has been conscious of lowering its c! osts. Th e company is buying 27 new 767-300 freighter planes from Boeing (NYSE: BA ) to replace its aging MD-10 planes. The new planes will be 30% more fuel-efficient and more reliable. The order is valued at $4.7 billion. This investment will reduce unit operating costs by 20%.
The Foolish bottom line
FedEx posted bright numbers this quarter due to a combination of strong Thanksgiving weekend e-commerce and higher margins. With well-planned investments in Asia and cost-efficient strategies, FedEx looks intriguing. The company expects to earn $1.25 to $1.45 per share this quarter as compared to the Street expectation of $1.31 per share.
FedEx looks to be a solid bet going into 2012, but if you'd like to take a look at the one company our chief investment officer has picked for tremendous growth in 2012, check out The Motley Fool's brand-new report, "The Motley Fool's Top Stock for 2012." It highlights a company that is revolutionizing commerce in Latin America. You can get instant access to the name of this company by?clicking here -- it's free.
Navjot Kaur does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of FedEx, United Parcel Service, and Amazon.com. Motley Fool newsletter services have recommended buying shares of FedEx and Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Sunday, January 29, 2012
Amazon: JP Morgan Rebuts Goldman; Sales Set to Beat
JP Morgan analyst Doug Anmuth this afternoon reiterates an overweight rating on shares of Amazon.com (AMZN) in what amounts to a direct response to the somewhat negative remarks this morning by Goldman Sachs’s Heather Bellini.?
Bellini had written that comScore’s estimate of 15% growth this quarter might mean Amazon’s sales would miss expectations if the company turned in only its average upside of 23 percentage points above the that overall growth figure.?
But Anmuth observes that Amazon’s outperformance relative to comScore data has been expanding this year, averaging 33 percentage points in the last three quarters.?
Anmuth believes that means Amazon could deliver at least 32 percentage?points of growth above comScore’s figure, turning in 47% growth. That would put Amazon’s total sales growth ahead of the 44% that Bellini cited as the consensus that Amazon has to beat.?
Anmuth also points out the limits to comScore’s data set:
Bellini had written that comScore’s estimate of 15% growth this quarter might mean Amazon’s sales would miss expectations if the company turned in only its average upside of 23 percentage points above the that overall growth figure.?
But Anmuth observes that Amazon’s outperformance relative to comScore data has been expanding this year, averaging 33 percentage points in the last three quarters.?
Anmuth believes that means Amazon could deliver at least 32 percentage?points of growth above comScore’s figure, turning in 47% growth. That would put Amazon’s total sales growth ahead of the 44% that Bellini cited as the consensus that Amazon has to beat.?
Anmuth also points out the limits to comScore’s data set:
We note that comScore��s eCommerce data measures just US desktop-based eCommerce, which we believe makes it difficult to draw a conclusion on Amazon’s WW revenue growth. comScore��s eCommerce data excludes sales through mobile phones and tablets, which could represent ~5-10% of US eCommerce (and growing rapidly) in 4Q.
Amazon shares today are down 14 cents at $173.75.?
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