The headwinds of European debt concerns and the evaporation of Chinese stimulus continues to assault the markets, although the major indices held in there pretty well considering the drag the Eurozone is going to put on global growth. The run, well maybe a jog for now, for safety persists as Treasury securities recorded a second-straight session of meaningful gain.
The dollar rallied as the euro got slammed again -- pretty much shaping up as our commentary suggested would be the case via the March 24 letter entitled Can the Dollar Rally Continue? (archived on the website) – as even ECB council member Axel Weber acknowledged that Greece’s fiscal crisis is threatening “grave contagion effects.” He’s got it partially right at least, it’s just not the Greek budget but the entire entitlement-centric system is crumbling, and another EU banking crisis is not out of the question. To repeat, so-called rescue packages can ease the concern on a day-to-day, even week-to-week basis, but eventually the Eurozone will have to ultimately face reality; their system is not sustainable.
Eight of the 10 major S&P 500 industry groups decline for the session, led by energy, industrials and consumer discretionary shares. The traditional areas of safety out-performed the market for a second day – health-care and consumer staples were the only groups in the black. Naturally, with this weakness, volume has begun to pick up, hitting levels that we haven’t seen with this consistency since early in 2009.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
Acropolis Investment Management
www.acrinv.com
Thursday, May 6, 2010
Wednesday, May 5, 2010
Daily Insight: Driven to the Shadows, Lost in Translation and Pending Home Sales
U.S. stocks took a little bit of a beating yesterday, as the market has run into the headwinds of EU debt troubles and China’s early-stage unwind of their stimulus measures via the tightening of lending standards. The broad market has dropped 3.5% over the past seven sessions, but then again it had rallied 80% from the March 9, 2009 13-year low.
As we’ve been touching on, the Chinese are in the process of reining in their stimulus efforts for fear of further inflating the housing market. Traders on the Shanghai Exchange got their first chance to react this week (they were closed on Monday) and pushed the index down another 1.2% to a seven-month low. Also in the region, the Aussie central bank hiked their benchmark interest rate for the fifth time in six months – man, it would be nice to have short-term rates at 4.25%. But maybe a little too much too fast Aussie’s, looks like you’ve been tricked into thinking the Pacific growth story is sustainable; we’ll see as the Chinese lay off the nitrous.
The EU sovereign debt crisis also played a role in spooking traders after Germany’s economic minister added uncertainty to the situation when he stated the $140 billion EU/IMF rescue was not intended to cover Greece’s borrowing needs for the next three years, but possibly just 18 months – more on this below.
Market sentiment will continue to ebb and flow because the EU government debt problem isn’t going away. Talks, plans and even implementations of bailouts may ease investor concerns in the short term but the reality of dealing with these structural issues will be harsh and felt by the global economy.
Basic material shares led the major industry groups lower, with industrials and tech also down big. The relative winners were traditional areas of safety – health-care and consumer staples – but they also closed lower as all 10 major groups declined.
Click here to read the full Daily Insight.
Brent Vondera, Senior Analyst
Acropolis Investment Management
www.acrinv.com
As we’ve been touching on, the Chinese are in the process of reining in their stimulus efforts for fear of further inflating the housing market. Traders on the Shanghai Exchange got their first chance to react this week (they were closed on Monday) and pushed the index down another 1.2% to a seven-month low. Also in the region, the Aussie central bank hiked their benchmark interest rate for the fifth time in six months – man, it would be nice to have short-term rates at 4.25%. But maybe a little too much too fast Aussie’s, looks like you’ve been tricked into thinking the Pacific growth story is sustainable; we’ll see as the Chinese lay off the nitrous.
The EU sovereign debt crisis also played a role in spooking traders after Germany’s economic minister added uncertainty to the situation when he stated the $140 billion EU/IMF rescue was not intended to cover Greece’s borrowing needs for the next three years, but possibly just 18 months – more on this below.
Market sentiment will continue to ebb and flow because the EU government debt problem isn’t going away. Talks, plans and even implementations of bailouts may ease investor concerns in the short term but the reality of dealing with these structural issues will be harsh and felt by the global economy.
Basic material shares led the major industry groups lower, with industrials and tech also down big. The relative winners were traditional areas of safety – health-care and consumer staples – but they also closed lower as all 10 major groups declined.
Click here to read the full Daily Insight.
Brent Vondera, Senior Analyst
Acropolis Investment Management
www.acrinv.com
Tuesday, May 4, 2010
Daily Insight: Spend It Like You Got It and Factories Humming
U.S. stocks were able to shake off some market weakness overseas and China’s continued pull-back of stimulus measures, as they tighten lending standards, to end two-sessions of decline on Monday. The three major indices gained back most of Friday’s losses.
Certainly a bang-up manufacturing report helped to ease some concerns but the Commerce Department showed the income/spending ratio deteriorated again, which means spending is being stolen from the future. These reports pretty much offset each other, if one is thinking beyond the here and now. More on this data below the jump.
A reader expressed surprise that I didn’t touch on the attempted car bombing in Times Square in Monday’s letter, particularly since I’ve spent several years talking about the importance of geopolitical risks/domestic security with regard to economic growth. The markets found it unnecessary to put in any additional terrorist premium as futures trading was not affected in the least, so I decided not to use space on the topic. However, while we’re on it now, even though it didn’t seem like a serious explosive device, one would think it to be a large enough act to raise concern of the larger issue of terrorism, but no worries for this market…yet. When risks lurk around many corners, it’s only a matter of time before some form jumps out and scares the complacency out of everyone.
Industrials, consumer discretionary (spend it like you got it), and financials led the market higher. The S&P 500 index that tracks basic material shares was the only group down for the session.
Click here to read the rest of the Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
Certainly a bang-up manufacturing report helped to ease some concerns but the Commerce Department showed the income/spending ratio deteriorated again, which means spending is being stolen from the future. These reports pretty much offset each other, if one is thinking beyond the here and now. More on this data below the jump.
A reader expressed surprise that I didn’t touch on the attempted car bombing in Times Square in Monday’s letter, particularly since I’ve spent several years talking about the importance of geopolitical risks/domestic security with regard to economic growth. The markets found it unnecessary to put in any additional terrorist premium as futures trading was not affected in the least, so I decided not to use space on the topic. However, while we’re on it now, even though it didn’t seem like a serious explosive device, one would think it to be a large enough act to raise concern of the larger issue of terrorism, but no worries for this market…yet. When risks lurk around many corners, it’s only a matter of time before some form jumps out and scares the complacency out of everyone.
Industrials, consumer discretionary (spend it like you got it), and financials led the market higher. The S&P 500 index that tracks basic material shares was the only group down for the session.
Click here to read the rest of the Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
Monday, May 3, 2010
April 2010 Recap
Market volatility picked up in April as investors grew concerned about the indebtedness of several European countries, a major oil spill in the Gulf of Mexico, and Goldman Sachs’ legal mess. Despite the concerns, the S&P 500 managed to post a 1.58 percent gain for the month.
Corporate earnings reports helped offset some of the negative sentiment, with 77.9 percent of companies in the S&P 500 that have reported beating expectations. According to Bloomberg, earnings estimates for companies in the S&P 500 increased 10 percent on average in April, the largest monthly increase since at least 2006. Earnings have certainly benefited from low expectations and year-ago comparisons, but this era is rapidly coming to a close. On the bright side, positive earnings results and outlooks with little price movement allow the fundamentals underlying the market to catch up to the price action.
A bigger reason for domestic equities’ April performance was the Fed’s decision to keep its benchmark interest rate at a record low to help keep the economy from dipping back into a recession. The Fed continues to paint a “Goldilocks” scenario for the economy in which growth is not too hot and not too cold. Although there are signs of prices picking up in the production pipeline, consumer prices have been showing deflationary signs in recent months. In addition, it’s very unusual for the Fed to tighten until the unemployment rate goes down.
Small caps continued to outperform large caps during April. Smaller firms tend to thrive in low interest rate environments, which allow them to borrow cheaply to fuel their growth. Additionally, new net inflows into small cap funds may also be providing support to small cap stocks, with the four-week moving average inflows topping $701 million in April according to Lipper FMI data. Small caps began the year with outflows exceeding $144 million.
The best performing S&P 500 sector was Consumer Discretionary, which benefited from improving sales data and consumer confidence. Consumer Discretionary and Industrials, which has benefited from global economic improvement, are the top performing sectors year-to-date. Healthcare stocks were the worst performers in April as the sector’s earnings reports exposed the bottom-line effects of the new U.S. healthcare legislation.
Volatility, as measured by the VIX Index, perked up 25 percent. For a market that seemed overly complacent in recent months, the return of volatility can be interpreted as a healthy development. The uptick in volatility coincided with several negative events including fraud charges by the SEC against Goldman Sachs, continued Eurozone debt problems, financial regulation concerns, and tightening by numerous foreign central banks.
Problems in Greece, Spain, and Portugal sent investors fleeing to the safety of U.S. assets. As a result, Treasuries rallied and the dollar strengthened. Mortgages followed Treasury yields lower, with spreads more or less unchanged, as the market yawned in response to the Fed’s MBS-buying program coming to an end. Meanwhile, Commercial MBS gained despite widespread worries about rising commercial defaults and high-yield bonds add to a record run that began in late 2008.
Overall, investors continue to show desire to put cash that yields nothing to work, but they are hesitant to stick with riskier bets in the face of volatility. Investors have plenty of headwinds ahead including the removal of monetary and fiscal stimulus, interest rate uncertainty, weak housing market, national debt burdens, Chinese economic and policy questions, expiration of the Bush tax cuts, and the growth-restraining effects of the rapid rise in commodity prices.
Peter Lazaroff, Investment Analyst
Acropolis Investment Management
www.acrinv.com
Corporate earnings reports helped offset some of the negative sentiment, with 77.9 percent of companies in the S&P 500 that have reported beating expectations. According to Bloomberg, earnings estimates for companies in the S&P 500 increased 10 percent on average in April, the largest monthly increase since at least 2006. Earnings have certainly benefited from low expectations and year-ago comparisons, but this era is rapidly coming to a close. On the bright side, positive earnings results and outlooks with little price movement allow the fundamentals underlying the market to catch up to the price action.
A bigger reason for domestic equities’ April performance was the Fed’s decision to keep its benchmark interest rate at a record low to help keep the economy from dipping back into a recession. The Fed continues to paint a “Goldilocks” scenario for the economy in which growth is not too hot and not too cold. Although there are signs of prices picking up in the production pipeline, consumer prices have been showing deflationary signs in recent months. In addition, it’s very unusual for the Fed to tighten until the unemployment rate goes down.
Small caps continued to outperform large caps during April. Smaller firms tend to thrive in low interest rate environments, which allow them to borrow cheaply to fuel their growth. Additionally, new net inflows into small cap funds may also be providing support to small cap stocks, with the four-week moving average inflows topping $701 million in April according to Lipper FMI data. Small caps began the year with outflows exceeding $144 million.
The best performing S&P 500 sector was Consumer Discretionary, which benefited from improving sales data and consumer confidence. Consumer Discretionary and Industrials, which has benefited from global economic improvement, are the top performing sectors year-to-date. Healthcare stocks were the worst performers in April as the sector’s earnings reports exposed the bottom-line effects of the new U.S. healthcare legislation.
Volatility, as measured by the VIX Index, perked up 25 percent. For a market that seemed overly complacent in recent months, the return of volatility can be interpreted as a healthy development. The uptick in volatility coincided with several negative events including fraud charges by the SEC against Goldman Sachs, continued Eurozone debt problems, financial regulation concerns, and tightening by numerous foreign central banks.
Problems in Greece, Spain, and Portugal sent investors fleeing to the safety of U.S. assets. As a result, Treasuries rallied and the dollar strengthened. Mortgages followed Treasury yields lower, with spreads more or less unchanged, as the market yawned in response to the Fed’s MBS-buying program coming to an end. Meanwhile, Commercial MBS gained despite widespread worries about rising commercial defaults and high-yield bonds add to a record run that began in late 2008.
Overall, investors continue to show desire to put cash that yields nothing to work, but they are hesitant to stick with riskier bets in the face of volatility. Investors have plenty of headwinds ahead including the removal of monetary and fiscal stimulus, interest rate uncertainty, weak housing market, national debt burdens, Chinese economic and policy questions, expiration of the Bush tax cuts, and the growth-restraining effects of the rapid rise in commodity prices.
Peter Lazaroff, Investment Analyst
Acropolis Investment Management
www.acrinv.com
Daily Insight: Q1 GDP and Chicago PMI
U.S. stocks gave back nearly all of the prior two-session rebound on Friday as the broad market declined 2.51% for the week – the first meaningful pullback in 10 weeks. The Dow held just about the 11K mark, but slipped 1.75% for the week. The NASDAQ got thumped by 2.73% last week, but is still up 14% over the past three weeks. The broad market made a key reversal as it hit a new 19-month high, failed to hold that level, and dipped below the prior week’s close.
Financials led the declines, the group generally leads no matter the direction, falling more than double that of overall market. Tech, industrials and consumer discretionary shares rounded out the worst-performers. The S&P 500 index that tracks utilities shares was the sole gainer, up about 0.5%.
Greece struck a EU/IMF deal but it effectively ensures the country will remain a zombie as a huge percentage of its revenue will be necessary to pay these loans back – revenues that will already be depressed as its economy has become ultra-dependent on government spending. The Greek government also pushed out its schedule for getting the deficit within the 3%-of-GDP EU guideline – although “guideline” isn’t the correct word as budgetary rules are not enforced and can’t be based on the zone’s massive entitlement programs. They now say that the threshold will be met by 2014, previously stated to be achieved by 2012, but that’s highly unrealistic as well. The deal will involve direct loans to Greece, for now planned at $145 billion over three years with EU members on the hook for $80 billion of it.
Click here to read the full Daily Insight
Brent Vondera
www.acrinv.com
Financials led the declines, the group generally leads no matter the direction, falling more than double that of overall market. Tech, industrials and consumer discretionary shares rounded out the worst-performers. The S&P 500 index that tracks utilities shares was the sole gainer, up about 0.5%.
Greece struck a EU/IMF deal but it effectively ensures the country will remain a zombie as a huge percentage of its revenue will be necessary to pay these loans back – revenues that will already be depressed as its economy has become ultra-dependent on government spending. The Greek government also pushed out its schedule for getting the deficit within the 3%-of-GDP EU guideline – although “guideline” isn’t the correct word as budgetary rules are not enforced and can’t be based on the zone’s massive entitlement programs. They now say that the threshold will be met by 2014, previously stated to be achieved by 2012, but that’s highly unrealistic as well. The deal will involve direct loans to Greece, for now planned at $145 billion over three years with EU members on the hook for $80 billion of it.
Click here to read the full Daily Insight
Brent Vondera
www.acrinv.com
Friday, April 30, 2010
Daily Insight: Jobless Claims and FOMC is FIDO
U.S. stocks rose again on Thursday, helping the S&P 500 erase more of Tuesday’s slide. – a 1% pick up today will compete the circle. Of the major indices, the NASDAQ gained the most, followed by the S&P500 and then the Dow.
The German Parliament came to consensus on supporting their $11 billion share of the Greek rescue package, which will prove to be the first in a series of installments over the intermediate term. Optimism over the corporate-profit story also goosed stocks, along with Federal Reserve Board nominees that are unlikely to put pressure on Bernanke to tighten anytime before the unemployment rate hits 8% -- more on that below.
Financials, which led the market lower on Monday and Tuesday, was the top-performing sector for a second-straight session. Industrials and consumer discretionary rounded out the top spots. Energy and utility shares were the worst-performing groups, but all 10 majors gained ground on Thursday.
Click here to read the full Daily Insight.
Brent Vondera, Senior Analyst
www.acrinv.com
The German Parliament came to consensus on supporting their $11 billion share of the Greek rescue package, which will prove to be the first in a series of installments over the intermediate term. Optimism over the corporate-profit story also goosed stocks, along with Federal Reserve Board nominees that are unlikely to put pressure on Bernanke to tighten anytime before the unemployment rate hits 8% -- more on that below.
Financials, which led the market lower on Monday and Tuesday, was the top-performing sector for a second-straight session. Industrials and consumer discretionary rounded out the top spots. Energy and utility shares were the worst-performing groups, but all 10 majors gained ground on Thursday.
Click here to read the full Daily Insight.
Brent Vondera, Senior Analyst
www.acrinv.com
Wednesday, April 28, 2010
Daily Insight: Richmond Booms, Housing Hesitation, Euro Trash, and The New Vigilante
U.S. stocks took a little hit on Tuesday after Portugal and Greece had their credit ratings cut by S&P -- Greece thrown to junk category and Portugal down two notches to A-as S&P stated the Portuguese government could struggle to stabilize it relatively high debt ratio through 2012.
I’m not sure whether it was the credit downgrades of Portugal and Greece, or the assault on Goldman Sachs by members of the Permanent Subcommittee on Investigations -- a circus event that showed these senators have no clue how market-making or hedging works. Goldman is not a fiduciary no matter how many times a politician wants to paint them as such; they are a market maker, which means they’re on both sides of the trade. Not that the ignorance of the political class should come as a surprise, but maybe market participants are finally acknowledging that these are the same rubes creating upcoming regulations on the financial industry, regulations that will have ramifications well beyond Wall Street. Thus far the go-for-the-gusto market sentiment has blocked clear thinking but it is only a matter of time, the potential peril via this growing wave of populism-by-convenience will be recognized.
Are investors also awakening to the fact that the European debt problems are looking increasingly like contagion? European economies, heavily dependent on government expenditures, will run into additional growth problem no matter how they react to their debt issues, has to get everyone’s attention. If the EU countries in the target circle make the tough choices to get their public finances in some sort of order, then intense near-term and intermediate economic damage will result; if they don’t then higher interest rates and debt burdens will crush them both in the short and longer-terms – either way you look at it, Europe is going to work as a large drag on global growth.
It was a broad-based decline with all 10 major industry groups down. Financials and basic materials were the worst performers, with health-care and telecoms the relative winners.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
I’m not sure whether it was the credit downgrades of Portugal and Greece, or the assault on Goldman Sachs by members of the Permanent Subcommittee on Investigations -- a circus event that showed these senators have no clue how market-making or hedging works. Goldman is not a fiduciary no matter how many times a politician wants to paint them as such; they are a market maker, which means they’re on both sides of the trade. Not that the ignorance of the political class should come as a surprise, but maybe market participants are finally acknowledging that these are the same rubes creating upcoming regulations on the financial industry, regulations that will have ramifications well beyond Wall Street. Thus far the go-for-the-gusto market sentiment has blocked clear thinking but it is only a matter of time, the potential peril via this growing wave of populism-by-convenience will be recognized.
Are investors also awakening to the fact that the European debt problems are looking increasingly like contagion? European economies, heavily dependent on government expenditures, will run into additional growth problem no matter how they react to their debt issues, has to get everyone’s attention. If the EU countries in the target circle make the tough choices to get their public finances in some sort of order, then intense near-term and intermediate economic damage will result; if they don’t then higher interest rates and debt burdens will crush them both in the short and longer-terms – either way you look at it, Europe is going to work as a large drag on global growth.
It was a broad-based decline with all 10 major industry groups down. Financials and basic materials were the worst performers, with health-care and telecoms the relative winners.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
Tuesday, April 27, 2010
Daily Insight: Achtung Baby, Today's Data, CAT's Not All That
U.S. stocks held onto early-session gains for most of the session but eventually succumbed to a bit of weakness as Europe’s sovereign debt issues remained in focus and China appears willing to continue their pull-back of stimulus measures.
Stocks got off to a good start after Caterpillar’s results were released during pre-market trading but the results didn’t justify the reaction, unless you’re talking about the go-for-the-gusto behavior of this stock market that has people ignoring the signs of weakness. (If you want more specifics on these results, I’ll post some comments at the end of the letter.) But the recent weakness in Chinese stocks, off 8% in 10 sessions as traders fear removal of the stimulus measures, and a spreading contagion in Europe was just enough to sap momentum late in the session.
Consumer discretionary, industrial and basic materials were the only three of the major industry groups to close higher yesterday. Consumer discretionary shares remain on fire, up 125% from the March 2009 low and up 25% since February as the momentum trade comes in. Are you kidding me? These shares are now just 10% below their all-time high hit in 2007, but this time the unemployment rate is 10% vs. 5%, incomes ex-transfer payments are down instead of rising and the cash-out refi is dead. Performance chasers don’t care about these realities; their actions are blind to anything but quick money. Some things never change, and never will.
Financials led the decliners, with health care and utility shares the next worst performers.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
Stocks got off to a good start after Caterpillar’s results were released during pre-market trading but the results didn’t justify the reaction, unless you’re talking about the go-for-the-gusto behavior of this stock market that has people ignoring the signs of weakness. (If you want more specifics on these results, I’ll post some comments at the end of the letter.) But the recent weakness in Chinese stocks, off 8% in 10 sessions as traders fear removal of the stimulus measures, and a spreading contagion in Europe was just enough to sap momentum late in the session.
Consumer discretionary, industrial and basic materials were the only three of the major industry groups to close higher yesterday. Consumer discretionary shares remain on fire, up 125% from the March 2009 low and up 25% since February as the momentum trade comes in. Are you kidding me? These shares are now just 10% below their all-time high hit in 2007, but this time the unemployment rate is 10% vs. 5%, incomes ex-transfer payments are down instead of rising and the cash-out refi is dead. Performance chasers don’t care about these realities; their actions are blind to anything but quick money. Some things never change, and never will.
Financials led the decliners, with health care and utility shares the next worst performers.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
Monday, April 26, 2010
Preference for Value
We are frequently asked why we favor ‘value’ stocks over ‘growth’ stocks. In this article, we attempt to define growth and value stocks with two examples, provide an overview of the academic underpinnings that support value investing, explain why we believe that value investing is more intuitive than growth investing and conclude with why we still maintain growth stocks in our client portfolios.
Click here to view the full article.
David Ott
www.acrinv.com
Click here to view the full article.
David Ott
www.acrinv.com
Daily Insight: The Great Unwind, Durable Goods and New Home Sales
U.S. stocks were able to shake off the increasingly early signs of government debt-related contagion in Europe as a great durable goods orders report and a bounce in new home sales – albeit from at least a 47-year low – helped the market focus on things more positive. The gains among the benchmark indices made for the fourth winning session this week and the 11th of the past 13.
Energy shares were the clear leader, up 2.29% on Friday, as the price of crude has quickly returned to $85/barrel. Eight of the 10 major industry groups closed higher. Telecoms and consumer staples were the only groups down on the session.
For the week, the S&P 500 added 2.10%; the Dow rose 1.68%; and the NASDAQ Composite gained 1.97%. The S&P 400 (mid cap) rallied 3.56% and the Russell 2000 (small cap) jumped 3.82%. The S&P 500 has now rallied 80% from the nefarious March 9, 2009 low of 666.
Greek government-bonds continue to get hit as Germany plays a game of chicken – a game Greece is going to win, but only in the short term. Germans don’t like bailing Greece out of their troubles because they’ll be on the hook for most of the cost; to begin with, Germans seemed fairly reluctant to go with this Euro System anyway, unwilling to give up their Deutsche Mark all the way up to the Euro’s initial adoption in 1999. Greek 10-year bond spreads have hit 626 basis points (that’s 6.26 percentage points above German bunds), which means a yield of 9.03%.
Click here to read the full Daily Insight.
Brent Vondera, Senior Analyst
www.acrinv.com
Energy shares were the clear leader, up 2.29% on Friday, as the price of crude has quickly returned to $85/barrel. Eight of the 10 major industry groups closed higher. Telecoms and consumer staples were the only groups down on the session.
For the week, the S&P 500 added 2.10%; the Dow rose 1.68%; and the NASDAQ Composite gained 1.97%. The S&P 400 (mid cap) rallied 3.56% and the Russell 2000 (small cap) jumped 3.82%. The S&P 500 has now rallied 80% from the nefarious March 9, 2009 low of 666.
Greek government-bonds continue to get hit as Germany plays a game of chicken – a game Greece is going to win, but only in the short term. Germans don’t like bailing Greece out of their troubles because they’ll be on the hook for most of the cost; to begin with, Germans seemed fairly reluctant to go with this Euro System anyway, unwilling to give up their Deutsche Mark all the way up to the Euro’s initial adoption in 1999. Greek 10-year bond spreads have hit 626 basis points (that’s 6.26 percentage points above German bunds), which means a yield of 9.03%.
Click here to read the full Daily Insight.
Brent Vondera, Senior Analyst
www.acrinv.com
Friday, April 23, 2010
Thursday, April 22, 2010
Daily Insight: Mortgage Apps, Stimulating Default and EU Under Pressure
U.S. major stock indexes ended essentially flat on Wednesday as the EU sovereign debt story weighed just enough to erase early-session gains. The Dow closed up slightly and the S&P 500 down a smidge. The tech-laden NASDAQ performed the best of the three majors; tech earnings are the most solid of all industries – financials profits are up the most on paper but it’s artificial.
Yesterday’s earnings reports were good for the most part, which offered support to the market. Again though, I can’t help but mention for a second day that multinational companies are reporting weak domestic growth; most of the profit growth is coming from overseas, currency translation and payroll cost-cutting. The financial company reports of the past couple of days showed that their profits are coming from big trading profits, thanks to Dr. Zero. I continue to believe that the banks are going to have a reality problem a couple of quarter out as the home sales reports will show distressed properties are making up a larger percentage of total sales – that percentage has been averaging about 35% and data from various states suggests it’s going over 40%; price declines will follow and that means banks will have to set aside more cash, which cuts into earnings. With 30% of home borrowers either underwater or with less than 5% equity, there is zero room for additional price declines.
On the EU sovereign debt problem, the relevance regarding the Greek financing issue is not that the country defaults on some payments per se, but that other EU countries have similar budget problems. Since the Eurozone is heavily dependent on government spending, the required and austere budget cuts will certainly be seen in their already very weak GDP readings. Further, I suspect that European banks hold large amounts of government debt and as those securities get whacked, so does the capital of those banks – as goes the capital so goes the lending.
The major industry groups were split with five up and five down. Industrials led the gainers and health-care the losers – the shares got hammered relative to the market, down 1.74%.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
Yesterday’s earnings reports were good for the most part, which offered support to the market. Again though, I can’t help but mention for a second day that multinational companies are reporting weak domestic growth; most of the profit growth is coming from overseas, currency translation and payroll cost-cutting. The financial company reports of the past couple of days showed that their profits are coming from big trading profits, thanks to Dr. Zero. I continue to believe that the banks are going to have a reality problem a couple of quarter out as the home sales reports will show distressed properties are making up a larger percentage of total sales – that percentage has been averaging about 35% and data from various states suggests it’s going over 40%; price declines will follow and that means banks will have to set aside more cash, which cuts into earnings. With 30% of home borrowers either underwater or with less than 5% equity, there is zero room for additional price declines.
On the EU sovereign debt problem, the relevance regarding the Greek financing issue is not that the country defaults on some payments per se, but that other EU countries have similar budget problems. Since the Eurozone is heavily dependent on government spending, the required and austere budget cuts will certainly be seen in their already very weak GDP readings. Further, I suspect that European banks hold large amounts of government debt and as those securities get whacked, so does the capital of those banks – as goes the capital so goes the lending.
The major industry groups were split with five up and five down. Industrials led the gainers and health-care the losers – the shares got hammered relative to the market, down 1.74%.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
Wednesday, April 21, 2010
Daily Insight: Is Eight Enough, Crude Reversal and Not So Confident
U.S. stocks marched higher on good earnings reports, moving above the 1200 mark on the S&P 500. This puts the broad market within 4% of its pre-Lehman collapse level. The tech-laden NASDAQ Composite has already fueled past its pre-Lehman number of 2300, crossing the 2500 mark for the third time in a week so we’ll see if we can hold it this time.
Profit reports are looking good again this quarter, the second quarter of improvement following nine periods of decline; although the theme among the multi-nationals has been Asian growth, with sales from the Americas weak-to-flat relative to the year-ago period -- IBM and Coca-Cola’s results were the latest examples. Also, corporate cost-cutting via payroll slashing is the primary boost to profits. This massive cost-cutting is both good and bad. While it helps the profit story, it stings personal incomes – exclude the $365 billion in transfer payments over the past 18 months, which cannot be sustained anyway, and personal income is down 4% over the last year-and-a-half.
As we’ve discussed, this profit cycle should extend for a few quarters, but for it to prove the multi-year run that is usually the case we’ll have to see the final demand necessary to fuel top-line improvement; that means several quarters of above-average GDP that is required for strong job growth. The requisite household de-leveraging process once job growth picks up will prove a headwind for consumer activity. If stocks hold these gains, it will make the process easier; if not, then consumers won’t have that relative wealth effect that helps propel spending. For now, the more cars bought (as 0% loans and $0 down is all the rage again) and the more iPhones purchased by generations X and Y that just can’t do without their gazillion apps, the necessary de-leveraging is only delayed.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
Profit reports are looking good again this quarter, the second quarter of improvement following nine periods of decline; although the theme among the multi-nationals has been Asian growth, with sales from the Americas weak-to-flat relative to the year-ago period -- IBM and Coca-Cola’s results were the latest examples. Also, corporate cost-cutting via payroll slashing is the primary boost to profits. This massive cost-cutting is both good and bad. While it helps the profit story, it stings personal incomes – exclude the $365 billion in transfer payments over the past 18 months, which cannot be sustained anyway, and personal income is down 4% over the last year-and-a-half.
As we’ve discussed, this profit cycle should extend for a few quarters, but for it to prove the multi-year run that is usually the case we’ll have to see the final demand necessary to fuel top-line improvement; that means several quarters of above-average GDP that is required for strong job growth. The requisite household de-leveraging process once job growth picks up will prove a headwind for consumer activity. If stocks hold these gains, it will make the process easier; if not, then consumers won’t have that relative wealth effect that helps propel spending. For now, the more cars bought (as 0% loans and $0 down is all the rage again) and the more iPhones purchased by generations X and Y that just can’t do without their gazillion apps, the necessary de-leveraging is only delayed.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
Tuesday, April 20, 2010
Daily Insight: Europe vs. The Volcano, and SEC Vote
U.S. stocks erased early-session losses after it was learned that the Securities and Exchange Commission’s (SEC) vote on pursuing a case against Goldman Sachs was not unanimous. The vote came in at 3-2, which means the SEC pursuit of the way Goldman has allegedly conducted itself may not be as vigorous as previously expected.
While many will say that it’s GS for the SEC not to pursue the case aggressively, the market also feared the short-term market ramifications of such action. But we shouldn’t put our guard down, as Congress and state attorneys general are there, in all their populist fury, to go after the entire financial industry by way of a new regulatory regime.
I do find it surprising the SEC voted this way, considering the several acts of serious malfeasance they missed over the past couple of years, or decades in terms of Madoff. One would have thought they’d go after this case, maybe even to overdo it, just to make a statement.
The early slide was largely led by basic material shares. China’s pullback on its stimulus, particularly on the loan front as they shift to more stringent credit standards and halt loans to those speculating within the housing market (third home buyers as they call them), has people worried about Asian demand a few months out. China’s very aggressive stimulus program, both in terms of outright government spending and in massive credit creation, has fueled the Asian economic bounce. But the market’s mid-day rally gave life to the commodity trade and basic material shares bounced back.
In the end, all 10 major industry groups close up for the session. Industrials were the laggard, essentially unchanged. Financials, Friday’s big losers, was the best-performing group, up 1.10%.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
While many will say that it’s GS for the SEC not to pursue the case aggressively, the market also feared the short-term market ramifications of such action. But we shouldn’t put our guard down, as Congress and state attorneys general are there, in all their populist fury, to go after the entire financial industry by way of a new regulatory regime.
I do find it surprising the SEC voted this way, considering the several acts of serious malfeasance they missed over the past couple of years, or decades in terms of Madoff. One would have thought they’d go after this case, maybe even to overdo it, just to make a statement.
The early slide was largely led by basic material shares. China’s pullback on its stimulus, particularly on the loan front as they shift to more stringent credit standards and halt loans to those speculating within the housing market (third home buyers as they call them), has people worried about Asian demand a few months out. China’s very aggressive stimulus program, both in terms of outright government spending and in massive credit creation, has fueled the Asian economic bounce. But the market’s mid-day rally gave life to the commodity trade and basic material shares bounced back.
In the end, all 10 major industry groups close up for the session. Industrials were the laggard, essentially unchanged. Financials, Friday’s big losers, was the best-performing group, up 1.10%.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
Monday, April 19, 2010
Eli Lilly (LLY) Earnings and Measuring the Costs and Impat of Healthcare Reform
Eli Lilly (LLY) became the first Big Pharma firm to give some concrete numbers relating to the cost of reform.
LLY trimmed its 2010 earnings guidance to reflect a 35-cent (full-year) impact from U.S. healthcare reform. The company projected government rebates related to healthcare reform to reduce full-year revenues by $350 million to $400 million. The healthcare reform-related charges in the first quarter amounted to 12 cents, or 9% of EPS.
The charges were higher than analysts were expecting, but this will not necessarily be the case for all drugmakers. Roughly 20% of LLY’s total sales are to government programs Medicare and Medicaid, both of which received discounts from pharmaceutical firms in the healthcare bill. As more pharma firms report earnings, I think we will see that LLY’s high exposure Medicare and Medicaid creates a disproportionately large impact for the firm relative to its peers.
It will take several years for the volume created by newly insured patients to offset the costs associated with the healthcare legislation. At the same time, I expect LLY to be one of the harder hit firms in the industry.
Shares of LLY are basically flat on today’s earnings release, but they have trailed the broader market over the past year. The firm’s pipeline will not offset the revenue loss expected from looming patent expirations and it seems inevitable that LLY will need to acquire a late-stage drugs.
Without additional revenues, LLY will need to slash its attractive dividend. Of course, any M&A activity would likely lead to a reduction in the payout anyways. The bigger downside to M&A is that it has historically destroyed shareholder wealth for drugmakers.
These concerns are well-known and something I’ve covered before; I’d say the bigger takeaway from LLY’s results is that investors will now expect the same level of disclosure regarding the impact from healthcare reform. That’s better than nothing, right?
Peter Lazaroff, Investment Analyst
www.acrinv.com
LLY trimmed its 2010 earnings guidance to reflect a 35-cent (full-year) impact from U.S. healthcare reform. The company projected government rebates related to healthcare reform to reduce full-year revenues by $350 million to $400 million. The healthcare reform-related charges in the first quarter amounted to 12 cents, or 9% of EPS.
The charges were higher than analysts were expecting, but this will not necessarily be the case for all drugmakers. Roughly 20% of LLY’s total sales are to government programs Medicare and Medicaid, both of which received discounts from pharmaceutical firms in the healthcare bill. As more pharma firms report earnings, I think we will see that LLY’s high exposure Medicare and Medicaid creates a disproportionately large impact for the firm relative to its peers.
It will take several years for the volume created by newly insured patients to offset the costs associated with the healthcare legislation. At the same time, I expect LLY to be one of the harder hit firms in the industry.
Shares of LLY are basically flat on today’s earnings release, but they have trailed the broader market over the past year. The firm’s pipeline will not offset the revenue loss expected from looming patent expirations and it seems inevitable that LLY will need to acquire a late-stage drugs.
Without additional revenues, LLY will need to slash its attractive dividend. Of course, any M&A activity would likely lead to a reduction in the payout anyways. The bigger downside to M&A is that it has historically destroyed shareholder wealth for drugmakers.
These concerns are well-known and something I’ve covered before; I’d say the bigger takeaway from LLY’s results is that investors will now expect the same level of disclosure regarding the impact from healthcare reform. That’s better than nothing, right?
Peter Lazaroff, Investment Analyst
www.acrinv.com
Daily Insight: Housing Starts, Confidence, Korea and Goldman Not So Golden
U.S. stocks ran into a little trouble on Friday as the IMF is headed to Greece, the latest consumer confidence reading erased three-months of gains, the potential for conflict on the Korean peninsula got a little hotter and Goldman Sachs is now officially under investigation for defrauding investors.
Pre-market trading, which was pointing lower very early Friday morning, weakened just before the open when South Korea stated there’s a high possibility the sinking of their warship last month was due to an external explosion – one would think if their ship ran into a mine or was hit by a torpedo that they’d know by now. But if it was external, it has North Korea written all over it. This concern extended into the official trading session.
But concerns on that front were suddenly overcome by an SEC charge that Goldman Sachs defrauded investors. The deal is Goldman stated a financial product they marketed that was tied to subprime mortgages, as the housing market was beginning to crumble, was structured by an independent, objective third party. It appears though that the product, a synthetic CDO, was not structured by an independent source, but rather the portfolio selection was influenced by John Paulson’s hedge fund who was betting the securities underlying the CDO would default. This resulted in new fears that ramifications from the financials chaos of late 2008 may not have completely blown over. More on this below the jump…
The market has become incredibly complacent, and while stocks improved from the session’s low point, the news out of Korea and yet another case of financial fraud may have reminded traders of the various risks that lurk in the marketplace today. There are always risks, but they are abundant right now and when the market is so complacent, as illustrated by the VIX index, its sets up for stocks to get rocked.
Friday we held in there pretty well, a 1.6% decline is not getting rocked in my view. Hopefully, Friday slapped enough people from their pretty little wonderland to lower expectations just enough so we don’t endure something that scares traders and makes a harmful move lower self-fulfilling. This still fragile economy will not respond well to such an event.
Click here to read the full Daily Insight.
Brent Vondera, Senior Analyst
www.acrinv.com
Pre-market trading, which was pointing lower very early Friday morning, weakened just before the open when South Korea stated there’s a high possibility the sinking of their warship last month was due to an external explosion – one would think if their ship ran into a mine or was hit by a torpedo that they’d know by now. But if it was external, it has North Korea written all over it. This concern extended into the official trading session.
But concerns on that front were suddenly overcome by an SEC charge that Goldman Sachs defrauded investors. The deal is Goldman stated a financial product they marketed that was tied to subprime mortgages, as the housing market was beginning to crumble, was structured by an independent, objective third party. It appears though that the product, a synthetic CDO, was not structured by an independent source, but rather the portfolio selection was influenced by John Paulson’s hedge fund who was betting the securities underlying the CDO would default. This resulted in new fears that ramifications from the financials chaos of late 2008 may not have completely blown over. More on this below the jump…
The market has become incredibly complacent, and while stocks improved from the session’s low point, the news out of Korea and yet another case of financial fraud may have reminded traders of the various risks that lurk in the marketplace today. There are always risks, but they are abundant right now and when the market is so complacent, as illustrated by the VIX index, its sets up for stocks to get rocked.
Friday we held in there pretty well, a 1.6% decline is not getting rocked in my view. Hopefully, Friday slapped enough people from their pretty little wonderland to lower expectations just enough so we don’t endure something that scares traders and makes a harmful move lower self-fulfilling. This still fragile economy will not respond well to such an event.
Click here to read the full Daily Insight.
Brent Vondera, Senior Analyst
www.acrinv.com
Friday, April 16, 2010
Daily Insight: Jobless Claims, Manufacturing, IP, and Housing
U.S. stocks gained a little more ground Thursday, extending the winning streak to six sessions, as strong regional manufacturing reports and an upbeat earnings pre-announcement from UPS offset troubling jobless claims figures, the rolling concern over European sovereign debt, and the lowest UK consumer confidence reading since July 2008 that had pre-market trading lower.
The numbers out of the manufacturing sector are really very good, but that’s about all we’ve got right now. If we’re going to pass this ball off from government stimulus to something that can achieve just mild economic growth without all of this support then we’re going to need big employment gains.
The UPS report was a good one, at least in relative terms as we’re coming out of two years of depressed package volume, but it showed domestic activity remained weak. Package volumes rose 24% within countries outside of the U.S., and make no mistake this is driven by China’s huge stimulus efforts, but U.S. shipments rose less than 1%.
Just three of the top ten industry groups closed higher on the session, led by industrials shares. Information technology and consumer discretionary shares were the other two winners. Financials led the seven industry groups that fell, health-care yet again was near the bottom of the list as it held the penultimate spot. Regulation that will cap health insurer profits have obviously led to investor unease.
Brent Vondera, Senior Analyst
www.acrinv.com
Thursday, April 15, 2010
Daily Insight: Mortgage Apps, Retail Sales, and Thanks to Dr. Zero...For Now
U.S. stocks extended the latest winning streak to five sessions on Wednesday after getting a boost from a strong retail sales report and positive comments from JP Morgan’s Chairman/CEO. Oh, and a stocks received little more help from Dr. Zero as he told lawmakers that the recovery faces “significant restraints” – this pretty much assures no change in the next FOMC meeting’s language with regard to fed funds at virtual zero.
JP Morgan’s CEO Jamie Dimon stated the following: China is growing, India’s growing, Japan is growing, home prices have stopped going down, consumer income is up, consumers are spending, service and manufacturing indexes are up, inventories are still low, I could go on and on.” I guess he could but one’s got to question a few of those points.
Asia is certainly growing, but we’ll see what happens when China reins in their massive government spending and loan activity (and even now it’s mixed as China just printed 12% GDP but Japan pretty much remains in recession); home price activity is precarious at best and existing home prices have engaged in second-round slide that has brought the median price back to the cycle low’ consumer incomes are flat, and that’s only because government transfer payments as a percentage of total income are at record highs, excluding these temporary payments incomes continue to fall. While he’s correct on spending and manufacturing activity, it seems his other assessments are a bit misplaced. But he’s the Chairman/CEO of the second-largest bank by assets and I’m just this guy commenting on the data – I guess we’ll just have to wait and see how things play out.
Financials led the rally, with tech and consumer discretionary rounding out the top spots. Telecoms and health-care (again) were the only two industry groups to decline.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
JP Morgan’s CEO Jamie Dimon stated the following: China is growing, India’s growing, Japan is growing, home prices have stopped going down, consumer income is up, consumers are spending, service and manufacturing indexes are up, inventories are still low, I could go on and on.” I guess he could but one’s got to question a few of those points.
Asia is certainly growing, but we’ll see what happens when China reins in their massive government spending and loan activity (and even now it’s mixed as China just printed 12% GDP but Japan pretty much remains in recession); home price activity is precarious at best and existing home prices have engaged in second-round slide that has brought the median price back to the cycle low’ consumer incomes are flat, and that’s only because government transfer payments as a percentage of total income are at record highs, excluding these temporary payments incomes continue to fall. While he’s correct on spending and manufacturing activity, it seems his other assessments are a bit misplaced. But he’s the Chairman/CEO of the second-largest bank by assets and I’m just this guy commenting on the data – I guess we’ll just have to wait and see how things play out.
Financials led the rally, with tech and consumer discretionary rounding out the top spots. Telecoms and health-care (again) were the only two industry groups to decline.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
Wednesday, April 14, 2010
Daily Insight: NFIB, Trade, Buyers Show Up But Greece Pays, Intel Inside
U.S. stocks shook off early-session weakness to gain ground for a fourth-straight session on Tuesday. The broad S&P 500 has jumped 15% over the past two months, bouncing off of the late-January pullback of 8%; the market has its eyes set on the pre-Lehman collapse level of 1250 – about 4% above yesterday’s closing price.
This 57-week rally from the 13-year low hit on March 9, 2009 currently stands at 77%, as measured by the S&P 500.
Consumer discretionary, technology and industrial shares led the gainers. Consumer stocks got a lift from the latest trade balance report that showed strong import activity in February; without fear of sounding repetitive, I’m highly skeptical of the idea that consumer activity will improve in a consistent manner – appears to be a minority view, but I’m fine with that.
The four industry groups that closed lower yesterday were energy, utility, basic material and telecoms.
On the EU sovereign-debt financing front, Greece sold $2.12 billion in 6-12 month Treasury bills on Tuesday and demand was super-strong with bid-to-covers at 7.67 for the six-month paper and 6.54 for 12 month – a figure approaching 3.00 is strong. But Greece had to pay up as yields came in at 4.55% and 4.85%, respectively. Dang, U.S. savers would love deposit rates even half these levels – sit tight, we’ll get them in time.
So the EU states that they’ll come to the rescue of Greece if they have trouble funding government debt, which means risk of default over the next 12 months is about zilch. I wonder what Greece would have had to pay without that backstop, 7-8% on 12-month paper? What will they have to pay when this debt needs to be rolled a year from now? Which begs the question: where will EU budget-deficit funding costs rise to when Italy and Spain run into trouble? Germany and France won’t be able to bail them out too, without driving their own borrowing costs higher. This story has only just begun.
Click here to read the full Daily Insight.
Brent Vondera, Senior Analyst
www.acrinv.com
This 57-week rally from the 13-year low hit on March 9, 2009 currently stands at 77%, as measured by the S&P 500.
Consumer discretionary, technology and industrial shares led the gainers. Consumer stocks got a lift from the latest trade balance report that showed strong import activity in February; without fear of sounding repetitive, I’m highly skeptical of the idea that consumer activity will improve in a consistent manner – appears to be a minority view, but I’m fine with that.
The four industry groups that closed lower yesterday were energy, utility, basic material and telecoms.
On the EU sovereign-debt financing front, Greece sold $2.12 billion in 6-12 month Treasury bills on Tuesday and demand was super-strong with bid-to-covers at 7.67 for the six-month paper and 6.54 for 12 month – a figure approaching 3.00 is strong. But Greece had to pay up as yields came in at 4.55% and 4.85%, respectively. Dang, U.S. savers would love deposit rates even half these levels – sit tight, we’ll get them in time.
So the EU states that they’ll come to the rescue of Greece if they have trouble funding government debt, which means risk of default over the next 12 months is about zilch. I wonder what Greece would have had to pay without that backstop, 7-8% on 12-month paper? What will they have to pay when this debt needs to be rolled a year from now? Which begs the question: where will EU budget-deficit funding costs rise to when Italy and Spain run into trouble? Germany and France won’t be able to bail them out too, without driving their own borrowing costs higher. This story has only just begun.
Click here to read the full Daily Insight.
Brent Vondera, Senior Analyst
www.acrinv.com
Tuesday, April 13, 2010
Daily Insight: Living on a Prayer, Commodity Inflation Watch, Budget Statement
U.S. stocks extended the latest winning streak to three days and the Dow, after facing afternoon rejection during a number of sessions over the past 10 trading days, finally closed above the 11000 mark for the first time in 18 months. This is now the third, I’m going to say secular, run through 11K after initially breaking through in May 1999.
A plan, this time with specifics (although it would take unanimous consent to implement), to bail out Greece from its debt financing problems helped stocks in pre-market trading. The hope that the first-quarter earnings season would post good results helped momentum just enough to hold onto half of the early-session gains – and the current earnings season will be a good one, it’s a couple of quarters out when things may get sketchy, as we’ll get to below.
First-quarter earnings season kicked off last night after the closing bell, but won’t begin in earnest for another week. Within three weeks time we’ll have about 30% of S&P 500 members in and a pretty good idea of how the season will turn out.
The fourth quarter of 2009 ended a nine-quarter string of declining earnings as ex-financial S&P 500 earnings per share rose 13.8%. This quarter the market expects 25%, and we should get that as industrials will finally begin to help out and consumer discretionary will have the easiest comparisons (remember what was occurring a year ago) in a very long time, if not ever. (Earnings results are matched against the year-ago period.)
Six of the major 10 industry groups led the broad market higher. Financials performed the best, with utility and technology shares not far behind. Basic material and health-care led the losers for the third-straight session. Telecom and consumer discretionary shares rounded out the sectors that ended in the red.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
A plan, this time with specifics (although it would take unanimous consent to implement), to bail out Greece from its debt financing problems helped stocks in pre-market trading. The hope that the first-quarter earnings season would post good results helped momentum just enough to hold onto half of the early-session gains – and the current earnings season will be a good one, it’s a couple of quarters out when things may get sketchy, as we’ll get to below.
First-quarter earnings season kicked off last night after the closing bell, but won’t begin in earnest for another week. Within three weeks time we’ll have about 30% of S&P 500 members in and a pretty good idea of how the season will turn out.
The fourth quarter of 2009 ended a nine-quarter string of declining earnings as ex-financial S&P 500 earnings per share rose 13.8%. This quarter the market expects 25%, and we should get that as industrials will finally begin to help out and consumer discretionary will have the easiest comparisons (remember what was occurring a year ago) in a very long time, if not ever. (Earnings results are matched against the year-ago period.)
Six of the major 10 industry groups led the broad market higher. Financials performed the best, with utility and technology shares not far behind. Basic material and health-care led the losers for the third-straight session. Telecom and consumer discretionary shares rounded out the sectors that ended in the red.
Click here to read the full Daily Insight
Brent Vondera, Senior Analyst
www.acrinv.com
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