March On

TAKEAWAYS & FYIs (commentary):

  • U.S.-Russian relations continued to decline, but markets didn’t see it as major issue; European markets have been more concerned about oil and gas sales from Russia, as Russia needs the currency and Europe needs the products
  • The Fed moved the conversation from stimulus ending to increasing interest rates, but after an initial negative impact the market accepted this (rate increases are at least a year away), just as it accepted the end of QE4-ever
  • Interest rates declined for Q1, as the 10-year fell to 2.72% from 3.03% (1.76% at the end of 2012)
  • Buybacks were flat for Q4 with fewer shares repurchased, but companies issued less, resulting in lower share counts and higher EPS
  • Activists continued on, as boards reacted: If you have people knocking on the board room door, you have to answer it or reinforce the door
  • Biotechnology declined, underperforming healthcare YTD: correction opportunity vs. bubble debate

Thought items:

  • It’s nice to have (new) paper money, as Facebook uses it for another $2B purchase, after last month’s $19B buy
  • It’s also a nice time to do an IPO – at least if you have profits (health care)
  • Starbucks will expand its evening wine and beer sales – a new twist on speak-easy (what would Maynard G Krebs buy?)

Key stats:

  • Cash set its sixth consecutive quarterly record for the S&P 500 Industrials (Old) at $1.3 trillion; 94 weeks of net income sitting on the books was making very little but attracting outsiders
  • Traders market: the index was up 1.30%, but 90 issues were up at least 10%, with 36 down at least 10% YTD (25.2% of the issues)

Key concept:

  • Q1 feeling (on the Street) is that the weather is an okay excuse for less than expected results, which increases the stakes on company guidance for Q2

The posts on this blog are opinions, not advice. Please read our disclaimers.

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