Feb 23-27: And the award goes to...

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Applicants at a recent job fair. The US economy has added 3.2 million jobs in the past year, helping to drop the unemployment rate to 5.7%.

283,000

Applications last week for unemployment aid. A drop in applications for aid is a positive sign that the economy is absorbing job seekers. Although more and more Americans are finding jobs, economists are arguing about the indicator's significance for the health of the overall economy.

Applications for US unemployment aid plummet to 283,000, AP via Yahoo Finance

Weekly applications for unemployment aid dropped by 21,000 last week to their lowest level since last October. The drop could be attributed in part to the economy adding 3.2 million jobs in the past year, helping to lower unemployment to 5.7% in January from 6.6% twelve months before. Number of people quitting jobs increased by 2.1, generally seen as a strong sign of job alternatives.

Walmart Raises Wages as Market Gets Tighter, WSJ

Following the lead of Gap and others, Walmart announced last Wednesday that it would raise associates' salary to $9 by this April and $10 by next year. The market responded by pushing WMT shares lower amid wage expense concerns. Investors are taking this as a sign that employment, at least at the lower end of the market, is tightening noticeably in recent weeks.

Economy's Supply Side Splutters, WSJ

Complicating bullishness associated with recent rates of employment is the fact that, at 3.6%, job vacancies in December were at their highest rate since 2001--well before the recession. Analysts are taking this as a sign that many employees are not well matched to the jobs currently available. Productivity has grown at just 1.3% per year since 2007, the slowest rate of increase since 1970.

Lenders Step Up Financing to Subprime Borrowers, WSJ

Almost four out of every 10 loans for cars, credit cards, and personal borrowing in the first 11 months of 2014 went to borrowers with FICO credit scores of 650 or less, or "subprime borrowers." These loans carry higher returns for investors, but also a greater chance of default. Autos, as opposed to credit cards or personal loans, are easier to cover because vehicles can be repossessed by lenders.

Fed Tiptoes into Rate Hike Debate, WSJ
The debate about when the Fed will raise interest rates continues, as Janet Yellen and her advisors remain extremely cagey about changing the wording used in FOMC minutes to give indications to markets either way--about a nearer-term or longer-term increase. One thing is clear--despite strong growth in jobs numbers, inflation is not yet at a level that the Fed would like it to be.

Vocabulary:

• Unemployment rate
• FOMC
• Labor productivity
• Janet Yellen

Economic Calendar:

• Mn Feb 23: Existing home sales, Dallas Fed Mfg survey; CHGG, HSBC, SF
• Tu Feb 24: Case-Shiller HPI, Consumer confidence; ; SAM, FSLR, FLTX, HD, ODP
• We Feb 25: New home sales, Janet Yellen speaks; CVC, CPB, DLTR, LOW, PLKI, TGT
• Th Feb 26: CPI, Durable goods, Jobless claims; BUD, GPS, JCP, LYV, RBS, SRE
• Fr Feb 27: GDP, Chicago PMI, Pending home sales

Predictions from last week: 2 / 3   All-Time: 12 / 18

• Chinese yuan weakens: WRONG
• Dow, S&P continue record highs :CORRECT
• Manufacturing expands: CORRECT

Weekly Predictions:

1. Yellen keeps "patient" wording in FOMC dialogue
2. CPI less food and energy at 0.0%, below consensus
3. GDP on Friday indicates annualized rate of over 3.5% economic growth

Participants: J. O'Brien, K. Meenan

Feb 16-20: DuPont getting peltzed

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Trian Fund Management founding partner Nelson Peltz is accusing DuPont CEO Ellen Kullman and her staff of not doing enough internally to better unlock value for shareholders.

67%

Percent over and above S&P 500 returns that DuPont stock has returned to shareholders since 2009.

Peltz's Firm, DuPont Trade Salvos, WSJ

Nelson Peltz's activist hedge fund, Trian, which already owns a 2.7% stake in DuPont, is pursuing 4 seats on DuPont's board. The US-based materials and chemicals company has been doing well recently, but Peltz insists that Trian's guidance is the leadership for outperformance--not the leadership of CEO Ellen Kullman. Peltz insists there is yet more value to unlock for shareholders.

Currency Wars: Pandering to Debase, Seeking Alpha

Tim Edwards walks through the decision-making of fictional country Atlantis: should they or should they not debase their currency? On the one hand, austerity measures aren't popular with their citizens, and stimulus would be exciting for equity investors while debt should become suddenly cheaper (in dollar terms). On the downside is the specter of inflation. What to do?

Aggregate Income Shows Consumers Ready To Take Growth Baton, Bloomberg Briefs

Economist Carl Riccadonna looks at last week's employment report and more specifically aggregate income to see if US consumers are ready to keep spending. While some pundits cite manufacturing and industrial production specifically in energy as the reason for the US' gradual recovery from crisis, there are signs that a consumption-driven surge may be on the way--or is already here.

Apple: $710 Billion and Counting, WSJ
The eye-catching graphic on the article's front page pretty much sums up the buzz: AAPL's market price is now 2 times Google's, 2.5 times Walmart's, 4 times Bank of America's, 8 times McDonald's, 12 times GM's, and 24 times Twitter's. Tim Cook cited high demand for iPhones in China as one reason for the explosion in value. Carl Icahn is calling for a valuation in excess of $1 trillion.

Convertibles Stay Hot, WSJ
US-listed convertible bond deal volume has jumped 49% since this time last year, totaling $5.7 billion. Convertible bonds get their name from paying their investors interest, like a bond, until they are converted into the company's stock at a certain predetermined strike price--much like an option. The spike in volume is attributed to low interest rates and bullishness in stocks.

Vocabulary: gathered throughout meeting, definitions from www.investopedia.com

• Convertible bond http://www.investopedia.com/terms/c/convertiblebond.asp
• Delinquent http://www.investopedia.com/terms/d/delinquent.asp
• Volatility http://www.investopedia.com/terms/v/volatility.asp
• PMI Manufacturing index http://www.investopedia.com/terms/p/pmi.asp

Calendar: from Barron's, Nasdaq Economic Calendar

• Monday: (President's Day)
• Tuesday: Empire State manufacturing survey, Housing market index; FOSL, FDP, JACK, TAXI, GT, VNO, WM
• Wednesday: Housing starts, PPI, Industrial production, FOMC minutes; ACT, ANGI, CAR, DENN, HLT, MAR
• Thursday: Jobless claims, Philly Fed survey; DTV, EQIX, INTU, LLC, PSA, TMUS, TRUE, WMT
• Friday: PMI Manufacturing index; DE

Predictions from last week: 3/3 All-Time: 10/15

• US import prices fall: CORRECT
• Zoetis beats: CORRECT
• Oil rallies: CORRECT

Weekly Predictions: gathered at conclusion of weekly meeting

1. Chinese yuan will weaken against the US dollar
2. Dow & S&P will continue record highs as Greece signals acceptance of some of EU's austerity program
3. PMI Manufacturing will indicate expansion (score of 50 or more)

Participants: T. Aygun, K. Meenan

Feb 9-13: Earnings parade and a Grexit

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Alexei Tsipras and the Syriza party have rebuffed 5 years of austerity imposed on Greece but intend to steer a course that keeps the country in the Eurozone. The ECB's decision to no longer accept Greek sovereign debt as collateral on loans sent returns on the Greek 10-year to over 11%. Three-year Greek notes now yield over 19%.

24.3%

South Africa's unemployment rate, which dropped this Tuesday to a 1-year low

*NOTE: For paywalled articles, unlock by copying article title into Google Search

Earnings Whiplash Slams GoPro, Pandora, Yelp, Stratasys, Barron's

Tech companies that were wrecked last week after just slight deviations from analyst expectations include Yelp, GoPro, Pandora, and Stratasys. Earnings day darlings included data-enriching software maker Tableau Software, VoIP consultants RingCentral, food delivery providers GrubHub, and mobile video game maker Glu Mobile. Forward prices to earnings multiple for these companies average out to about 70 times 2015 earnings.

ECB: Banks can't use Greek debt as collateral, CNBC via Yahoo Finance

The European Central Bank has revoked a waiver that allowed banks to use Greek government debt as collateral. The implications of this move are profound, including a risk of systemic counterparty risk throughout the Eurosystem. After US markets responded with a drop, it was announced later that Greek would still have access to the ECB's "emergency liquidity assistance" program, retaining a backstop for the beleaguered economy.

Job market looks ripe for liftoff, WSJ

US non-farm payrolls continued their hot streak, as the economy continued to add jobs with a consistency not seen since 1997. Average hourly earnings ($24.75) was up 0.5% last month and 2.2% over the past year. While the labor market still has room for improvement--as it moves closer to the 5.2-5.5% target--some economists argue that slews of retiring baby boomers mean we are closer to full labor participation than some may think.

Treasuries fall as US readies auctions, Microsoft sells bonds, Bloomberg
The combined effect of Microsoft's sale of $10.75 billion of bonds--the biggest issuance so far in 2015--more than Merck's $8 billion issue and Apple's $6.5 billion issue--and the US government's sale of up to $30 billion of 1-month Treasuries accounted for an influx of supply that pushed up yields across different bond markets. Cash-rich corporations are using the exceptionally low rate environment to lock in debt issues with maturities as long as decades into the future.

Vocabulary:

• Grexit http://en.wikipedia.org/wiki/Greek_withdrawal_from_the_eurozone
• Non-farm payrolls http://www.investopedia.com/terms/n/nonfarmpayroll.asp
• JOLTS http://www.investopedia.com/terms/j/jolts.asp

Calendar: check Nasdaq Economic Calendar

• Mon Feb 9: Labor market conditions index; HAS, L, SOHU
• Tue Feb 10: Labor Dept JOLTS;  KO, CVS, TAP, SAVE, HOT
• Wed Feb 11: EIA Petroleum status report, Treasury budget; BIDU, FEYE, NVDA, PEP, TSLA, TRI, TWX, ZTS
• Thu Feb 12: Jobless claims, Retail sales; AIG, APA, DPS, GRPN, HSP, K, MANU, ZNGA
• Fri Feb 13: Import and export prices, Consumer sentiment; RRGB, SJM

Predictions from last week: score: 2/3 All-Time: 7/12

• Chipotle beats: CORRECT (on bottom line, missed on top line)
• Buffalo Wild Wings beats: WRONG (on bottom line, exceeded top line)
• Non-farm payrolls increase: CORRECT (by 250k+, Dec 2014 revised upwards)

Weekly Predictions: gathered at conclusion of weekly meeting

1. US import prices fall amid the strengthening dollar and stagnant global demand
2. Zoetis beats estimates on continued strength in pet and pet products
3. Oil prices rally against a new $50 resistance zone

Participants: R. Niu, S. Shah, K. Meenan, J. O'Brien

Feb 2-6: I'm lovin' it

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With Seattle driving for a game-winning touchdown, New England cornerback Malcolm Butler (21) comes up with perhaps the greatest plays in Patriots history, securing the win with an interception. The thrilling Super Bowl ended up being the most watched television event in history, with a record 114.4 million people tuning in.

$18,000

Current price of a 500ml bottle of McDonald's Big Mac Special Sauce, being auctioned on eBay by McDonald's Australia. This is equivalent to about $23,000 Australian dollars. There are still 8 days left in the auction.

Super Bowl breaks record for US TV viewing, WSJ
Nielsen has reported that this year's Super Bowl, a nail-biter that saw the New England Patriots defeat the Seattle Seahawks with less than a minute left, was the most watched US television event ever, attracting 114.4 million viewers. Super Bowl XLIX is the seventh straight Super Bowl to draw over 100 million viewers, and the 4th bowl game in 5 years to set an all-time record.

Shake Shack more than doubles its IPO price in market debut, DealBook
Shake Shack's IPO, with a stock price that more than doubled on it's first trading day from $21 to more than $45, revealed tremendous excitement for the current trend in investment in "fast casual" restaurants, including Zoe's Kitchen, El Pollo Loco, Chipotle, and Habit Restaurants. The public offering expanded the wealth of famous New York restauranteur Danny Meyer to $340 million. Meyer helped start Shake Shack to provide extra jobs to employees outside nightly work hours.

McDonalds will now accept selfies and hugs as payment, Business Insider
Starting on February 2nd and running until the 14th, McDonalds will allow customers to "pay with lovin'" (expressions of love including selfies and hugs) during predetermined times at certain stores. The company announced the Valentine's Day ad campaign during a commercial spot on the Super Bowl.

Chipotle is an expensive burrito, WSJ
Chipotle, which has provided a 632% return to investors since its IPO nine years ago, is set to report earnings on Tuesday amid a torrent of news and investment in other food chains. Chipotle, which was once almost entirely owned by McDonalds, stopped selling carnitas for a time after poor treatment of pigs by a supplier was revealed. Among other things, McDonald's is currently reeling from a beef scandal in China, which it said played a part in in EPS falling by 1% last quarter.

Why food prices won't fall as fast as gas prices, MarketWatch

Commodities traders are anticipating that lower fuel prices spell a continued fall in food commodity prices including fruits and meats. Oil prices have plummeted this summer, with other commodities struggling to keep up with the fall. Falling input costs could mean continued high margins at restaurant chains including Shake Shack and Habit Restaurants, both of which recently started trading publicly.

Vocabulary:
Fast casual
Nielsen
Danny Meyer
Malcolm Butler

Calendar, Dates: (Nasdaq Economic Calendar)

• Mon Feb 2: PMI Manufacturing, Construction spending; FLWS, RCII
• Tues Feb 3: Factory orders; ADM, AN, BP, CMG, NYT
• Weds Feb 4: ADP Employment, ISM Non-manufacturing index; UHAL, CLX, EVR, GM
• Thur Feb 5: International trade, Jobless claims, Productivity and costs; ATVI, BEBE, BWLD
• Fri Feb 6: Employment situation; MCO, MSG, WETF

Predictions from Jan 26-30: 1 / 3   All-Time: 5 / 9

• AAL beats: CORRECT
• CVX misses: WRONG
• Bitcoin up: WRONG

Predictions for Feb 2-6:

• Chipotle (NYSE: CMG) misses earnings on pork supplier problems
• Buffalo Wild Wings (NYSE: BWLD) beats forecasts on falling commodity prices
• Non-farm payrolls continue to increase as US economy improves

Participants: K. Meenan