Feb 9-13: Earnings parade and a Grexit

DJIA 17729 // S&P 2047 // NASDAQ 4726  // 10-YR TRE 1.948% //

EURO 1.13 // OIL 52.28 // GOLD 1241 // BIT 219

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

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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

Nov 10-14: The perks of single life

Alibaba employees are turning up to handle a lot of traffic on their e-commerce platforms this week.

$8,200,000,000

Expected sales during this year's Single's Day (Nov 11) sale on Alibaba's Tmall and Taobao e-commerce platforms. 2013 revenues totaled $5.8 billion.

A Single Company Will Dwarf All of America's Black Friday and Cyber Monday Online Sales on Tuesday, Business Insider

http://www.businessinsider.com/singles-day-is-chinas-cyber-monday-2014-11 

On Tuesday November 11 (11/11), China marks their annual "anti-Valentine's Day" celebrating bachelors, bachelorettes, and single's life. Single's Day also marks an annual online shopping bonanza. With revenues last year of $5.8 billion, Alibaba is anticipating sales this year in excess of $8 billion. Products sold include everything ranging from body pillows to BMWs. By comparison, e-commerce for all sellers during the US's Cyber Monday is expected to come in at less than $2 billion.

WSJ: OPEC Unlikely to Act Till Oil Hits $70/Barrel, Barron's

http://blogs.barrons.com/asiastocks/2014/11/06/wsj-opec-unlikely-to-act-till-oil-hits-70/

Although oil has dropped 20% in price so far this year, there is more downside coming. Experts say that OPEC is unlikely to cut production (i.e. limit supply, producing upward pressure on prices) until oil prices reach $70/barrel. The cartel does not see oil falling below $75 this year. Lower fuel prices may provide a boon to airlines, who could pass gas savings onto customers to boost the number of flyers during the holiday season.

Lampert Weighs Turning 300 Sears Stores Into REIT, New York Post

http://nypost.com/2014/11/07/lampert-weighs-turning-300-sears-stores-into-reit/

As sales at brick-and-mortar retail locations continue to fall, Sears chairman and chief executive Eddie Lampert is planning to 200 to 300 stores to a real estate investment trust (REIT). With same-store sales falling across the franchise, Sears is selling off assets to raise cash to support a failing balance sheet. The company said is has about $330 million in cash and $234 million in its credit facility.

Bond Swing Draws Scrutiny, WSJ

http://online.wsj.com/articles/bond-swings-draw-scrutiny-1415581163 (paywall)

Changes in bond trading practices from phone-based to electronic exchanges and the continued rise of high-frequency and algorithmic trading may have contributed to the 10-year Treasury's dip below 1.9% last week. Some officials are comparing the event to the 2010 Flash Crash during which the Dow Jones Industrial Average dropped 900 points before recovering a few minutes later.

New Vocabulary (Investopedia):

• REIT http://www.investopedia.com/terms/r/reit.asp
• High-frequency trading http://www.investopedia.com/terms/h/high-frequency-trading.asp
• Algorithmic trading http://www.investopedia.com/terms/a/algorithmictrading.asp
• Flash Crash http://www.investopedia.com/terms/f/flash-crash.asp

Calendar, November 10-14 (Nasdaq Economic Calendar):

• Mon 10th: AAPL, MRK
• Tue 11th: PFE
• Wed 12th: NFIB Small Business Optimism (96.0); Wholesale trade (0.2%); CMCSA, SBUX
• Thu 13th: Jobless Claims (280K); AIG, XOM
• Fri 14th: Retail Sales (0.2%/0.5%); CVX

Let's Play Nostradamus! GBA FFS Predictions, Nov 11-14:

• Following lower oil prices and increased consumer confidence reports from October, consumer stocks should continue to increase in price into the holiday season
• Stocks relating to prevention and treatment of Ebola, such as LAKE, APT, and TKMR, should continue to climb
• Oil prices will rebound as cold air hits the US Northeast and seasonal consumption picks up