May 4-8: Activists Abound

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Dan Loeb, founder of Third Point Management, took a swipe a Warren Buffett at the SALT Conference in Las Vegas last week. Activists have been in the news with two big conferences: SALT in Las Vegas last Wednesday and the Sohn Conference last Monday in Lincoln Center, Manhattan.

$112,000,000,000

Total amount of assets under management controlled by activist hedge funds as of 2014, according to JP Morgan

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Hedge fund star Dan Loeb trashes Warren Buffett, CNN Money 

"I love how he criticizes hedge funds, but he really had the first hedge fund. I love how he criticizes activist investors, yet he was the first activist," said Dan Loeb to the sound of applause. "He thinks we should all pay more taxes but he loves avoiding them himself."

Factories sluggish but orders signal stronger outlook, Investor's Business Daily

"2015 had a rocky start: a soaring dollar shrank exports, a West Coast ports work stoppage snarled supply chains, and plunging oil prices dented energy firms' capital budgets. Yet key ISM indicators suggest that some headwinds are receding."

Europe: There's plenty of good news, and then there's Greece, CNN Money

"The quarterly growth rate of the 19 countries in the eurozone was stronger than either the US or UK managed in the first quarter. France outpaced Germany, Spain is on a roll, but Greece saw its economy shrink for the second consecutive quarter."

Vocabulary & People:

• hedge fund
• ISM
• activist
• Dan Loeb

Calendar:

• Mo May 11: Labor market conditions, 3-month bill auction; ACT, DISH, MBLY
• Tu May 12: NFIB Small biz optimism, Treasury budget; Z, GDDY 
• We May 13: Retail sales, Import export prices, Biz inventories; CSCO, M, SHAK
• Th May 14: Jobless claims, PPI; WB, SINA, MANU
• Fr May 15: Industrial production, Consumer sentiment; MTU

Predictions from last week: 3/3 All-Time: 23/42

• High consumer sentiment: CORRECT
• NFLX beats: CORRECT
• GS beats: CORRECT

Weekly Predictions:

1. Industrial production up
2. MANU beats on rising international popularity
3. MTU misses

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

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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