Tuesday, December 13, 2011

Morning Journal How jobs get created


Economics
This Week’s Data


November retail sales advanced 0.2% versus expectations of a 0.5% increase; ex autos, sales were also up 0.2% versus estimates of up 0.5%.

Other

Manufacturing profits remained strong in third quarter (short):
http://mjperry.blogspot.com/2011/12/american-manufacturing-profits-remain.html

This is a great article on how jobs get created and who benefits (medium):
http://pragcap.com/the-role-of-the-entrepreneur-in-a-capitalist-economy

The latest WSJ-Economists poll for 2012 (medium):
http://advisorperspectives.com/dshort/commentaries/WSJ-Economist-Survey-on-GDP-Dec-2011.php

Federal finances update (short):
http://scottgrannis.blogspot.com/2011/12/federal-finances-update.html

Small business optimism increases in November (short):
http://www.calculatedriskblog.com/2011/12/nfib-small-business-optimism-index.html


News on Stocks in Our Portfolios

03:59 PM UBS reiterates a Buy on Johnson & Johnson (JNJ) following a meeting with management, albeit while lowering its PT to $69. The firm expects major share repurchases to offset the dilutive impact of the Synthes acquisition, and notes J&J's management appeared upbeat on 2012 margin expansion, which will be led by its pharmaceuticals business. Comment!

03:30 PM Valuentum crunches the numbers on Caterpillar (CAT -3.4%), seeing shares flying into triple-digits soon based on the firm's cash-flow methodology to pull out the intrinsic value of companies. Leaning on CAT's discounted cash flow and valuation versus peers - a $110/share "fair value" mark is derived along with a $145 price target looking 3 years out. Comment!

02:43 PM A McDonald's (MCD) providing delivery? That's often the case at restaurants in China and other Asian markets, where labor is often cheap and drive-through impractical. An exec claims McDonalds' delivery sales "have been posting double-digit growth every year in every country where it's offered." Yum Brands' (YUM) KFC chain is also offering delivery at many Chinese locations. Comment!

01:28 PM AT&T (T) asks the presiding judge to put its antitrust trial over the T-Mobile (DTEGY.PK) merger on hold until Jan. 18 while it considers how to revise the deal to make it more acceptable to the FCC (or maybe scrap altogether). Comment!

11:49 AM Stifel is reiterating a Buy on Nike (NKE -1.7%) ahead of tomorrow's FQ2 report, and lifting its PT to $108. The firm believes Nike's pricing power and "moderating cost inflation" will translate into "growth tailwinds" and expanding margins in FY13 (ends May 2013). It also notes Nike's valuation has historically "expanded in anticipation of expanding gross margin." Comment!

11:17 AM Lowe's (LOW -1.9%) faces some backlash after pulling ads from a reality show centered on American Muslims after a conservative group complained about the program's so-called propaganda. A state senator from California is holding Lowe's feet under the fire, labeling the action by the home improvement retailer as a form of discrimination. Comment!

09:41 AM 3M (MMM -1.1%) signs a 5-year deal with privately-held Shale-Inland to create game-changing products including technology that could end the need for paint on cars. The firm says the new commercialization agreement will spark a number of project announcements in 2012. Comment!

09:38 AM Boeing (BA -0.4%) shares are raised to Overweight by Morgan Stanley on the assumption the company will be able to quadruple its cash flow next year and boost its dividend. "Key pluses" at Boeing - orders, cash flow, earnings achievability - "look better" than the overall aerospace sector; total free cash flow could hit $10B-$11B, raising the odds for a dividend hike. (also) Comment!

07:49 AM Boeing (BA) announces that it lined up an order from Etihad Airways for ten 787 Dreamliners and two 777 Freighters in a deal valued at $2.8B. The UAE carrier expects to take delivery of the aircraft starting in 2014. Shares of BA -1.1% premarket. Comment!