Saturday, June 29, 2013

The Closing Bell--6/29/13

The Closing Bell


            I am taking next week off.  I will return July 8.  As always I will be monitoring the Market and if action is needed will be touch via Subscriber Alerts

Statistical Summary

   Current Economic Forecast


Real Growth in Gross Domestic Product:                           2.2%
                        Inflation (revised):                                                              1.8 %
Growth in Corporate Profits:                                  16.1%


                        Real Growth in Gross Domestic Product                       +1.0-+2.0
                        Inflation (revised)                                                             1.5-2.5
                        Corporate Profits                                                              0-7%

   Current Market Forecast
            Dow Jones Industrial Average

                                    Current Trend (revised):  
                                    Short Term Trading Range                      14190 (?)-15517
Intermediate Uptrend                              14254-19254
Long Term Trading Range                       4783-17500
                        2012    Year End Fair Value                                     11290-11310

                        2013    Year End Fair Value                                     11590-11610                                          

            Standard & Poor’s 500

                                    Current Trend (revised):
                                    Short Term Trading Range                             1576 (?)-1687
                                    Intermediate Term Uptrend                       1511-2099 
                                    Long Term Trading Range                         688-1750
                        2012    Year End Fair Value                                      1390-1410

                        2013   Year End Fair Value                                       1430-1450         

Percentage Cash in Our Portfolios

Dividend Growth Portfolio                              42%
            High Yield Portfolio                                        44%
            Aggressive Growth Portfolio                           43%

The economy is a modest positive for Your Money.   It was a relatively busy week for economic releases and contained more positive than negative indicators: positives---May durable goods orders, the Dallas and Richmond Fed manufacturing indices, weekly purchase applications, May new home sales, the April Case Shiller home price index, May personal income and June consumer confidence and sentiment; negatives---weekly mortgage applications, May personal spending, the Chicago National Activity Index, June Chicago PMI, first quarter GDP and corporate profits; neutral---weekly retail sales and weekly jobless claims.

The numbers over the last couple of weeks have been weighted to the plus side, reversing the April/May trend towards economic weakness.  That suggests that I should turn off the flashing yellow light on the economy.  However, I am leaving it on because (1) Obama has decided to attempt to overhaul the US energy policy, which, as fate would have it, is the one solid positive in our economic outlook and (2) despite the confusion wrought by Bernanke’s ‘tapering’ comments and the subsequent full court press to walk back that statement, investors are starting to question their faith in  Fed policy, which, in turn, is causing turmoil in the credit markets. 

I am, however,  altering our forecast somewhat, eliminating the concern about inflation but leaving the risk of the Fed improperly timing its transition in policy.  Our forecast:

a below average secular rate of recovery resulting from too much government spending, too much government debt to service, too much government regulation, a financial system with an impaired balance sheet. and a business community unwilling to hire and invest because the aforementioned along with...... the historic inability of the Fed to properly time the reversal of a vastly over expansive  monetary policy.
            A turd in the punch bowl (medium and a must read):

            The pluses:

(1)   our improving energy picture.  The US is awash in cheap, clean burning natural gas.... In addition to making home heating more affordable, low cost, abundant energy serves to draw those manufacturers back to the US who are facing rising foreign labor costs and relying on energy resources that carry negative political risks. 

Regrettably as I noted above, Obama has once again put ideological issues above the economic well being of the country.  His attempts to dismantle the coal industry and obstruct the completion of the Keystone pipeline will negatively impact the national security of the country in the long term as well as adversely affect our struggle to solve the unemployment problem in the short term.
       The negatives:

(1)   a vulnerable global banking system.  The principal news this week was mounting problems in Europe; specifically, the revelation of huge potential derivative losses in Italy and the deterioration in the French financial system.

As to the former, those derivative transactions were originally set up to mask the lousy state of the Italian budget when it was applying for membership  into the EU.  We already know that the Greek government engaged in the same type transactions; so the question is, how many more countries employed the same tactics and hence have large and to date undisclosed derivative losses?

In addition, the EU announced that the Cyprus template [bank depositors share in losses in case of insolvency] will now apply to all of Europe.  What do think that means for capital outflows from the EU banking system?

As you know, one of my primary concerns has been the lack of transparency in the derivatives markets which I believe carries [and recent trading desk explosions confirm] considerably more risk than assumed by traders, quants and anyone else foolish enough to be chasing yield. 

 ‘My concern here.....that: [a] investors ultimately lose confidence in our financial institutions and refuse to invest in America and [b] the recent scandals are simply signs that our banks are not as sound and well managed as we have been led to believe and, hence, are highly vulnerable to future shocks, particularly a collapse of the EU financial system.’

(2)   fiscal policy.  Our ruling class continues to focus on everything but getting control of the federal budget.  This week it was on [a] the Senate’s immigration bill, in which one result will be to add lots and lots of potential Democratic voters to the welfare rolls that Your Taxes will fund and [b] as I noted above, an Obama overhaul of energy policy which will {i} increase unemployment, {ii} drive up electricity costs in coal burning states (oddly most of which are red states) and {iii} reduce the chances of the US becoming energy independent anytime soon.  Well done, Mr. President, well done.

In short, entitlement and tax reform remain a wet dream, the economy must still fight this fiscal policy headwind and the Fed will continue to assume that it alone must bear the responsibility of keeping the economy from falling back into recession---an assumption that has led to policy moves more harmful than helpful to the economy.
I also continue to worry about .....the potential rise in interest rates and  its impact on the fiscal budget.  As I have noted previously, the US government’s debt has grown to such a size that its interest cost is now a major budget line item---and that is with rates at/near historic lows.  Moreover, government debt continues to increase and the lion’s share of this new debt is being bought by the Fed. 

So the risk here is two fold: [a] to the Fed---its balance sheet is levered to the point that Lehman Bros. looks like it was an AAA credit.  So if interest rates go up {and prices go down}, the very thin equity piece of the balance sheet would disappear.  The Fed would then be technically bankrupt. and [b] to the Treasury---it must pay the interest charges.  Hence, if rates go up, the interest costs to the government go up; and if they go up a lot, then this budget line item will explode and make all the more difficult any vow to reduce government spending as a percent of GDP.....

(3)   the potential negative impact of central bank money printing:  The key point here is that [a] the Fed has inflated bank reserves far beyond any comparable level in history and [b] while this hasn’t been an economic problem to date, {i} it still has to withdraw all those reserves from the system without creating any disruptions---a task that I regularly point out it has proven inept at in the past and {ii} it has created or is creating asset bubbles in the stock market as well as in the auto, student and mortgage loan markets. 

Unfortunately, other central banks have followed the Fed’s lead; hence the problem is not confined to this country, but rather has become a global one.  From the outset, I have maintained that this experiment was not going to end well; and we got a hint of that in the prior week when Japanese and Chinese credit markets were seizing up.  Banking officials from around the world spent the past week walking back hawkish policy statements that had originally caused those credit market problems.  That may prove to be a temporary salve; but it doesn’t change that fact that tightening has to occur sometime, it will likely not be a pleasant experience and the Markets, which have become addicted to easy money, will have to adjust---and indeed may have already started that process.

An analysis of why past credit crunches occurred and why it will happen again (medium and today’s must read):

And this great article on why deflation is not so bad (medium and another must read):

It’s never a good time to tighten (medium):

More from China (medium):

And this great explanation of what is occurring in China (medium and a must read):

Finally, one of the corollaries of too much money printing is the rise in the potential for a currency war.  ‘ an overly easy monetary policy generally results in the depreciation of the currency of that bank’s country which in turn improves that country’s trade balance and strengthens its economy.  That is great unless its trading partners get pissed and commence their own ‘easy money/currency depreciation’ effort.  At that point, you got yourself a currency war; and that seems to be the direction that the major economic powers are headed in.’ 
(4) a blow up in the Middle East.  ‘The US, Russia and Israel continue to lay down markers in the Syrian civil war.  As each side gets less flexible in its position, I worry that if violence erupts, it may in turn lead to a disruption in either the production or transportation of Middle East oil, pushing energy prices higher.’

(5)   finally, the sovereign and bank debt crisis in Europe.  There was mixed news out of Europe this week.  On the negative side as noted above, it appears that Italy could incur billions in losses in the derivatives market, France’s budget deficit is growing not shrinking and its banks are weakening not strengthening and the ECB has decided that the Cyprus template rules. 

On the other hand, the EU agreed to cut its budget deficit and rumors abound that the ECB will follow the US and Japan down the road of government bond purchases [monetary easing].  The former is the first concrete step in some time that the eurocrats have taken to address the mess that they created.  Whether or not they follow through with it is another issue.   But, credit where credit is due, it is a positive step.  That said, whether it is not too late to do any good remains to be seen.  Certainly, it doesn’t assuage my concerns over the risks associated with excessive sovereign indebtedness and poor quality, overleveraged EU bank balance sheets. 

‘To be sure, Europe has managed to ‘muddle through’ so far---indeed that has been our forecast.  But if current turmoil in the credit and derivatives markets continues, the EU economies, in particular those weak Mediterranean sisters, are much more vulnerable as a result of the magnitude of their indebtedness and overleveraged banks.’
    Merkel not happy with the Irish (short):

  Bottom line:  the US economy remains a positive for Your Money but primarily as a result of the hard work and genius of American businesses and workers.  Fiscal policy reform has taken a back seat to scandals, immigration and energy policies.  So the restraints caused by irresponsible spending, inefficient taxing and over regulation will continue to hold back the economy from returning to its average historical, secular growth rate.

Central bank reserve creation policies have turned into a clusterf**k.  First the US and Chinese banks actually started to do the right thing; the Markets understandably swooned when they realized the punch bowl was being taken away and now the central bankers are stumbling all over themselves to walk back their original statements/actions. However, as you know, I think that the jig is up in that Markets no longer accept that QEInfinity can go on forever with no negative consequences.  If I am correct, this will impact the economy via higher interest rates---another drag on growth.

Finally, Europe remains a problem.  Even if the ECB buys sovereign bonds, I doubt that will be sufficient of overcome the turmoil that could flow from rising sovereign and bank derivative losses.

This week’s data:

(1)                                  housing: weekly mortgage applications declined while purchase applications rose; May new home sales were up more than expected; the April Case Shiller home price index was very strong,

(2)                                  consumer: May personal income rose more than estimates while spending was up slightly less; weekly retail sales were mixed; weekly jobless fell, in line with forecasts; June consumer confidence was up more than anticipated as was June consumer sentiment,

(3)                                  industry: May durable goods orders were stronger than expected; the Chicago Fed National Activity Index was down more than estimates; the June Chicago PMI came in at 51.6 versus forecast of 55.0 and May’s reading of 58.7, the June Dallas and Richmond Fed manufacturing indices were much better than anticipated while the Kansas City Fed index was very disappointing,

(4)                                  macroeconomic: revised first quarter GDP was well below forecasts; fourth quarter corporate profits were considerably below those reported in fourth quarter 2012.

The Market-Disciplined Investing

The Averages (DJIA 14905, S&P 1606) had a good week, though Friday was down   Last week, both indices broke their 50 day moving averages (intersect circa 15025, 1619); this week they rallied sufficiently to challenge this resistance level on Thursday, but fell back on Friday. 

This pin action also served to set what may be another lower high in the downtrend off the May 22 high.   I say ‘may be’ because the Averages on Friday were basically flat with their Thursday close going into the last fifteen minutes of trading---which was heavily influenced by the ‘Russell rebalancing’ on the close (index funds mirroring the Russell indices re-set their composition quarterly based on additions to and subtractions from those indices).  The point here is that had the Dow and S&P closed flat on Friday, there would have been no new lower high, simply a pause in an uptrend.  This isn’t a particularly big deal and Monday’s trading will resolve the issue,  But I point it out as something that I will be paying close attention to on Monday. 

That said, the Averages continue to trade in a downtrend off their May 22 high (intersect circa 15254, 1640), to search for a lower boundary of a new short term trading range (14190 [?]-15550, 1576 [?]-1687) and to remain within their intermediate term (14254-19254, 1511-2099) and long term uptrends (4783-17500, 688-1750). 

On Friday, volume soared but, as I noted above, that was largely a function of the ‘Russell re-balancing’; breadth deteriorated.  The VIX was off fractionally closing within its intermediate term downtrend and still looking to set an upper boundary of a short term trading range.  It also remains above a very short term uptrend, which if broken would be a positive for stocks.

Margin debt posts first monthly decline in a year (short): 

GLD actually had an up day, surprise, surprise.  However, it closed outside the boundaries of all major trends.  This is a sick puppy.
Bottom line: equities had a nice rally this week; but not sufficient enough to call into the question the very short term downtrends of the Averages as well as a preponderance of the stocks in our Universe.  On Monday if the indices reverse Friday’s decline and subsequently challenge their 50 day moving averages, that would signal the sell off could potentially be over.  There is nothing to do but watch the process.

   Fundamental-A Dividend Growth Investment Strategy

The DJIA (14905) finished this week about 30.1% above Fair Value (11450) while the S&P (1606) closed 13.1% overvalued (1419).  Incorporated in that ‘Fair Value’ judgment is some sort of half assed attempt at getting fiscal policy under control, a botched Fed transition from easy to tight money, a historically low long term secular growth rate of the economy and a ‘muddle through’ scenario in Europe.

Two of those assumptions remain on target: (1) the economy continues to grow at a sluggish pace and (2) our ruling class would rather focus on ideological issues than budgetary ones.

The ‘tapering’ debate remained front and center this week, kept there as it was by an endless stream of Fed officials attempting to walk back Bernanke’s statement.  However, I think that all the discussion about what levels of unemployment and inflation would trigger ‘tapering’ and their likelihood misses a critical point; and that is, that Markets have come to realize that the Fed’s easy money policy has already created asset bubbles that will burst sooner or later and hence, the risk premiums in all asset classes are going up.  In other words, the specifics of Fed guidance on policy matter much less than a week ago because the end result (increased risk premiums) is going to/or already is happening no matter it does.  To be clear, this is just my hypothesis on what is and will happen going forward and, therefore, subject to being wrong.

Finally, bad news continues to emanate out of Europe; though to be fair, the reported EU agreement to reduce its budget deficit is a positive assuming the eurocrats actually implement it. That action notwithstanding, the risks of a sovereign and/or banking debt crisis remain a threat to our ‘muddle through’ scenario.

         Bottom line:  our key assumptions in our Models on economic growth and an inept fiscal policy are unchanged.  Monetary policy may or may not be changing; but whatever happens, I believe that investor attitudes about monetary policy are changing---becoming more skeptical of Fed omnipotence and altering the stability in the credit markets.  Finally, if more volatility is coming to the fixed income markets, the risk of dislocations in the European sovereign and bank debt markets rises.
        This week, our Portfolios did nothing.

DJIA                                                    S&P

Current 2013 Year End Fair Value*                11600                                                 1440
Fair Value as of 6/30/13                                   11450                                                  1419
Close this week                                                14905                                                  1606

Over Valuation vs. 6/30 Close
              5% overvalued                                 12022                                                    1489
            10% overvalued                                 12595                                                   1560 
            15% overvalued                             13167                                                       1631
            20% overvalued                                 13740                                                    1702   
            25% overvalued                                   14312                                                  1773   
            30% overvalued                                   14885                                                  1844
Under Valuation vs.6/30 Close
            5% undervalued                             10877                                                      1348
10%undervalued                              10305                                                  1277   
15%undervalued                             9732                                                    1206

* Just a reminder that the Year End Fair Value number is based on the long term secular growth of the earning power of productive capacity of the US economy not the near term   cyclical influences.  The model is now accounting for somewhat below average secular growth for the next 3 to 5 years with somewhat higher inflation. 

The Portfolios and Buy Lists are up to date.

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973.  His 40 years of investment experience includes institutional portfolio management at Scudder. Stevens and Clark and Bear Stearns,  managing a risk arbitrage hedge fund and an investment banking boutique specializing in funding second stage private companies.  Through his involvement with Strategic Stock Investments, Steve hopes that his experience can help other investors build their wealth while avoiding tough lessons that he learned the hard way.

Friday, June 28, 2013

Thoughts on Investing

Mistake #4: Asset Allocation Matters More than Stock Picking:

The decisions you make as to your mix of assets has a far greater impact on your investing success than does your stock picking or market timing. This too has proven repeatedly in both academic studies and the real world.

I’ll save you the war story, but when I was on the Sell Side, I was a big Apple fan. When the first iPod came out, the company was trading at $15 (pre-split) with $13 in cash. I recommended Apple, the firm bought a ton at $15, and dumped most of it at $20 for a 33% winner.

Pretty smart, huh?

That was literally the worlds greatest stock — and it hardly mattered at all. The worlds’ greatest stock pickers all got crushed during the 2008 crisis. And a monkey could have thrown a dart at a stock list in 2009 and made a ton of money.

Consider this: If your allocation mix contained too little equities over the past few years, then you probably missed the 100% rally since stocks since March 2009. And a lack of bonds meant that during the 2008-09 crash, you had nothing protecting you as markets fell.

Stock picking is for fun. Asset allocation is for making money over the long haul.

Morning Journal--The Supreme Court's other ruling

 News on Stocks in Our Portfolios courtesy of Seeking Alpha

Nike's net profit jumps 22% but Chinese outlook is soft. Nike's (NKE) FQ4 earnings beat expectations as net profit soared 22% to $668M, adjusted EPS came in at $0.76 and revenues climbed 7% to $6.7B. North American sales rose 12%, and revenues grew in emerging markets, although they fell in Japan and Western Europe, and were flat in greater China. Nike's shares were -0.9%premarket after the company said that it expects Chinese revenue to fall in fiscal H1 2014 and that it's hard to predict how quickly sustained growth will return to the region.
Accenture (ACN):
 FQ3 EPS of $1.14 beats by $0.01. Revenue of $7.2B misses by $0.22B. Shares -3.9% AH.


   This Week’s Data

            The June Kansas City Fed manufacturing index fell to -5.0 versus expectations of +4.0.


            Jon Corzine and MF Global officially charged (medium):



The cost of government regulation (medium):

            The Supreme Court’s other ruling (medium and a must read):


            UK consumer income plunges (medium):

                Russia evacuates its Syrian naval base (medium):

The Morning Call--Will endless jawboning turn the tide?

The Morning Call


The Market

The indices (DJIA 15024, S&P 1613) continued their rebound yesterday, closing within their intermediate term (14244-19244, 1511-2099) and long term uptrends (4783-17500, 688-1750)..  Nevertheless, they remain below the downtrend off the May 22 high (current intersects: 15270, 1640) as well as their 50 day moving averages (15024, 1618) and are in search of  lower boundaries for new short term trading ranges (14190 [?]-15550, 1576 [?]-1687).

            Volume was down; breadth improved.  The VIX fell, finishing within its intermediate term downtrend but near the lower boundary of a very short term uptrend---a break of the latter trend would be a positive for stocks.  It has yet to mark an upper boundary of a new short term trading range.

            GLD was whacked again and remains outside of all boundaries of all major trends.  It continues to have a very broken chart.

Bottom line: I noted this yesterday and I will repeat today---despite a strong rally, nothing in the charts of either the Averages or the stocks in our Universe (over 90% remain in downtrends off their May 22 highs) suggest that the short term correction is over.  The Dow closed right on its 50 day moving average and the S&P is close.  If the indices break this resistance level that will be the first sign that this latest move is something more than an oversold bounce. 



            Yesterday’s economic data was neutral: weekly jobless claims fell slightly, May personal income was better than expected while spending fell a little short, the Kansas City manufacturing index was a big disappointment.  While not as positive as the general data flow this week, there is nothing here that would alter our forecast.

            The main headlines of the day was the continuing stream of Fed officials out in public attempting to jawbone Market expectations off of Bernanke’s ‘tapering’ comments.  More speeches are due to today; and I assume that they will continue until (when, as and if) investors’ regain their former faith in QEInfinity. 

Certainly, the Market rally of the last couple of days suggests that they are achieving some success.  However, as you know, I think that Bernanke’s comments awakened the Markets out of a QE stupor and re-inserted the concept of risk into Fed policy.  I am not saying that to argue for a dive in equity prices; I am saying risk premiums are going up and that will weigh on valuations.

I am also not saying that QEInfinity won’t continue.  Given the current economic data flow, there is plenty of reason to doubt that unemployment or inflation will get anywhere near the targets Bernanke mentioned in his ‘tapering’ comments.  What I am suggesting is that investors’ attitudes toward QE has irrevocably changed---they have suddenly realized that infinite liquidity injections come with risk and they are no longer buying ‘the Fed has your back’ rationale for chasing stock prices higher.

Meanwhile, France reported a soaring budget deficit, a Goldman report put French banks at the head of the most levered in the EU list and the EU announced that the Cyprus template (depositors share in bank losses) was now official EU policy.  I didn’t hear any of the talking heads reporting these points in spite of the risks that in a world in which credit problems are growing, this policy that could ignite large capital flows out of EU banks.

****over night, Japanese factory orders improved more than expected, the EU agreed to its first budget cuts ever and rumors are circulating that the ECB will begin buying the bonds of its member countries ala Bernanke.

Bottom line: I guess the big question before us is, can the Fed convince investors to again drink the QE/the Fed has your back Kool Aid?   The answer to that is likely to determine Market direction, at least in the near term.  As you know, I am a skeptic; but then I have been for too long. 

All that said, I simply can’t get the assumptions plugged into our Models positive enough to justify current valuations.  So I remain cautious and our Portfolios will continue to take advantage of any upward price movement that drives any of our stocks into their Sell Half Ranges.

            The latest from SocGen (medium and today’s must read):

            Update on Market valuation (medium):

            For the bears (medium):

            The latest from Bill Gross (medium):

            Total versus per share earnings (short):

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at

Thursday, June 27, 2013

Jim Grant on the Fed's latest move

Emerson Electric (EMR) 2013 Review

Emerson Electric designs and manufactures a broad range of electrical and electronic products and systems for commercial, industrial and consumer markets, including electronic process and measurement equipment, industrial automation equipment, climate control electronics, network power equipment and appliances and tools. As you can see, the company has a very well diversified product base and serves a broad range of both industrial and consumer markets. The company generates an attractive return on equity (20-25%) and has grown earnings and dividends at a 7-8% pace over the last 10 years.  Like most industrial companies, Emerson suffered in the 2009 economic down turn; however, as the global economy improved, profits resumed growth and should continue as a result of:

(1) a well diversified product line that is offered to a broad range on industries and can deliver technology and product solutions globally,

(2) the company’s continuous investment in breakthrough technologies,,

(3) benefit from global infrastructure building, especially in the energy business,

(4) an ongoing cost reduction program,

(5) acquisitions .


(1) its large foreign exposure can lead to currency shocks, local economic challenges and potential delays due to product and shipment disruptions,

(2) weakness in EU economies,

(3) restructuring costs.

EMR is rated A++ by Value Line, has a 34% debt to equity ratio and its stock yields 3.0%

  Statistical Summary

                 Stock       Dividend         Payout      # Increases  
                  Yield      Growth Rate     Ratio       Since 2003

EMR          3.0%           4%               43%              10
Ind Ave      2.4              10                28                 NA 

                 Debt/                       EPS Down       Net        Value Line
                 Equity       ROE      Since 2003     Margin       Rating

EMR         34%           23%            1                 11             A++
Ind Ave     24              17              NA               10            NA


            Note: EMR stock made good initial progress off its March 2009 low, quickly surpassing the downtrend off its May 2008 high (straight red line) and the November 2008 trading high (green line).  Long term, the stock is in an uptrend (blue lines).  In 2011, it fell into an intermediate term trading range (purple lines).  Short term, it is in an uptrend (brown lines).  The wiggly red line is the 50 day moving average.  The Dividend  Growth and High Yield Portfolios own 75% positions in EMR.  The upper boundary of its Buy Value Range is $34; the lower boundary of its Sell Half Range is $96.


Morning Journal--Victor Hanson on immigration

  News on Stocks in Our Portfolios courtesy of Seeking Alpha

FDA recalls Medtronic pump after 14 deaths.The FDA has recalled Medtronic's (MDT) SynchroMed infusion pump following the death of 14 patients since 1996 due to flaws in the device. Eleven patients died because of the inadvertent injection of a drug into subcutaneous tissue rather than into the pump, while two died from a blockage and another because of an electrical short.

Paychex (PAYX):
 FQ4 EPS of $0.34 misses by $0.03. Revenue of $585.3M (+6% Y/Y) misses by $0.66M

General Mills (GIS): FQ4 EPS of $0.53 in-line. Revenue of $4.31B misses by $0.01B. 


   This Week’s Data

            First quarter corporate profits rose 4.7% versus +13.3% in the fourth quarter of 2012.

                Weekly jobless claims fell 9,000, in line with expectations.

            May personal income rose 0.5% versus estimates of up 0.2%; spending increased 0.3% versus forecasts of up 0.4%; PCE came in at +0.1%, in line.




Victor Hanson on the immigration bill (medium):

  International War Against Radical Islam