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My Gut Feeling 2014

November 20, 2014
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10 Things I Won't Miss About 2014

Every year since 2002 I have closed out the year with my satirical look at the world through the eyes of a professional investor poking fun at what has transpired in our global society during the year we are about to turn the page on. 2014 has brought forth its own unique series of unexpected news, celebration, joy, disappointment, tragedy and political intrigue. I hope that 2015 will be a year of health, happiness and prosperity to all of the members of my family, clientele, students, co-workers and readers. So without further ado, here is my List of 10 Things I Won’t Miss About 2014 (and never want to hear about ever again), in no particular order:

  1. KIM KARDAHISAN’S BUM – Last year #4 on my list were the Cherry Healey flushable bum wipes commercials. This year we have another derrière topic which was thrust upon us – Kim Kardashian’s gluteus maximus. Kayne West can keep her from head to toe.
  2. EBOLA – The Ebola scare knocked the stock market down about 10%, something that even the bears could not do alone on fundamentals. As it turned out, just like SARS, Avian Flu, AIDs and Swine Flu, Ebola was not a pandemic resulting in a Malthusian event. By the time November ended, Ebola was no longer a daily headline.
  3. MICROSOFT SURFACE 3 COMMERCIAL– Every year there is one commercial that is so bad and annoying that you would rather stick your head in the ground to avoid watching or hearing it. This year’s award goes to Microsoft (MSFT) for the company’s Surface 3 commercial comparing its features to that of an Apple (AAPL) MacBook Air as 2NE1, a K-Pop (Korean Pop) band sings “I Am the Best”, in Korean I suppose. The cure for this commercial was listening to anything else on your iPhone with a Beats headset.
  4. JOHNNY “FOOTBALL” MANZIEL – Another Heisman Trophy winner certain to be an NFL bust. He was supposed to be a top 5 draft pick but instead went number 22 in the first round. His first start as a pro resulted in a 30-0 loss. I hope he has Tim Tebow and Ryan Leaf’s cell phone numbers.
  5. KALE – Before 2014, did you ever hear of kale? Did you even care? Now it is the must eat green vegetable. I never thought that we could have a leafy green vegetable fad but, never say never as 2014 was the Year of Kale. As for me, I will stick to spinach or broccoli or string beans.
  6. RED LIGHT CAMERAS – Red light cameras were installed in many cities and towns across the nation. In practice, these cameras were imperfect and were known to misfire. The stated reason to install these cameras was to increase traffic safety. The real motivation was to generate more revenues for cash strapped municipalities who are having problems meeting budgets and pension liabilities. Fortunately, the libertarians might have won out as New Jersey did not extend its law which established the state’s pilot program.
  7. AIRLINE SURCHARGES – In the good old days you paid one price for an airline ticket for which you received your choice of seats, free baggage check, snacks and drinks and even free movies. I hate getting nickelled and dimed whenever I spend my money. I also hate restaurants that charge you extra for potatoes or beans or corn or whatever side dish when you are spending $50 for a steak. Now booking a flight is like buying a car from a car dealer. There are all sorts of additional fees for extra legroom, express boarding, baggage checking, food, blankets, WiFi, entertainment, etc. Don’t think because oil prices have fallen dramatically that you will see the airlines eliminate those surcharges and fees. My plan is to pack my personal items carryon with sandwiches and sell them to passengers, undercutting the airline in the process. It will be like GrubHub (GRUB) for air travel. Then I will put my Eastern Airlines pack of cards up for sale on EBay (EBAY),
  8. BILL COSBY – Here’s the good news: Bill Cosby is no OJ. Here is the bad news: Bill Cosby has destroyed not only his reputation but the lives of his victims. If the allegations are true, he is a creep. Furthermore, his positive position as a role model in the African American community is now all for naught. How can anyone watch his classic shows anymore?
  9. THE WORLD CUP – I tried like heck to watch a World Cup match but with the Rangers playing in the Stanley Cup Finals, it was an easy choice - hockey. I get it that Soccer, I mean (not American) Football is the world’s most popular game. Hey, over 1 billion people use tobacco on the planet, so does that make it a better plant than say corn or wheat? I prefer a 1-0 pitchers’ duel in baseball than a 1-nill soccer match.  As for the World Cup itself, it is an overhyped and corrupt enterprise which adds no long term value, socially or economically to the host nation. It is sort of like a mini-Olympics.
  10. CELEBRITY WEDDINGS – Let me start by saying that I think that expensive and gaudy weddings are total wastes of money. I have yet to find a study which equates the cost of a wedding with the success of a marriage. When it comes to celebrity weddings, we go from expensive and gaudy to the absurd. The aforementioned Kim Kardashian and Kanye West’s wedding was ornate. Then the George Clooney – what’s-her-name wedding was over the top in Venice. Celebrities, in general, who try to be politically correct and charitable, should be writing a check for a few million dollars to a worthy cause and get married in a simple rent-a-tux and off the rack wedding gown at a local catering hall. Why not save a few million bucks and cut a nice big check to a charity or charities?  Furthermore, if they are going to spend big bucks on a wedding, why not patronize American vendors and labor? I tell you why – celebrities are the most hypocritical bunch of rich people out there.

PRIOR YEARS' 10 THINGS I WON'T MISS ABOUT....

10 Things I Won’t Miss About 2013

10 Things I Won’t Miss About 2012

10 Things I Won’t Miss About 2011

10 Things I Won’t Miss About 2010

10 Things I Won’t Miss About 2009

10 Things I Won’t Miss About 2008

10 Things I Won’t Miss About 2007

10 Things I Won’t Miss About 2006

10 Things I Won’t Miss About 2005

10 Things I Won’t Miss About 2004

10 Things I Won’t Miss About 2003

10 Things I Won’t Miss About 2002 (no link available)

 

Disclosure: For informational purposes only.At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL  & BABA — although positions can change at any time.
LakeView Asset Management  investment advisor representative registered with Kingswood Wealth Advisors LLC, an SEC registered investment advisor, specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, December 22, 2014: Economic Gains Trump Oil Losses


Wednesday’s rally extended into Thursday as economic data releases continue to point toward an accelerating economy. Friday’s advance was a bit muted, most likely due to the influence of quarterly derivative expiration. It is clear that the economy’s growth trajectory is trumping the crash in energy prices.

With only seven trading sessions left in 2014, the S&P 500 (SPX) now stands about 9 index points or 0.43% away from its all-time high set within the last month. Incremental gains in the market will continue with periodic and dramatic sell-offs, as we had earlier in December and back in October.

At this point in time, you should be looking to sell off any losers which may no longer fit your investment criteria to hold into 2015 as an investment. Use the proceeds to put more capital to work. If you have to trade these next few days, it means that you may have gotten the market wrong and need to make up for your deficit in very short order. However, you are not alone. CNBC reported that 29% of professional money managers have underperformed the market by 5% or more in 2015. So, despite trading at all-time highs, the market has been difficult to navigate.

Typically, the Monday after an expiration day will open in a mirror image way to how the markers closed last Friday. However, given the market’s recent strength and the end of the year approaching, anything goes today.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, December 18, 2014: The FOMC is Patient, So Should You

Janet Yellen and her merry band of monetarists told us that the FOMC “can be patient in beginning to normalize the stance of monetary policy.”  Furthermore, in her press conference, Yellen stated that “that the decline we've seen in oil prices is likely to be, on net, a positive.” So what does this mean? There will be small increases in short term interest rates at the end of 2015. The market took the FOMC decision as positive and stocks rallied about 2% across the board. Crude oil was barely changed and seems to be finding support in the $56 - $57 range.

While the Philly Fed, weekly unemployment claims and LEI (leading economic indicators) are released today, none should be market movers. There are some worthwhile economic reports next week, but nothing that would be earth shattering for the markets. We might be in a period of time when the seasonal slow yet positive bias takes hold and the recent market volatility comes to an end.

Tax Selling is Over, Window Dressing to Begin

Tax selling, which may have had an influence on the last two week’s selling, is pretty much winding down, if not over. This may give us that opportunity to buy put capital to work in the energy sector. Expect that some window dressing will start to take hold as money managers add to wining positions. That is good news for those of you who were a little worried recently for stocks in the tech space like Apple (AAPL) and Alibaba (BABA), which have gotten beaten up lately. Just as the FOMC is going to be patient with its monetary policy, so should you with your investment positions.

I will be back with more commentary next week, including my annual 10 Things I Won't  Miss

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL  & BABA — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com

 

My Gut Feeling For Today, December 17, 2014:  Dividends On the Rise

A lower open set up for a Turnaround Tuesday as stocks rallied in the late morning. Then concerns over the faltering Russian Ruble and economy sent stock and crude oil markets lower. The day went from disappointment to pleasure and ended in anguish. During the pleasure portion of the trading day I put some cash to work in our dividend portfolio. This was one of those days when I was the bug rather than the windshield.

US Companies Boosting Dividends

Speaking of dividends, American industrial companies are sending a clear message to the markets that the economy is picking up steam. They are doing so via dividend increases. Two such companies to do so yesterday were Boeing (BA) and the 3M Company (MMM). In addition, CVS (CVS), a retailer did so as well. The only dividends that are at risk are from the energy sector. To me, lower oil prices and stronger bottom line performance by non-energy companies is a recipe for higher stock markets.

Considerable Period in Question

Today the focus will begin in Russia and end with the FOMC. The US Central Bank will deliver its final monetary decision of the year. At issue is whether the FOMC will remove the “for a considerable period” phrase from its statement. That considerable period alludes to the timing that the FOMC will maintain its target rates or will begin to tighten. The decision could be pivotal to the market which will remain jittery entering into the press release.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, December 16, 2014:  Sub Two Dollar Gasoline, But the Markets Don’t Care

New Jersey – Pennsylvania – Ohio – Indiana – Missouri – Oklahoma – Texas – New Mexico – Arizona – Nevada. We managed to make that 2,550 mile trek in three days rather than four as originally planned. Thanks to my iPhone, we were able to play along the route: Allentown (Billy Joel), Meet Me In St. Louis (Judy Garland), the entire soundtrack to the original Broadway cast of Oklahoma, The Wasp (Texas Radio and the Big Beat) (The Doors),  Point Me in the Direction of Albuquerque (The Partridge Family) for which my wife gets credit as I never heard of it, Take It Easy (The Eagles) but we passed through and did not stand on a corner in Winslow. We won’t play Leaving Las Vegas (Sheryl Crow) until we leave in January. Travelling through our wonderful country was a pleasure, and to be honest, we marked off some places that we hope to visit in the future when we don’t have the puppies along for the ride.  However, the highlight of the journey can be best described in the picture below.

$1.99 Gas At the Pump

That’s right, just off Interstate 40, not far from Cushing, Oklahoma (the largest oil and gas storage facility in the nation); the price of regular graded gas was $1.99. It is hard to find a place in this country where gasoline has not dropped at least $1/gallon in the last year. With most people driving on average 10,000 miles a year with an average of 20 mpg, every car operator is saving at least $500/year. With two cars in a typical family, that is $1,000 in savings which is equivalent to two William McKinley’s or a Grover Cleveland greenback.

Americans will either use that to spend at retail stores, pay down debt or invest in the market. However, the market seems to be reacting as if a decline in oil prices is a bad thing. That may be the case for the 10% of the S&P 500 (SPX) that is in energy, but the other 90% should benefit directly or indirectly.

What most surprises me these last few days is the selling that dividend stocks have endured. The crude oil decline should benefit the electric producers but as we see, in the short run, irrational behavior can be the norm. I have been holding some cash for our Low Volatility / High Dividend Portfolio the last few days. That patience has paid off and I foresee putting the capital to work today, ahead of tomorrow's FOMC decision.

While an early rise in crude oil coupled with strong industrial production data put a strong opening bid in stocks on Monday,that quickly dissipated as crude oil reversed course and made new lows. What also spooked the market was a hostage situation in Australia which was reported as a possible terrorist event and was being covered constantly on CNBC. The latter coverage only compounded the market sell-off in my opinion. The markets bounced to even and then backed off, closing in the red but above the day’s lows.

All of the above can be set straight come Wednesday when the FOMC delivers its last interest rate policy decision for the year. So, today, we will have to watch the crude oil silliness continue while traders square away positions ahead of the monetary decision.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com


My Gut Feeling For Today, December 11, 2014:  Last Throes of Commodity Super Cycle

The trading day started off rather tame but in the red. Then as crude oil began to sink lower, the sell-off began to snowball. Comments by Federal Reserve Vice Chairman Stanley Fischer saying that JP Morgan Chase (JPM) will require around  another $22 billion of capital to satisfy new Federal Reserve capital rules threw fuel on the fire. By the end of the day, all of the major averages declined about 1.5% or slightly more.

Crude Oil Last Commodity to End Super Cycle

Let’s tackle these two issues separately. First, the energy market crash. We are in the midst of an unwinding of the materials and commodity super cycle bull market. For years, as China’s economy was expanding and the US housing market was heating up, commodities staged a huge bull market. This was highlighted by massive leverage and over speculation on the part of hedge funds, endowments and pension plans who sought returns in non-traditional markets.

Crude Oil began its bull run at about $20, just as the last major super cycle – the tech and dotcom boom – was coming to an end in 1999. The commodity peaked at $140 as the financial crisis began, rallied off of its 2009 trough, along with the stock market, and then peaked, for the final time in 2014, closing yesterday at $61. Gold also began its cyclical run at the end of the 90’s tech boom, starting at just over $250; then peaked in 2011 at $1,900 and now sits at $1,225. Corn, wheat, coffee, copper and silver all followed the same script. It is just that crude oil is the last commodity to crash and we are experiencing the last throes of the related super cycle.

It may take several weeks, months or even years for a final and perhaps lower equilibrium price to be met by commodities across the board. Thus, trying to catch a good entry point for energy stocks may not be so easy. I would speculate that a good trading bounce will occur soon; but only a trading bounce, as commodities might be dead money for years to come.

The crude crash feels more painful than that for the other commodities for several reasons: 1) globally, it is the most widely recognized and important of all the commodities and 2) the precipitous fall is coming at the end of the year when hedge funds who are on the wrong side of the trade are unwinding their leveraged positions as they must meet redemption demands, thus creating a viscous cycle that takes unrelated asset classes along with it for the ride down.

Phibro, the storied commodity trading firm which once bought Salomon Brothers is closing its US operations and will likely seek a sale of its international arm. Occidental Petroleum (OXY) now owns Phibro.

When you think of it, declining crude and energy prices is a major plus across the United States. Not only does it reduce the cost of heating, lighting and driving for consumers, it also reduces input costs for service and industrial companies. Win – win if you ask me. However, if you are a hedge fund that lives and dies with leverage, you are forced to sell anything that is not nailed down to meet redemptions. Just about the only sector that seems to rise with the decline in crude oil are airlines.

What does this all mean to us? Some short term pain for mid and long term gains and opportunities. Once the hedge funds and other leveraged players are finally put out of their misery then rational expectations will take hold and the benefits of lower oil prices will materialize.

JP Morgan Singled Out by Fischer

Now let’s turn to the comments by Stanley Fischer. Let me start by saying that I respect this gentleman and his intellect. I first was introduced to his work when my Intermediate Macroeconomics Professor Robert Shiller had us use the Dornbusch & Fischer textbook over 30 years ago at the Wharton School. Fischer is well known for his work on rational expectations and most recently, before his Fed appointment was the Governor of the Bank of Israel. So, when he makes a statement as he did about JP Morgan Chase, you have to take it seriously. He stated that JPM was the only one out of the eight major US banks that have a capital shortfall. I do not doubt the sincerity of his comment. However, the manner and timing of the comment is something that I question In the end, the cat was out of the bag and the damage was done.

Two final points worth noting: i) JPM will have no problem raising and meeting capital requirements and ii) every time JPM gets slammed by some issue, e.g. the London Whale, the stock sells off dramatically setting up a buying opportunity. That opportunity will be at around $55 / $56 per share, about another 10% lower than where it closed on Wednesday.

For today, I expect that we will take our lead from economic releases – weekly unemployment claims and November retail sales – rather than the hysteria being caused by the last gasps of the crude oil bull market and its leveraged participants.

I am headed out of town for the next few days as I migrate westward for the rest of the year and early January. I will likely resume my commentary on next Wednesday. Finally, my WCBS NewsRadio 880 interview for December 9, 2014 is now available.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, December 10, 2014:  Maintaining Our Cool

Sorry for skipping commentary for yesterday but Monday night I was not feeling well and wanted to maximize my rest ahead of my 9AM WCBS Newsradio 880 interview (no link was provided yet by the station). As it turned out there was plenty to miss yesterday, none of which was expected when I would normally pen this commentary. What I would have said is that I expect us to revert to a slow motion rise in the stock market after Monday’s little pullback.

If all you did was check the major indexes on the 6 o’clock news or on CNBC after returning from work, then my prediction would have been correct. It was how we got there that was interesting. The markets opened heavily to the downside, thanks to sell-offs in China and Greece, most of all Greece. When you say the word Greece in the financial markets it is like yelling “fire” in a crowded movie theatre and makes me recall the old “Niagara Falls” vaudeville sketch. The Greek stock market crashed; yes that term is apropos, 13%.

Keep Your Cool

When the US markets opened lower by over 1%, I knew that we were going to have a “Turnaround Tuesday.” The news in Greece was not worthy of a major US market sell-off. As a matter of fact, I was on the phone with my friend Paul, a West Coast broker and we simultaneously said to each other that the markets could end green. By the closing bell, the S&P 500 (SPX) declined a minuscule 0.02%, the Dow Jones Industrials declined 0.29% while the NASDAQ 100 (NDX) rose 0.38% and the Russell 2000 (RUT) 1.79%. From their morning lows, these indexes rose over 1% with the RUT rising nearly 3% intraday.

What does this all tell us? First, that the Greek story is old. We have had to endure bank failures, austerity and elections in Greece for several years now. I think that Apple (AAPL) can buy Greece and have cash left over. Second, there is still demand for US equities. Third, with the techs and small caps leading the way, there is appetite for risk. Lastly, we had a mini-panic in the morning where weak hands (traders) panicked and once again the strong hands (investors, professionals) just maintained their cool. I maintained my cool, just like the Jets, from West Side Story, not the football field.

Narrowing Down Energy Opportunities to Midstream

Energy stocks bounced while crude made yet another multi-year low. I am still waiting for the right opportunity to put some cash to work in energy for our Growth Portfolio clientele but remain in no rush. I am inclined to look toward midstream (storage, transportation, pipelines and refining) opportunities which do not have price sensitivity on the magnitude that upstream (exploration and production) energy companies have. The reason for this is that midstream will be linked to demand and economic growth whereas the upstream is far more dependent on supply, of which there is now a glut. As it turns out, the decline in oil and gas prices will generate more economic growth and energy demand, whcih will benefit the midstream companies.

As for today, let’s put yesterday's traders’ temper tantrum behind us and get back to business. Broadcom (BRCM) announced some positive news (stock buyback and strong guidance) after yesterday’s market close. However, don’t let that suck you into that stock. There are better opportunities in the tech world and especially in the semiconductor sector. We own Micron (MU) in our Growth Portfolio and I would not be averse to adding to our positions. Otherwise, today should be another slow motion day ahead of what is a busy economic calendar on Thursday.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL & MU — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com

 

My Gut Feeling For Today, December 8, 2014:  Slow Steady Rally to Continue

Friday’s labor report for the month of November reported job gains of 321,000, nearly 100,000 more than expectations of 230,000. Furthermore, October’s job count was increased by an additional 31,000. The market, as I expected, responded positively, but rather muted with the S&P 500 (SPX) rising about 0.17% to a new all-time high. The Dow Jones Industrials Average (INDU) also rose to an all-time high.

Barron's Makes Wrong Call on Hawaiian Electric

Barron’s is a weekly newspaper (though it calls itself a magazine) that is widely read by market professionals and some individual investors. Many people refer to it as “Bearons” because of its propensity to run negative stories. Anecdotally, taking the other side of Barron's suggestions has been a winner (buy its sells and sell its buys). The publication, let’s categorize it as such, is issued every Saturday. In the November 29 issue, Barron’s ran a story on Hawaiian Electric (HE). As it turns out, I bought a small amount of HE in the company’s dividend reinvestment and stock purchase plan (DRIP) a few weeks earlier. I have for the last thirty plus years invested in many utility companies DRIP plans and in the past few years extended that to non-utility companies. Anyway, in that November 29 story, the author, Avi Salzman wrote about HE that, “The shares have risen 17% in the past six months, to a recent $28.19, and trade for 17.5 times forward-four-quarter earnings, a five-year high. At a more reasonable multiple of 14 times, toward the low end of the industry’s range, the shares would trade for about $22.50, a 20% discount to Friday’s [November 28] close.” So, guess what happened? The following Wednesday, NextEra (NEE) announced that it would acquire HE for .2413 shares. Furthermore, HE shareholders would get a one-time special dividend of 50 cents per share and shares in ASB Hawaii, HE’s banking subsidiary in a spin-off. When you put it all together, the value to HE shareholders’ is about $33/share. Way to go Barron’s.

Markets Set For Slow Steady Rise Into 2015

What has been quite wonderful about the market’s ascent since the beginning of November is the ever slow stair-step higher. While a rise of 10 – 25 basis points per day may seem boring or insignificant, it is anything but that. Bull markets are known for their slow steady incremental moves rather than huge bursts of capitalistic adrenaline.

There are twenty trading days left to 2014. I expect that the major indexes will continue to inch higher to all-time highs over that period. My SPX target for the end of 2014 which I set at the beginning of the year is 2,148. While reaching that level is not a certainty, being 3.5% away from Friday’s close is also not out of the question

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long HE — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com

 

My Gut Feeling For Today, December 8, 2014:  Slow Steady Rally to Continue

Friday’s labor report for the month of November reported job gains of 321,000, nearly 100,000 more than expectations of 230,000. Furthermore, October’s job count was increased by an additional 31,000. The market, as I expected, responded positively, but rather muted with the S&P 500 (SPX) rising about 0.17% to a new all-time high. The Dow Jones Industrials Average (INDU) also rose to an all-time high.

Barron's Makes Wrong Call on Hawaiian Electric

Barron’s is a weekly newspaper (though it calls itself a magazine) that is widely read by market professionals and some individual investors. Many people refer to it as “Bearons” because of its propensity to run negative stories. Anecdotally, taking the other side of Barron's suggestions has been a winner (buy its sells and sell its buys). The publication, let’s categorize it as such, is issued every Saturday. In the November 29 issue, Barron’s ran a story on Hawaiian Electric (HE). As it turns out, I bought a small amount of HE in the company’s dividend reinvestment and stock purchase plan (DRIP) a few weeks earlier. I have for the last thirty plus years invested in many utility companies DRIP plans and in the past few years extended that to non-utility companies. Anyway, in that November 29 story, the author, Avi Salzman wrote about HE that, “The shares have risen 17% in the past six months, to a recent $28.19, and trade for 17.5 times forward-four-quarter earnings, a five-year high. At a more reasonable multiple of 14 times, toward the low end of the industry’s range, the shares would trade for about $22.50, a 20% discount to Friday’s [November 28] close.” So, guess what happened? The following Wednesday, NextEra (NEE) announced that it would acquire HE for .2413 shares. Furthermore, HE shareholders would get a one-time special dividend of 50 cents per share and shares in ASB Hawaii, HE’s banking subsidiary in a spin-off. When you put it all together, the value to HE shareholders’ is about $33/share. Way to go Barron’s.

Markets Set For Slow Steady Rise Into 2015

What has been quite wonderful about the market’s ascent since the beginning of November is the ever slow stair-step higher. While a rise of 10 – 25 basis points per day may seem boring or insignificant, it is anything but that. Bull markets are known for their slow steady incremental moves rather than huge bursts of capitalistic adrenaline.

There are twenty trading days left to 2014. I expect that the major indexes will continue to inch higher to all-time highs over that period. My SPX target for the end of 2014 which I set at the beginning of the year is 2,148. While reaching that level is not a certainty, being 3.5% away from Friday’s close is also not out of the question

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long HE — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com

 

My Gut Feeling For Today, December 5, 2014:  Labor Report Likely to Begin Santa Claus Rally

I refer to trading days like Thursday as Jello Days. The markets wiggled all day long but went nowhere. The reason, as I explained earlier in the week, was that there is no desire for traders or investors to place any trades ahead of today’s jobs report.

230,000 jobs are expected to be added in November. In addition, there should be upward revisions to the previous month’s reported 214,000 job gains. While the jobs number will take center stage at 8:30 AM, factory orders are reported at 10AM and are expected to be flat.

Adding to Chinese Internet Play

A few days ago JD.com (JD), one of the pieces of our Chinese Internet portfolio did a spot secondary. We managed to get some stock and then topped that off with some purchases yesterday. To reiterate our strategy, we have positions in Chinese internet companies Alibaba (BABA), Baidu (BIDU), Tencent (TCEHY) and JD. The two former positions, which are the largest of the four, have performed quite well, whereas the latter two have been disappointing. Yet, we like the package and will be patient with the underperformers.

Is Santa Clause Coming to Town?

Since the beginning of November, the S&P 500 (SPX) has closed with a change of more than 10 points on five occasions. During that period there were 23 trading days. The last time the index closed with a change of greater than 1% was on October 31. So far, the highly anticipated Santa Claus rally has yet to materialize. I believe that today’s labor report might usher that rally in.

[ Please note that we have had some issues of late with our server. I was assured that the problem was resolved and that it would not happen again. If you cannot access the website, kindly let me know.]

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BABA, BIDU, JD & TCEHY — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.c


My Gut Feeling For Today, December 4, 2014: A Day of Media & Entertainment

In the stock market, sometimes you are the windshield and sometimes you are the bug. I have to say that yesterday and the last few weeks, I (along with my clients) have been the windshield. In life, sometimes you are blessed and sometimes cursed. Yesterday was one of those blessed days.

The Elephant Man

In one day, I was interviewed by Scott Gamm of The Street where we discussed the recent ABCs of Trading Paper that I coauthored. Then I had an impromptu conversation with Kevin Miles, CEO of Zoe’s Kitchen (ZOES). I told him that in my opinion, Zoe’s was going to be the next Chipotle Mexican Grill (CMG), as I have publically stated on Bloomberg Radio. Then I took a trip to Midtown (via the old reliable MTA) where I spent some time and had an early lunch with colleagues / friends. Following lunch, on a walk in the rain to the Theatre District, I was interviewed over the phone by a reporter for a Gateway Chamber of Commerce article (yet to be published) regarding NY/NJ economic and business forecasts for 2015. At 2PM my wife and I caught a Wednesday matinee of the revival of The Elephant Man with Bradley Cooper, Patricia Clarkson and Anthony Heald. After the show we had a wonderful dinner at Joe Allen’s (a well-known Broadway restaurant) with the Healds. It is not that Bradley Cooper wasn’t welcome but we wanted to keep it a family affair. You see, the Healds are members of the family (on my mother’s side for those of you who don’t have a Rothbort Family Playbill). By the way, Nick H – Tony sends his regards.

The Elephant Man is on a limited run and I strongly suggest (my personal family prejudices aside) that you consider catching the show and its wonderful cast while you can. If only the New York Times (NYT) would publish my review.

Stock Market Marking Time 'Till Friday's Labor Report

All the while, thanks to my trusty Apple (AAPL) iPhone, I was in close contact with the markets and even managed to make a few transactions along the way. It was a slow motion day for the markets, which except for a few minutes, was in the green with the major averages closing less than 40bps in the plus column. Energy shares continued to rebound, thanks to cheap prices and analysts’ upgrades. As I have written on these pages, I am looking to commit capital to energy. I have been performing some research and making some calls around the street. By next week, I expect to have a strategy in place for energy investments.

As for today, I am expecting much of the same action as for Wednesday. The reason being that there is no reason for institutional investors (who control the markets) to make any moves ahead of the labor report on Friday. If anything, I expect some shorts, i.e. hedge funds to cover some positions today.

If all that media coverage was not enough, I have an interview with WABC 770 AM Radio today to discuss what is happening to the “American Dream.” Hopefully in Friday’s commentary I will have a link to the interview.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, CMG & ZOES — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com


My Gut Feeling For Today, December 3, 2014: The ABCs of Investing

Not only did Monday turn out to be a strange day for the markets, it also can now be categorized as another in a long list of “One Day Blunders.” Those monthly cash inflows into stock funds apparently did come in a day late and scooped up stocks at a discount to Friday’s prices.

The crude oil market continued to slip but energy stocks found bargain hunters happy to nibble on the sector. I am not ready to commit capital to the sector but am getting closer. It is not a matter of if, but when.

Helping the bulls case was strong economic data – construction spending and new vehicle sales. When the industrial complex gets going in the USA, it is a sign of good things to come in the economy. My friend and star analyst Brian Reynolds also points out that the December corporate bond issuance got off to a strong start on Monday. That might have put a dent in stocks Monday but will pay dividends for stocks down the road.

The ABCs of Investing

Yesterday, Seton Hall University and Yeshiva University released findings from a research study that I co-authored with other academic colleagues.  The entire research paper, yet to be formally published, can be found on the Social Science Research Network. Today I will be interviewed on our research for The Street TV and next Tuesday at 9:30 on WCBS 880 AM Radio in New York City. I will provide links when they become available.

I can summarize our findings and recommendations best from the joint press release which was issued early on Tuesday (italicized):

NEW YORK, NY (December 2, 2014) – new research report from professors at Seton Hall University and Yeshiva University finds that early alphabet stocks trade more frequently and at higher valuations than later alphabet stocks as a result of individual investors’ tendency toward settling on an acceptable option, rather than exploring all options, and on susceptibility to defaulting to an alphabetical approach to x potential stock purchases. According to the researchers, these “lazy” investing behaviors, fed by an overabundance of investment information, have a significant impact on the stock market.

Scott Rothbort , chief market strategist at the Stillman School of Business, and the husband and wife team of Jennifer Itzkowitz, assistant professor of finance at the Stillman School of Business and Jesse Itzkowitz, assistant professor of marketing at Yeshiva University’s Sy Syms School of Business, looked at all stocks traded on the NYSE, AMEX, and Nasdaq between 1985 and 2012. Among their key findings: 

  • The first 20% of firms according to alphabetical order account for 21% of stock turnover; 
  • After controlling for other factors, an early alphabet stock’s turnover is 1.7% higher than that of later alphabet stocks;
  • The market-to-book value of an early alphabet stock is 6.1% higher than later alphabet stocks;
  • The early alphabet effect only occurs after 1998, corresponding to an increase in access to information and ability to trade via the internet;
  • Individual investors are more biased than institutional investors.

According to the researchers, these results indicate that many investors are not investing rationally, which affects stock pricing.  This behavior – “satisficing” – occurs when people search through options until an “acceptable” option is found. This is contrasted against a purely rational strategy in which all options are evaluated before deciding on the absolute best choice. The status quo bias comes into play when a decision maker relies on a default option -- in this case, since stocks are almost always presented in alphabetical order, investors choose stocks by scanning an alphabetical list without re-sorting it. Both satisficing and the status quo bias are more likely to occur when more information is available.

“Even as investors have gained the ability to review more stocks and more information about each stock, they have increased reliance on the default, alphabetical ordering of stock information,” said Jennifer Itzkowitz. “Because they are cognitive misers and satisfice, they start at the beginning of the list, ‘A,’ stop when they find a reasonable stock to buy or sell, and never make it to the end of the list.”

“There are some important takeaways from this research, for investors, publicly-traded companies and brokers," said Rothbort. “Retail investors should not make stock decisions as if they are shopping for products on a site like Amazon. Rather, they should be seeking out investment research services that provide a variety of financial data or consider using professionals for advice, such as a registered investment advisor or full service broker, who don't fall for mistakes that individuals make when they satisfice." 

“Simply said, investors are lazy,” said Jesse Itzkowitz. “Despite being inundated with investment information, they don’t search through all information. Instead, they look until they find something that satisfies their minimum criteria. It’s similar to the days when we looked for an exterminator in the Yellow Pages and stopped with ‘Acme Pest Control.’ That is a questionable approach to making any significant life decision.”

The researchers found that, anecdotally, companies that change their name from late to early in the alphabet gain liquidity and valuation. However, these results were not statistically significant because of the small number of stocks that made this change absent of other confounding factors.

The researchers explored, and were ultimately able to rule out, other potential explanations for investors’ behavior, including factors that could lead to a stock gaining more attention from investors, such has the firm’s size, age or even whether the company’s ticker is a “real word.”  For example, the data held true when Apple and 9 other high volume stocks were removed from their calculations. They also were able to discount the serial-position effectthe concept that people have the best memory for items that come first and last in a list, through findings that stocks near the very end of the alphabet did not experience increased turnover.

Recommendations

Based on their findings, the researchers make a series of recommendations to individual investors, companies and sell-side policy makers.

For Individual Investors:

  • Start by re-sorting stocks by various metrics or attributes before evaluating your choices.
  • Don’t consider too much information at once. Before evaluating a stock, decide what smaller set of information you care about and try to focus on that.
  • Decide on a particular stock attribute on which to focus (e.g., return, expense, market capitalization) and sort by this factor before searching through the list of stocks.
  • Perform research when alert, since other factors also contribute to status quo bias and satisficing. Most deal with fatigue, either mental or physical.

For Companies:

  • Changing the company ticker or name to begin with an early alphabet letter can be a strategy for a company to increase liquidity. Changing the company ticker or name to an early alphabet letter may increase the firm’s market-to-book (valuation) ratio.

For Policy Makers – Sell Side:

  • Allow users to sort stock information before the information is displayed to them.
  • Display stock information in a random order to negate alphabetical order effects.
  • Random ordering of stock information could also encourage active sorting by the investor.
  • Allow for information to be presented differently (print, grid style, etc.)

Methodology

Stocks were considered an early alphabet stock if their ticker fell in the first 20% of stocks when ordered alphabetically each year. Trading volume was measured using stock turnover, which is the annual average of total monthly trades divided by the number of shares outstanding. Stock value was measured as the ratio of the market value of equity to the book value of equity. The researchers controlled for other factors known to influence stock turnover, including a firm’s market cap, age, firm profitability, amount spent on advertising, past stock performance, stock volatility, current stock price, which exchange the stock trades on, and whether or not the company is a technology firm.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, December 1, 2014: Why Oil is Cheap and Getting Cheaper

was emphatic in my opinion when the quarter began that we were entering a positive six month period for the stock markets. October was a green month; as the Standard & Poor’s’ 500 (SPX) index rose 2.32%; but not before testing the bulls’ fortitude in mid-month.  November’s market activity resulted in that index tacking on another 2.45%.

Expect the Rally to Continue

So, can the rally continue in December? It certainly can. As it turns out, December is the most positive month of the year, rising on average by 1.71% every year since 1950 and 1.95% in mid-term election years. The last time the SPX declined in December was 2007.

It was easy getting long as we entered the quarter. It was tough to remain so in the middle of October. October was a period of time that separated the men from the mice in the investment world. The temptation to take profits and move to cash now is great as markets continue to make all-time highs. Resist that temptation. Don't be a mouse.

Why is Crude Oil Crashing?

Despite the positive tone to the stock market, there is one sector that is in its own bear market hell – energy. In the Thanksgiving shortened week, the SPX gained 0.2% whereas the Energy Select Sector SPDR (XLE), an exchange traded fund of large capitalization energy stocks slid 9.81% that same week. Meanwhile, on the New York Mercantile Exchange, futures for Light Crude fell an astonishing 13.54% to close the week at $66.15. That was the lowest price since the financial crisis low set nearly six years ago at $33.87. The difference is that the 2008 decline was due to demand shrinkages whereas in 2014 the decline can be attributed to many other factors, the most of which is excess supply.

How we got here is really due to a series of several events. It began as the United States was becoming more energy self-sufficient as a result of declining demand as energy efficiency and alternative sources increased.  Simultaneously, supply, from fracking and shale came online. Then, in an attempt to put pressure on Russia for its incursions into Ukraine, economic sanctions were enacted. This forced Russia to sell more oil to support its economy, either by dumping on the market or bringing more supply to market. Then, continued weakness in the Eurozone resulted in a dramatic rise in the US Dollar (USD) versus the Euro (EUR). As crude oil is priced in dollars, the price continued to fall. Then, last week, OPEC decided to challenge the veracity of the North American shale business by declining to cut production. By doing so, OPEC was willing to take some short term pain while trying to force the shale market to shut down by lowering prices below the critical levels at which the cost to produce oil from shale was above the realization price of sales.

So here we are in a game of chicken while the US consumer and industry gains. The potential losers in this price decline are not only OPEC, Russia and the shale industry, but Latin American countries which rely on oil prices to support their debt repayments. If the price goes too low, the domestic benefits will be lost to global economic problems. Thus, we are hoping that a floor is reached within reason before more permanent damage is done.

Of course, oil stocks in the US markets are getting hurt. However, as the rest of the market continues to rise, the declines in those stocks are more than offset. What we are setting up for is a huge opportunity in 2015 to get aggressive in the energy sector. Until then, we are underweight that sector.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, November 28, 2014: 2014 Holiday Shopping Season

Thanksgiving is over and the stores are open for Black Friday. While the calendar says that today is Black Friday, it has been open season for consumers since Veterans Day weekend. Retailers have been discounting and promoting rather heavily since. With that in mind, here is My Gut Feeling for the 2014 Holiday Shopping Season:

Holiday Shopping Expectations

  • There is not any single must have product, like Tickle Me Elmo or Cabbage Patch Dolls, which consumers will strive to buy. I have heard some people say the Go Pro (GPRO) Hero cameras will be hot. I don’t think so as that product is rather one dimensional in terms of its core customer demographic. Keep an eye on Go Pro, as it could turn out to be a fad company and stock.
  • The big losers are going to be the teen/tween/young adult apparel retailers. That list includes the 3As – Abercrombie & Fitch (ANF), Aeropostale (ARO) and American Eagle Outfitters (AEO) as well as Urban Outfitters (URBN), Gap Stores (GPS), including its Banana Republic chain, The Buckle (BKE), etc.
  • The big winner is going to be Apple (AAPL) which is certain to continue to pump out iPhone 6s which fly out the door as soon as they hit the stores and the new iPad models.
  • Discounts have already bypassed the typical opening 25% level and have gone right to 40% from the outset of the season. Don’t be surprised if 50% off becomes standard by Dec 15 and or some desperate firms run buy one get two free sales.
  • Factory outlets, where everything is always on sale, will be hot. Good luck getting parking at one of those retail centers. The best play without a doubt is Tanger Factor Outlets (SKT). The stock has recently had a big run. I would like to see the stock come in a little before committing capital. The company pays a 24 cent quarterly dividend, equating to an annual yield of 2.62% and I see that dividend increasing to 25 cents per quarter in early 2015.

Market Advanced 72% of Trading Days in November

In the meantime, the markets continue their slow ascent higher which, in bull market terms, is a Goldilocks scenario. So far, the S&P 500 (SPX) has advanced in 13 of the 18 trading days in November. In total, through Wednesday that index is advanced 2.71% for the month. Historically, Black Friday tends to be a positive session for the equity market. There is every reason to believe that another slight move to the upside is in the cards for today. By the end of today, you should be fully invested to take advantage of what I expect to be a strong end to the year and beginning of 2015.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com


My Gut Feeling For Today, November 24, 2014: Consumers Shop Without a Sense of Urgency

I apologize for not resuming my commentary when I promised to do so. My trip to Las Vegas for the Money Show / Traders Expo was extremely busy. Furthermore, I had a family issue to contend with which took up some of my time which I would otherwise use for writing. So, let’s get to business.

Chinese and European Stimulus Stimulate Markets

After barely budging for five straight sessions, through last Monday, serious buyers showed up on Tuesday thanks to positive economic releases. Wednesday and Thursday, the market once again marched in place. Then on Friday, thanks to the European and Chinese Central Banks, both of whom will expand their monetary economic stimulus programs, buyers stepped up in the United States and sent the Standard & Poor’s 500 (SPX) to another all-time high of 2,063.50. All told, the index rose 1.16% for the week.

Besides the Expo in Las Vegas, I was able to spend some quality time at various retail malls and stores. On the East Coast, retailers have been active, for weeks now, pushing holiday and pre-Black Friday sales. Out here in Las Vegas, there is a paucity of holiday advertisement, compared to what I am used in the New York Metro area. However, that does not mean that stores were empty. However, traffic seemed light and there was no sense of urgency on the part of consumers.

Expect a Slow Market Week

The trading week will be quite quiet. Essentially there are two full days of business – Monday and Tuesday – followed by an official full day of trading on Wednesday, but honestly, after lunch, most market professionals leave early to get a jump on Thanksgiving, when markets are closed in the USA. Friday is a half-day session when the B-Teamers are at their trading stations and the A-Teamers rest at home.

Today’s calendar is devoid of any worthwhile earnings report but, there are economic releases – Empire manufacturing, industrial production and capacity utilization. I am expecting that today will be another sideways session for the markets. In fact, these next three days could be quiet. Typically, Black Friday is a positive market day. As we enter this week, we have a tiny amount of cash but will look for opportunities to get fully invested before December beings, when I expect a strong move into the New Year.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, November 17, 2014: Japan Enters Recession

The G20 met over the weekend agreeing to continue to stimulate global demand  as needed to spur economic expansion. Vladimir Putin took early leave from the summit, due to his taxing travel schedule. Everyone knows that Putin just did not want to deal with global pressure to pull out of Ukraine.

After  the summit, Japanese economic data revealed that nation may be slipping into recession. The most likely reason for the economic weakness was the enactment of a hike in the national sales tax. Despite a weakening Yen, which should stimulate exports, Japan is suffering from domestic economic woes and a dominating export machine from competitors, China and South Korea. While Japan's problems may be Japan's problems only, nevertheless, the news sent US and Global futures lower.

Whether  Japan is  the reason for a pullback or not, after a four week rally, the markets could absorb a small short term retreat.

This week we expect a round of retail earnings reports. I am making a decision to sell our positions in Lowes (LOW) ahead of its earnings release as I think the stock is fully valued, even should the company report better than expected results.

Tomorrow, I am headed to Las Vegas for the Traders Expo and Money Show which takes place at Caesar's Palace on the Strip. I will be working from the Scutify exhibition table or out of my office in Henderson for the balance of the week. Hence, I am going  to resume My Gut Feeling on Wednesday.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long LOW although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com


My Gut Feeling For Today, November 13, 2014: Buy Zoe’s Kitchen Secondary Offering

As I suspected, Macy’s (M) did set the tone for Wednesday’s market, at least for some sectors of the market. The S&P 500 (SPX) winning streak ended, which should be viewed as positive as you never want to rally too far too soon. Retail, tech and growth stocks advanced while for the most part the rest of the market was flat to slightly in the red. It was one of those sessions where stock picking was important and passive indexing underperformed. Overall though, it was a boring day for the markets.

Links to Live Commentary

The retail sector was the topic of conversation during yesterday’s live chat During my Bloomberg radio appearance, we discussed Macy’s earnings and restaurant stocks such as Chipotle Mexican Grill (CMG) and Zoe’s Kitchen (ZOES).

Zoe’s Kitchen Announces Secondary Offering

As it turns out, subsequent to that radio segment, ZOES announced a secondary stock offering, which will likely be priced about 1 – 2 points below Wednesday’s closing price for the stock. This will give us an opportunity to add to positions at a cheaper price, which given my commentary on Bloomberg radio about the stock, is a gift to long term investors in the company. I plan on adding to positions.

Weekly unemployment claims will be released today and there are a few interesting retail earnings reports to keep us awake. In other words, get ready for another lackluster trading session. Allow the boring action in the market to run its course. When it is over, the market is certain to continue its recent advance. Most of all, never short a dull market.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long CMG & ZOES — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com

 

My Gut Feeling For Today, November 12, 2014: Macy’s to Set Market Tone

Tuesday’s session was even-keeled and quiet, allowing traders to book profits and investors to catch their breath. At the closing bell, the S&P 500 (SPX) experienced its fifth straight winning session. Historically, there is a 55% chance of a five day winning streak extending to day six. The expected return on that sixth day is only 0.017%, which is exactly half of the average daily return for the SPX. In other words, it’s just about the flip of a coin if we rise or fall today.

Macy's Earnings Will Preview Black Friday

It is likely that earnings and guidance from Macy’s (M) could set today’s market direction and tone, especially as we are just a little over two weeks away from Black Friday. After the market closes, troubled retailer JC Penney (JCP) and networking technology company Cisco (CSCO) will report results.

Live Chat and Bloomberg Radio Appearance

I will be focused on two events today:

  • From 1 – 2PM we will conduct our live chat on the LakeView Asset Management website. Today’s topic will be: How Does the Market Finish 2014?
  • At 4:30 PM I will be appearing on Bloomberg Radio’s Taking Stock show with hosts Carol Massar and Michael McKee to discuss the markets and restaurant stocks. You can tune in on: WBBR 1130AM New York; Bloomberg 1200AM and 94.5FM-HD2 Boston; http://www.bloomberg.com/radio/, and Sirius/XM Satellite Radio channel 119.

I hope you can tune in to the radio and join in the chat.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, November 11, 2014: Happy Singles Day

Yesterday I advocated being invested in technology and the tech heavy Nasdaq 100 (NDX). Today I will reiterate my call to commit capital to Chinese Internet Stocks, the New Four Horsemen of the NASDAQ.That was of course also in preparation for the Alibaba (BABA) IPO.

Today is Singles Day in China while it is Veterans Day in the US. Singles Day is a day for single people in China to socialize and connect with each other. It is also a day when internet shopping and gift giving looms large in China, sort of like our Black Friday. Alibaba reported $2 billion in sales in the first hour of Singles Day. Perhaps it is a way that we could reinvigorate or modernize the concept of Sadie Hawkins dances.

Rather, here in the United States we will commemorate Veterans’ Day. That takes place in two ways. First and traditionally is recognition of all those men and women who have served in the armed forces to defend our nation. The other way is to run sales across Retail America. .If there is ever an excuse to run sales, Americans can certainly come up with one.

Trucking with Swift

As for the stock market on Monday, there were new highs for the S&P 100 (SPX) and Dow Jones Industrials (INDU). For added measure, the NDX outperformed both of those indexes for the day. I put money to work in the trucking industry by making investment purchases in Swift Transportation (SWFT).

Swift is certain to benefit from ever lower crude oil prices and a growing economy. One of the biggest impediments to this industry was a scarcity of drivers due to low pay. Swift has increased pay and can divert gasoline savings to increase pay and hence get more trucks and cargo on the roads.

The Trend is Your Friend

Asian markets; European and US index futures rose overnight. Unless there are any negative or divergent news, we will continue to make new highs in the US. There will be some off days when the markets pull back but nothing of severe magnitude. The trend is clearly telling us that higher equity prices will prevail. As we say on Wall Street, “the trend is your friend.”

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BABA, SWFT & QLD— although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com


My Gut Feeling For Today, November 10, 2014: Focus Your Portfolio on the NASDAQ

Thanks to a good labor report for October and upward revisions for prior months, the S&P 500 (SPX) rose t0 another all-time high. Since the month began, the index has inched its way higher over six sessions by 0.69%.This is how a bull market operates, small incremental moves higher over extended periods of time.

In what is an unexciting week without any significant economic or earnings reports and a day off to celebrate Veterans Day on Tuesday for the bond markets, I expect a tepid market   with a similar upward bias as that for last week.

Overweight the NASDAQ

Conspicuously, one market has not made an all-time high, the NASDAQ. Whether it’s the broadly based NASDAQ Composite (IXIC) or technology heavy NASDAQ 100 (NDX), both peaked on an intraday and closing basis on March 10, 2000. Having closed at 4,160.50 on Friday, the NDX remains 10.25% away from reaching its old high of fourteen years ago. That index is also on fire, rising 12.4% since the markets bottomed intraday on the day of the great Ebola scare on October 15, outpacing the SPX and Dow Jones Industrials (DJIA), in the process.

As we head into the end of the year, NASDAQ stocks are the ones you want to overweight. The top holding in the NDX is Apple (AAPL) with roughly a 12% weighting. If you don’t own Apple then think twice and buy some. Google (GOOGL) is the third largest holding in the index. That stock is off a little more than 1% this year and should also not be ignored. Not only do we own those stocks but I also bought the ProShares Ultra QQQ (QLD) as an portfolio overlay.

Mark Your Calendars For Wednesday

While the markets may be quiet this week, my dance card is full, especially on Wednesday when I will conduct my weekly chat from 1-2PM and then will be a guest on Bloomberg Radio at 4:30PM.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, GOOGL & QLD— although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com


My Gut Feeling For Today, November 5, 2014: A Sea of Red Across the Nation

The Republican Party swept to victory last evening. The Grand Old Party recaptured the Upper House taking away at least 8 seats and potentially a ninth seat in Louisiana next month and extended its majority by twelve seats in the House of Representatives. As it now stands, the GOP has 53 seats in the Senate. Furthermore, the Republicans picked up a net of three Governorships, including heavily Democratic states of Massachusetts and Illinois.

Expect Some Post-Election Political Maneuvering

The election has clearly created some winners and losers in the political arena. Plus I think that you will see some interesting aftershocks to the election. Here are my post-election political Gut Feelings:

  • Harry Reid will voluntarily step down as leader of his party in the Senate. Nancy Pelosi will be forced out behind closed doors as the House minority leader
  • The Clintons were big losers last night. Both the Senate and Governor races were taken by Republicans in the Clinton home state of Arkansas. Also their electioneering failed to produce any significant winners. The Clintons may be down but not exactly out. However, if Hillary makes a run at the White House, clearly she has lost some advantage and is more vulnerable to competition.
  • West Virginia Senator Joe Manchin, will pull an Arlen Specter move, switching party affiliation from Democratic to Republican, just as Specter switched from Republican to Democrat after the Obama election sweep of 2008.
  • Expect heads to fall at the White House – senior executives and some cabinet secretaries will get the axe. A complete shakeup could occur in the State Department.

At Seton Hall University, I will be participating in a post-election panel discussion at 5PM in the 4th floor Atrium of Jubilee Hall. It should be interesting. Feel free to join. Given that round table discussion and an earlier student/faculty lunchtime post-election discussion which I moderate,  I am going to cancel this week’s live chat and reschedule for next week.

Markets Headed to New Highs

Futures slowly began to rally when the 51st Senate seat was captured by the Republicans. That was extended in the morning by a positive ADP (ADP) jobs report. Clearly, the S&P 500 (SPX) will trade to new highs this morning and I believe will hold into the close.

Expect Republican friendly stocks such as defense, energy, financials, healthcare technology, pharmaceuticals and retail to get a boost from the election results. Jazz Pharmaceuticals looks to trade higher by about 4% after a strong earnings report.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long JAZZ— although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com

_________________________________________________________________________

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, November 4, 2014: Get Out the Vote

Normally the first trading day of a month is decisively positive. However, with Election Day on Tuesday (today), we should expect flattish action until the outcome of the election is made clear. Normally I would say that would be about 10PM EDT, after which the index futures market tends to get very active. That however might not occur as two of the Senate races may go to a second round of voting. More on that as I handicap the election.

As it now stands, the Senate is comprised of 53 Democrats, 45 Republicans and 2 Independents. However, the Independents, Angus King of Maine and Bernard Sanders of Vermont (a Socialist) caucus and by extension vote with the Democrats. I can’t remember the last Independent who did not caucus with the Democrats. Per Real Clear Politics, an unbiased political website, according to their methods, the Battle for the Senate is looking to have with a high degree of certainty 47 Republicans and 45 Democrats who are elected or in office with 8 Senate spots up for grabs. Those battleground elections will determine how the futures trade tonight and the market trades on Wednesday. Here is how I think those races will play out (along with running totals):

  • Alaska (AK) – the victory will go to the Republican, Sullivan - 48R, 45D
  • Colorado (CO) – the Republican Gardener will win – 49R, 45D
  • Georgia (GA) – this one has three candidates, none of which will garner at least 50%, forcing a run-off election in January. If, the Republicans already have 51 seats, the democrats will sit home and not vote. I expect that to be the case and the Republican Perdue will be victorious, but again not until 2015. Call it one contingent Republican – 49R, 45D +1R contingent.
  • Iowa (IA) – Joni Ernst ( R) will win and become the Elizabeth Warren of the GOP – 50R, 45D +1R contingent
  • Kansas (KS) – another independent, Orman will get elected and as is usually the case caucus with the Democrats – 50R, 46D +1R contingent
  • Louisiana (LA) – another three candidate race which will go to overtime in December. Too close to call but again the Democrats might stay home in December if the Republicans already grabbed a majority. On the other hand, if Mary Landrieu can summon her inner Huey Long she might successfully defend her seat. Still too close to call and I will leave it as a toss-up  – 50R, 46D +1R contingent + 1 toss up
  • New Hampshire – a black and blue campaign in which Shaheen (D) will win in a tight race that could force a recount – 50R, 47D +1R contingent + 1 toss up
  • North Carolina (NC) – The Liberal 3rd party candidate will spoil Democrat’s Kay Hagen’s bid for election, giving the victory to Republican Thom Tillis - 51R, 47D +1R contingent + 1 toss up

Here’s a wildcard – West Virginia Senator Joe Manchin, who is not up for reelection, switches part affiliation from Democratic to Republican.

So, while a Republican majority is likely, it may not materialize until January. If it takes that long, the S&P 500 (SPX) could get whacked tonight. If the GOP wraps it up tonight, buyers will materialize in the futures market and regular session on Wednesday. Either way, today we should expect another inside lackluster trading day.

We can all discuss the election in great detail in this week's chat on Wednesday, However, I am going to have to push that off till 3PM to 4PM just for this week.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, October 30, 2014: 3rd Quarter Advance GDP to Set Market Tone

The FOMC, to no surprise, told us what we already knew: QE3 was ended and low interest rates would be maintained for a “considerable time”. What also occurred was the usual FOMC shuffle: the first Pavlovian response by the bears was to sell the announcement (without any regard to what the announcement said) in an attempt to cause panic which was later followed by the cash heavy portfolio managers who took advantage of lower prices to add to equity positions.

Swapping Some Gilead for Jazz

I shaved off a bit of our Gilead Sciences positions yesterday and traded that in for some Jazz Pharmaceuticals (JAZZ). We kept a core investment position in Gilead. The rationale was that we have some sizeable gains in Gilead and want to remain in biotech, but desired to diversify. Hence we chose another fast growing pharmaceutical company such as Jazz which is already domiciled in Ireland and hence will not have to do battle with the US Treasury which is seeking to block tax inversion acquisitions (see Mylan in next paragraph).

There is a pretty long list of companies that are reporting results today, but it will be LinkedIn (LNKD) that is likely to garner all the media attention. Personally, I will focus on Marathon Petroleum (MPC) which reports before the market opens and Mylan (MYL) which reports after the market closes. I am expecting Marathon to benefit from increased asphalt sales and guidance for wider refining and retail margins due to declining crude prices. Mylan will provide an update on its pending acquisition of Abbott Laboratories' (ABT) Netherlands based generic drug subsidiary in what is considered a tax inversion motivated transaction.

3rd Quarter Advanced GDP

Also of great interest is the advanced 3rd quarter GDP report which is set to be announced at 8:30AM. Economists expect a 3.0% annual increase. This follows a 4% rise in 2nd quarter GDP. Anything above 3% will likely draw in buyers to the stock market. This report could set the tone for the market day.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long GILD, JAZZ, MPC & MYL— although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com

_________________________________________________________________________

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, October 29, 2014: Try to Pick Up Some Shell Midstream

The only fly in the ointment in Tuesday’s market was the disappointing September Durable Goods Orders (ex-transportation) which declined 0.2% versus expectation of an increase of 0.5%. However, this metric is very unreliable and quite volatile. The only real damage from Durable Goods Orders was a temporary dip in pre-opening index futures, which was quickly recouped by the time the market opened.

Alibaba (BABA) and Apple (AAPL) both continued their ascent to new highs as reports circulated that the two companies may be interested in some sort of collaboration. Buffalo Wild Wings (BWLD) surged 13% after Monday’s earnings release while Panera Bread (PNRA) slipped after hours on Tuesday due to a lowering of forward guidance. That company’s earnings call will take place this morning.

Social Networking in Profit Taking Mode

Facebook (FB) reported a solid quarter but informed the street that it would ramp up expenses in the future. This was the excuse that traders needed to take profits in the social network. It also followed Twitter’s (TWTR) earnings related decline. This leads me to believe that LinkedIn (LNKD) could be setting up for a sell-off after that company’s earnings release on Thursday.

Today’s most interesting earnings release comes from Polo Ralph Lauren (RL). The fashion retailer has struggled this year. The question I have is this due to an aging brand or is it the difficult retail environment around the globe?

Shell Midstream Partners Begins Trading

Shell Midstream Partners, LP (SHLX), a master limited partnership )MLP) priced its 40 million share IPO at $23 last evening. This pricing was way above the expected range of $19-$21. I doubt that I was able to get IPO shares for clients as the deal was quite oversubscribed. I am going to try to buy some stock for income oriented accounts today, if the price is reasonable. I would suggest kicking the tires on this MLP.

Other than all that, recall that today the FOMC will complete its two day meeting and I will conduct my weekly chat from 1 – 2 PM.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, BABA, BWLD, & FB— although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com

My Gut Feeling For Today, October 28, 2014: The Good and the Bad in Social Networking

Finally, the market rested. That was in the aggregate. Below the surface not all was that quiet. Biotechs rallied on the back of Amgen’s (AMGN) earnings. Crude oil dipped below $80 dragging down energy stocks. Alibaba (BABA) gained 2% as analysts are now free to initiate coverage, post-IPO, and have done so with healthy upside price targets. To my disappointment, there were no merger and acquisition announcements.

Buffalo Wild Wings Soars, Twitter Tanks

After the market closed, Buffalo Wild Wings (BWLD) one of our long term holdings in both the Growth and Food & Restaurant Chain Portfolios reported strong results from top to bottom. The stock rose over 6% after hours. Twitter (TWTR) also reported results and tanked 11% after hours. Despite reporting better than expected revenues the social micro blogging site cited slower user growth and weaker sales guidance.

Facebook (FB), the anti-Twitter reports results after the market closes today. I expect that social networking site will report that it continues to expand its revenue base. Following up on AMGN and BWLD earnings reports will be Gilead Sciences (GILD) in the biotech sector and Panera Bread (PNRA) in the casual dining industry.

Gilead Has Many New and Exiting Drugs

GILD rose to a 52-wwek high today. The company has many promising drugs to be rolled out, or in the pipeline, including treatments for Hepatitis C, HIV and certain cancers. However, the company’s success is a double edged sword as Congress is concerned about the price tag for the Hepatitis C drug Solvaldi.

Speaking of ground-breaking medical solutions, today would have been Jonas Salk's 100th birthday

So, it appears that the market is in single stock mode while it awaits the FOMC decision tomorrow. As I mentioned yesterday, there is nothing new or out of the ordinary that we should expect from the monetary authority. It might seem boring, yet if you are in the right stocks, it can be quite exciting.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BABA, BWLD, GILD & FB— although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com

 

My Gut Feeling For Today, October 27, 2014: Overweight Growth Technology

In the recent market surge; as you can consider what occurred since the intra-day bottom on October 15 as a market surge; I have been steadfast in my opinion that the markets were suffering from fear of Ebola rather than a material shift in the fundamental outlook of the economy and companies. Hence, rather than panic, we put more cash to work and reallocated capital in order to increase our exposure to technology and restaurant stocks. That has paid off.

Technology Growth Companies Send Bullish Messages

Perhaps my expectations for a time-out from the rally at the end of last week, was curbing my enthusiasm somewhat. However, that did not deter me from calling an audible in the waning minutes of Thursday’s session, when it became apparent that Alibaba (BABA) was not going to pull back Thus, we added to positions in the newly public stock. My Gut Feeling on that decision was correct as Alibaba rose handsomely on Friday. The stock is now the 4th largest holding in the LakeView Asset Management Growth Strategy accounts.

So far through Friday, three of largest technology companies – Apple (AAPL), Intel (INTC) and Microsoft (MSFT) - all reported earnings in excess of analysts’ expectations. These three companies collectively are worth $1.175 trillion in market capitalization. I estimate that the total market capitalization of the S&P 500 (SPX) is about $17.5 trillion, give or take $100 billion. These three companies also drive a considerable amount of other demand for products and services in the economy, both domestically and globally. In other words, take the cue from these three; be overweight technology growth stocks. Just be sure to be long the right ones, and ignore the likes of International Business Machines (IBM) and Amazon (AMZN) which are not growth technology companies. Don’t leave Alibaba out of your selection process.

I would also note that as an overlay to our positions, we also hold Powershares QQQ Trust (QQQ) and ProShares Ultra QQQ (QQQ) both of which are tied to the tech heavy Nasdaq 100 (NDX)

An Important Week for Economists

The next to last FOMC meeting of the year takes place this Tuesday and Wednesday. Frankly, it will get more attention than it deserves as we already know that a rate increase is pushed well off into late 2015 or early 2016 and the QE3 program is winding down.

In addition, a whole host of important economic data will be released this week such as: Durable Goods, Case-Shiller Index, Consumer Confidence, 3rd quarter GDP (first or advanced look), Personal Income, Chicago Purchasing Managers Index, and the final Michigan Sentiment for October. I expect that in the aggregate, the data will paint a picture of a steadily improving economy. Earnings season will also continue with several important results, but for the most part, the intensity of the season peaked last week.

The big news which could drive European markets and potentially could spill over to the western side of the Atlantic will be the stress tests of European banks. Overnight, there were no indications that the stress tests were causing any panic in the futures markets. My Gut Feeling though is that we should wake up to a few new takeover announcements.

Entering Monday, the SPX is in the green for the month of October and stands just 2.78% away from its all-time high. We should see a new high in the next few weeks. Don't expect instant gratification and just remain patient for now.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, BABA, QQQ & QLD  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com


My Gut Feeling For Today, October 23, 2014: A Welcome Round of Profit Taking

After four strong days of rallying – five if you consider how far the markets came back from the depth of last Wednesday’s sell-off, some profit taking kicked in yesterday afternoon. Most likely, what set in motion the bout profit taking was a shooting at the Canadian Parliament building in Ottawa. Certainly, earnings were not the cause as those reports were for the most part  better than expected. However, despite those results, stocks of companies such as Boeing (BA) and Biogen-Idec (BIIB) were met with sell-on-the-news reactions.

I used the early strength in yesterday’s market to trim holdings in Yahoo (YHOO) and Cracker Barrel (CBRL) and then late in the session picked up some Krispy Kreme Doughnuts (KKD).

Technical Levels Might Be a Short Term Determinant of Market Movement

As it now stands, the Standard & Poor’s 500 (SPX) stands about 4.5% below its all-time high and about 5.9% above Wednesday’s reaction low. In other words, we have retraced at least half of the correction’s losses, which is quite normal. The question for the markets now becomes: Can the market retake the old highs and make a strong run into the New Year? Based on earnings reports and the strong credit markets, I believe that it can. Technicians, will look at the index’ 50 and 200 day moving averages. The index is above its 200 day moving average but needs to tack on about 2% to cross back over the 50 day moving average. Doing so, in the technical sense would be a market positive.

Alibaba (BABA) closed at its highest price since the day of its IPO last month. I have a $120 price target on the stock. The company won’t report earnings till next month. I am inclined to add to BABA on its next dip below $90. BABA was one of the stocks that was discussed during yesterday’s live weekly chat.

Overall the market has a less ominous feel than a week ago. There is not, however, any sense of urgency on the part of portfolio managers to chase the market. Given that no sexy stocks are reporting before the markets open and a quiet economic calendar – just weekly claims and leading economic indicators or LEI are to be reported – we could have an inside day with a daily change for the SPX in just single digits.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BABA, KKD, CBRL & YHOO  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com


My Gut Feeling For Today, October 22, 2014: Earnings Bring in Buyers

We did not get that day of rest that I was expecting. However, we did get an bullish surge to continue the post-Ebola scare rally that began from the depth of last Wednesday’s panic sell-off. From that trough to yesterday’s close, the S&P 500 (SPX) rallied 6.6%. Of greater importance is the leadership that the markets are getting from the tech heavy Nasdaq 100 (NDX) and the Russell 2000 (RUT) indexes.

Strong Technology Earnings

Helping to do all of that is the strength of technology earnings from the likes of Apple (AAPL), Texas Instruments (TXN), Intel (INTC) and Yahoo (YHOO), as examples. Also, the snap back in energy shares, which I attribute to earnings from Schlumberger (SLB) last Friday, has helped to feed the rally.

Earnings, which are a reality will always trump fears such as those from Ebola. It is earnings that determine stock valuations and the ability for companies to pay dividends and buy back stock.

For today, we are likely to get some early tailwinds from strong Asian markets and earning from Yahoo after the close of business on Tuesday. However, after advancing for four consecutive sessions, we should not be surprised if some profit taking hits the tape. Today’s earnings will be concentrated in industrial, defense and financial companies.

Weekly Chat Today

Also on the calendar for today is my weekly chat from 1-2PM. This week we will discuss some of my observations from my recent trip to South Carolina as it applies to the restaurant industry..

Lastly, I published an article yesterday afternoon on MarketWatch outlining three other important factors for the market correction

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, QLD  & YHOO  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com

 


My Gut Feeling For Today, October 21, 2014: IBM is Not Your Father’s IBM

As I expected, Friday’s rally extended to Monday. However, it was not all that easy an accomplishment. While overnight futures indicated about a ½% rise in the major indexes, International Business Machines (IBM) delivered a poor quarter and disappointing guidance before the markets opened. . The company also had to pay another company $1.5 billion to take its chip business off its hands. Thus, the market went from a potential rise at the open to a a bit of a sell-off.

Apple is the New IBM

However, the market quickly came to the realization that IBM’s problems were just IBM’s problems. In fact a case could be make that IBM’s problems worked to the advantage of the rest of the technology community. IBM was The Tech Company of the 1960s, 1970s and 1980s. However, its dominance was significantly diminished when the company decided to focus on personal computer and mainframe hardware rather than software. This allowed Microsoft (MSFT) to become The Tech Company of the late 1980s and 1990s. Microsoft was then replaced as King of Tech by Apple (AAPL) over the last decade as Apple became dominant in mobile computing and communications. All told, IBM declined by 7% for the day.

Apple’s dominance was confirmed after the market closed when the company reported better than expected sales and earnings per share. The quarter only included 9 days of iPhone 6 sales, so it is all but certain that the following quarter which includes holiday sales will exhibit strong growth. If there was a disappointment to Apple’s quarter, which is hard to say for a company ringing up record sales, it was declining iPad sales. Apple hopes to reinvigorate those sales with new iPads and further expansion into the enterprise market. Shares of Apple gained 1.5% in after-hours trading.

Increasing Exposure to Restaurant Stocks

I am becoming increasingly positive on the restaurant industry. After a difficult first six to eight months of the year, restaurant stocks, which rose to overvalued levels in 2013, needed some time to correct, which they did. Now you can put capital back into that sector. Chipotle Mexican Grill (CMG), a stock we nibbled on last week, also reported strong results after the market close. However, same store comp guidance was short of historical levels and the stock sold off after hours, I would be inclined to add at the right price. We also took a starter position in Zoe’s Kitchen (ZOES) yesterday morning.

Overnight futures were lower on news that growth in China’s economy had slowed down. There are several restaurant companies reporting results today, including McDonald’s (MCD) which could be a car wreck. We own MCD for our dividend strategy and even there it is not a significant holding. Also reporting are Verizon (VZ) and Coca-Cola (KO), other dividend holdings; as well as Harley-Davidson (HOG), Intuitive Surgical (ISRG) and Yahoo (YHOO). After two weeks of volatile movement, we could use a day of rest in which the market does not move very much in either direction.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, CMG, ZOES, MCD, VZ, KO, HOG & YHOO  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com

 

My Gut Feeling For Today, October 20, 2014: Can Apple Make Us Forget About Ebola?

Along with my wife we drove nearly 2,000 miles over the last week. First, to South Carolina, from New Jersey passing through Pennsylvania, Maryland, West Virginia, Virginia and, North Carolina along the way. Thanks to Pam C. and Alex Z. for setting up the meetings, presentations and meals in Columbia SC.

We then returned to New Jersey in time to rest for a day before heading to the Woodstock Film Festival to watch the premier of Friends & Romans, written and produced by my friend Gregg Greenberg for which I have a small investment in. Then we headed to Lake George for a day and back to New Jersey.

Markets Panic Over Ebola

All along my travels I kept a watchful eye on the goings on in the financial markets. It was quiet an interesting week to say the least. If you yell fire in a theater you will likely get arrested. If you yell Ebola in the stock market you get a panic sell-off. For the most part that is what happened. Of course, you had a little bit of European worries and disappointing domestic retail sales mixed in for good measure.

After a failed rally attempt the market sold off hard at the end of the day on Monday. Tuesday was a rather stable day for the markets. On Wednesday the market was in full-fledged Ebola panic mode. The markets gapped lower on the open. The media was using words like “crash” and meltdown” to describe the action. A rally attempt after the opening failed and the markets gapped even lower. At its worst, the S&P 500 (SPX) experienced nearly a 10% correction.  In the afternoon, bargain hunters showed up to buy stocks and trimmed losses to less than 1% for the S&P 500 (SPX) and NASDAQ-100 (NDX). On Thursday after reports that weekly unemployment claims hit a 14 year low, the markets stabilized. Finally, a snap back rally took placed on Friday and looks to extend itself today.

For the most part, this recent sell-off, which was the deepest correction in several years, had all of the characteristics of a pullback within a bull market. Those typically are sparked by some exogenous event and run a few days or weeks, ending in panic and resulting in stronger investors stepping up to buy stocks.

It seems that we get one of these periods of panic every year. It can be quite painful to experience such pullbacks but in retrospect they are just speed bumps in a bull market. In case you don’t remember, here are the last four such pullbacks and the related proximate cause:

2013 –  “Taper Tantrum” when the financial markets got spooked by the FOMC’s announced reduction in its third round of quantitative easing or QE3

2012 -  Fiscal Cliff  when the US was supposedly running out of its ability to fund fiscal policy and ran up against the statutory debt ceiling

2011 – US Debt Downgrade which lowered the ratings of US Treasuries below AAA

2010 – Greek Government Debt Crisis or Greek Depression where the nation’s banking system and government was bailed out and the country was forced into taking measures of fiscal austerity

As far as diseases go, the global financial markets have overcome other actual or potential pandemics such as AIDs, SARS, Avian Flu and Swine Flu. I am not dismissing the risk of a potential Ebola outbreak in the United State. However, I don’t see cause for a 10% market correction because of two cases of Ebola in the United States. Furthermore, I have confidence in the US medical system. Lastly, you are more likely to be killed by an automobile than by Ebola, but people won’t stop driving cars.

Not All Sectors Suffered Equally

Interestingly enough, while the broad market experienced a difficult few weeks, hurting our Growth portfolios, our other strategies have performed significantly better. The Restaurant & Food Chain and the Low Volatility / High Dividend strategies have fared much better during the period of market turmoil outperforming their benchmark indexes and falling only slightly so far for October.

Apple Reports Results Today

What we need to do is not take our eye off of the earnings reports which are going to begin to heat up the next two weeks. Today’s highlight is the world’s largest company, Apple (AAPL) which is set to report results after the market close. Apple is expected to earn $1.31 per share versus $1.18 a year ago on a sales increase of 6.3% to $39.85 billion. The introduction of the new iPhone 6 series took place at the very end of the quarter and will only have a slight impact in today’s reported results.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com


My Gut Feeling For Today, October 9, 2014: A Classic Bear Trap

I had the magnitude of the move wrong on Tuesday but I knew that the release of the FOMC meeting minutes were going to set up a market event. Instead of a market pause we got rather volatile and panicky markets from Monday right through the 2PM release of the FOMC notes on Wednesday.  Then the minutes were released and we found out, just exactly what we already knew, that the FOMC was not going to commit to any timing of an interest rate increase. The bears were disappointed as they were expecting a more hawkish stance with certainty of tightening. Instead the claws of the bear trap snapped closed. A bid for stocks flooded into the markets and squeezed the giddy shorts. When the bell rang the major indexes posted one of their largest advances of the year.

Has the Rally Resumed?

Now the question becomes: was Wednesday a one day wonder or was Tuesday a one day blunder? If earnings continue to roll in positively as they have so far for Yum Brands (YUM), Costco (COST) and Alcoa (AA), then the answer is simple – the pullback is over and the rally has resumed.

Today, PepsiCo (PEP) is the only company of significance reporting results. In addition, the weekly jobless claims will be reported. Overseas overnight, the Chinese markets are picking up where the US markets left off but Japanese markets are lower. What the European markets will do is a big unknown. One thing I do know is that global markets experience a multiday pullback; it is always the US market that reverses first and leads the rest of the world higher. I suspect that has already occurred. Let’s see if that prophesy comes true. We will need Europe to trade higher today to provide confirmation.

Finally, here is a link to yesterday’s chat. As I will be travelling next week, so the next live chat will be in two weeks.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long PEP — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@l.com


My Gut Feeling For Today, October 8, 2014: Europe Drags Markets Lower

My expectations for yesterday’s market were totally off base. What should have been a quiet session was turned into a rout as negative data out of Germany and Europe put global recessionary and banking fears back in the minds of traders.

Yum and Costco Report Earnings

Last evening Yum Brands (YUM) reported earnings. Initially, CNBC misreported those results versus expectations, making it seem as if the company missed on the bottom line. In fact, the company missed on the top line by a slight amount (likely due to forex) but did outperform bottom line expectations. Already today, Costco (COST) reported better than expected results from the top line to the bottom line. Both stocks are higher in pre-market trading. If retail, which has been a laggard, can put in positive quarterly results, especially as we head into the holiday shopping season, then the markets will have a reason to grind higher. I still expect the markets to do so, especially in an environment of declining commodity prices. NYMEX oil is now trading at $88.00

While a few other earnings will be reported today, eyes will be on Europe and the FOMC meeting minutes. In our early morning, European markets continue to trade lower – call it about ½% in general. As for the FOMC minutes, it is hard to believe that there will be any surprises that will be disclosed.

Credit Markets Remain Strong

So, we will have to wait for the markets to stabilize before turning higher. All told, the recent pullback or correction, depending on your definition, is just another scary panic that will in the fullness of time end. What is making me confident of that statement is the strength in the credit markets. Yesterday I ran an analysis of the credit default swap market spread which indicated that those spreads contracted the past two days. It is widening of those spreads that the stock market should be concerned with. Patience not panic is what is needed till the equity markets regains its footing.

Today I will conduct my weekly chat from 1-2 PM on the LakeView Asset Management website. This week’s topic will be third quarter earnings expectations. I hope to see you then.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, October 7, 2014: A Pause Before FOMC Minutes and Earnings

Monday’s session was a typical Monday session. We opened higher; then at about an hour into trading the markets reversed course and closed in the red. I would read nothing into the day’s trading other than after Friday’s moonshot, individual investors got too giddy at the market open and institutions took profits thereafter.

GT Advanced Technologies Files for Bankruptcy

The most interesting or shall I say strange story yesterday was that of GT Advanced Technologies (GTAT) . After thirty years in this business, I thought I had seen it all. Then along came GTAT. The company was in a strategic partnership with Apple (AAPL) whereby the company produced sapphire phone screens for the iPhone maker. Today, out of left field GTAT filed for Chapter 11 bankruptcy protection, causing the stock to slide over 90% from Friday’s closing price of $11.05 to 80 cents yesterday. Apparently, Apple, GTAT’s largest customer did not use the company’s sapphire screen in the new iPhone 6 series of smartphones. Usually, a corporate bankruptcy is part of a longer drawn out process. Never have I seen a sudden and unexpected bankruptcy filing as the one which occurred yesterday.

All Should Be Quiet Today

Earnings season commences with Yum Brands (YUM) announcing 3q14 earnings after the market closes. I anticipate that weakness in China will have a meaningful impact on the quarter’s results. Otherwise I am expecting a quiet day ahead of Wednesday’s release of the Federal Reserve Open Market Committee's (FOMC) minutes for its most recent meeting last month.

Tomorrow I will reconvene my weekly chat from 1-2 PM. This week we will discuss the upcoming earnings season.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, October 6, 2014: Labor Report Trumps All

I often say that  there is a single economic data point that trumps all others. That is the monthly Bureau of Labor Statistics employment report – known as the monthly jobs report. Within that report is the non-farm payroll data. Not until that declines for at least two consecutive months is there cause for alarm. If the increase is 50,000 or 250,000 it really should not matter and you need to avoid the noise within and between jobs reports. On Friday, the September report was issued and non-farm payrolls were reported to increase by 248,000 versus expectations of 210,000. Also, the August figure was revised higher by 38,000 to 180,000. In the context of the macroeconomic picture, all other data points are just pilot fish.

So as a result of this report, the markets reversed their Ebola paranoia sell-off and rallied dramatically across the board on Friday. Markets appear headed higher on today’s market open. The old adage of sell on Rosh Hashanah and buy on Yom Kippur (which began Friday) was never truer.

October and Fourth Quarter Expectations Remain Intact

I have often written about the strength of the fourth quarter in the election market cycle. While October began on a weak note, it has regained its footing and for the most part is about flat to off ½% across all the major indexes.

In this week’s issue of Barron’s, the newspaper wrote that “The 1.3% drop in the Standard & Poor’s 500 (SPX) this past Wednesday was bad enough to cause some to wonder if it was time to throw in the towel. They should take it as good news instead. The reason: Wednesday was the first day of October, and Fundstrat Global Advisors’ Thomas Lee notes that a drop at the start of that month increases the odds that the stock market will rise for the rest of the year. Of the 13 times October began with a dip of 1% or more, the S&P 500 finished the year higher in 12 of them. The one exception occurred in the midst of the Great Depression in 1931. The average gain, meanwhile was 7.3%. Feeling better yet? “

Clearly that analysis fits right into my thesis and expectations for a strong October and fourth quarter. So don’t let Ebola get you down or the bears shake your confidence. The market rally is still intact and with a trailing price to earnings ratio of 17 for the S&P 500, it is hardly overvalued as many bears try to make you believe.

Gold is breaking below $1,200. I have said for some time that it will go to the $1,000s. Bitcoin, the cryptocurrency crashed over the weekend. Both should be avoided.

Earnings Season Begins Tomorrow

That aforementioned price to earnings ratio is likely to get revised, lower in my opinion, once third quarter results are announced. That period of earnings results will commence tomorrow when Yum Brands (YUM) releases its earnings after the market close.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 


My Gut Feeling For Today, October 2, 2014: Risk Off Is Back On, But For How Long?

Wednesday’s session was rather ugly. Whether or not Ebola fears were the motivation behind the decline is not so clear. What is clear is that we had a big risk off session. High beta stocks (the more risky growth stocks) and indexes were hit hard. Income stocks and related indexes did not fare so poorly, by a wide margin.

We have days like yesterday from time to time. You just have to ask yourself – has anything changed which might indicate that the economy is about to enter a period of recession? If yes, then it is time to take appropriate action and cut back on risk.

Choppy Economic Expansion is Not Recessionary

I don’t think that is the case. Rather, we have experienced a rather choppy economic expansion which still has not been able to achieve what economists refer to as escape velocity. When we achieve escape velocity, the economy grows in a self-perpetuating fashion, without the need for fiscal or monetary stimulus.

So we are stuck in a slow growth economy where negative divergences in single data points are wrongly interpreted as recessionary. Most people, shall I say traders, don’t even understand diffusion indexes such as the ISM (Institute for Supply Management) PMI (Purchasing Managers Index) which was released yesterday. A diffusion index measures degree of change with a reading of 50 as being no change. So a reading of say 57 is actually positive. That is unless you interpret a diffusion index on the basis of 100.

Still in Sell on Rosh Hashanah Buy on Yom Kippur Mode

The recent nervousness, which could last a few days, or a few weeks, comes before the beginning of earnings season and this week’s monthly labor report. With the major indexes such as the S&P 500 (SPX), NASDAQ 100 (NDX) and Dow Jones Industrials (INDU) all off just over 3% from recent highs, it is hardly a reason to panic. Rather, we are just experiencing another pullback in a longer term cyclical bull market. Weak holders of stock are exiting the market because they cannot afford to absorb short term losses. Once we flush them out, the markets will stabilize and move higher again – that could be today, next week or next month. It is a fool’s errand to try to guess when. I will say this; a strong employment report on Friday will drive short sellers to cover and investors to put money back to work. Also, don’t forget we are still in the sell on Rosh Hashanah part of the year. The buy on Yom Kippur begins on Friday.

We actually used yesterday's weakness to add a little but to our NASDAQ 100 exposure.

Finally, if you are worried about Ebola, recall that we went through similar fears with the Avian Flu, AIDs and Mad Cow Disease. So, unless you are expecting a Malthusian event to occur, just relax.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long QLD — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, October 1, 2014: Another Brick in the Wall of Worry

We came into September knowing that it was a historically difficult month and we got exactly what we asked for, a down month. We came into the second quarter expecting a dull quarter and once again, predictions came true when you consider returns for the: S&P 500 (SPX) were +0.62%; Dow Jones Industrial (INDU) +1.29%; and the Barclays Aggregate Bond Index +0.17%.

Ebola is Now on the Wall of Worry

What actually began to occur was a slow building of what on Wall Street we refer to as “The Wall of Worry.” The Wall of Worry is an aggregation of small negative factors which are short term obstacles to the stock market’s progress but are not medium or long-term impediments to its advance. The current Wall of Worry has many bricks that we have been discussing over the course of the last quarter: the spread of Islamic Fundamentalism using military means through ISIS; Vladimir Putin’s continued aggression into Ukraine and the resultant round of economic sanctions; Europe’s continued economic malaise; the Hamas / Israeli conflict (which has since subsided); FOMC rate and quantitative easing policy; the strong US Dollar (which is a positive and negative); a rise in expected market volatility via the CBOE Market Volatility (VIX) Index; and now Ebola. In fact, yesterday, the first case of Ebola in the United States was reported, adding another Brick in the Wall of Worry. It’s time to queue up Pink Floyd’s The Wall.

Entering a Historically Bullish Six Month Period

This quarter, besides that Wall of Worry, we will be focusing not only on the traditional economic and earnings data, but the midterm election will captivate the media and markets as well. Historically, the fourth quarter of a midterm election year is the best of the sixteen quarter election cycle, with the SPX rising 8.03% on average. That is followed by the first quarter of the year before the Presidential election which on average rises 7.48%. Taken together, the next six months are historically extremely bullish for the stock market. The last time the SPX declined in a midterm election year fourth quarter was 1994 which was directly attributable to the Orange County bankruptcy. Before that you have to go back to 1978 for the next decline, thank you Jimmy Carter. The last time the index declined in October of a midterm election year was 1990 and even that decline was just a modest -0.67%.

Yesterday’s market was a classic day of window dressing with growth, small cap and energy stocks, which were poor performers in the third quarter getting sold off; coupled with some lesser purchasing going into third quarter winners such as Apple (AAPL) which rose an impressive 8.65% in 3Q14, helping to underscore the relative strength in the NASDAQ 100 (NDX) which rose 5.19% last quarter. Today we will get the ADP (ADP) jobs report which is expected to show a rise in jobs of 210,000; ISM manufacturing data; and, a slew of auto sales figures for the month of September as new models hit the showrooms. Normally we would expect strong cash inflows to the markets on the first day of a new month or quarter. However, the Ebola news may dampen those expectations, at least in the early going.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, September 30, 2014: Ending a Frustrating Third Quarter

When it comes to market opens on Monday mornings, there is one thing that I can just about guaranty. That is market orders will be put in without regard to rational thought. It occurs both on the buy and sell side of the market. Yesterday it was the sell side of the market as people overreacted to unrest in Hong Kong. Let me rephrase what I said earlier. There are two things that I can guaranty. The second is that whatever irrational behavior takes place on the market open, by the end of the first hour, more level headed market participants, usually professionals, will step in and take the other side of the irrational orders and the market will reverse. So, in a nutshell that’s what happened yesterday. When the dust cleared, the markets indexes were lower fractionally.

Street TV Interview

I spent the day in New York City, first in Manhattan to film a segment on The Street TV with Gregg Greenberg where we discussed Burger King (BKW), Coca-Cola (KO), McDonalds (MCD) and Warren Buffett. Later on I was in Brooklyn, not far from where Neil Diamond performed his flash concert at Erasmus Hall. Had it been at the Barclay’s center I would have bought some tickets. Instead, it was not worth waiting outside alone for a single ticket. So I headed home to New Jersey by NYC MTA train, PATH train and NJ Transit listening to Neil Diamond’s greatest hits on my Apple (AAPL) iPhone 5 (no I have not upgraded yet).

Frustrating 3rd Quarter

Now we move onto today, the last day of the 3rd quarter. It has been one frustrating quarter. Whereas the major market indexes moved to new highs, they never seemed to get any traction. Through yesterday, those indexes, the S&P 500 (SPX) was up 0.90% and the Dow Jones Industrials (INDU) was up 1.45%. Not much to write home about, but enough to frustrate nearly everyone – professional and amateurs alike.

As a result, unless some extraordinary news hits the wires, today is likely to see lots of sideways action with window dressing taking place. Window dressing is where large fund managers get rid of losers and add to gainers on the last day of a reporting period to make their portfolios appear to be better performing than they actually are.

Consumer confidence and the Chicago PMI (purchasing managers index) are just about the only information to keep us awake in the morning. Otherwise there are no earnings reports to react to. Time will be best spent contemplating what to expect in the final quarter of the year, which I will discuss tomorrow.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, KO, & MCD— although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, September 29, 2014: Bill Gross Departure is Prick in Bond Bubble

The market fell on the first day of Rosh Hashanah and then rose on the second. On Thursday the decline was attributed to Apple’s (AAPL) IOS issues and fear that the new iPhone 6 has a propensity to bend. Apple fell nearly 4 points on the session. Then Friday, the market rose (although less than Thursday’s decline) on the news that GDP grew at a 4.6% annual rate in the 2nd quarter. Net net net Apple lost exactly $1 over those two days and just 31 cents for the week.  All told, if you ask me, we had two days of volatility for no real good reason.

In the meantime, Bond King Bill Gross left PIMCO for Janus. If there is ever going to be a pin prick for the bond market, this is as good of a one that you might ever find. It won't be long to learn that bond prices across the industry are as phony as three dollar bills and liquidity is lousy. I cannot emphasize enough how important it is to exit long term bond holdings.

This week’s big economic reports are the Case-Shiller Home Pricing Index and the monthly series of labor reports for September. Also, we will enter the pre-announcement season when companies who expect to report results that are significantly below market expectations will do so. I expect a quiet pre-announcement period.

On Wednesday I had a last minute interview with ABC TV New York on the reason behind declining gas prices. Immediately after, but in an unrelated transaction, we added to positions in Himax (HIMX).

Today, I have an interview with Gregg Greenberg of The Street TV in which we will discuss my recent article on Burger King (BKW). Today is the penultimate trading day of September. Typically, that day is flatish to higher. I expect nothing more today, although I would note that overnight futures indicate a lower opening.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL and HIMX — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, September 24, 2014: September Is, As September Does

It just feels to me like the market wants to do what it usually does in September. That is put in a negative month. Most of the major indexes are off about 2% from recent and in some cases all-time highs. The small cap / growth Russell 2000 Index (RUT) is breaking down and retreating more. Whether that is caused by technical factors or a macro level asset allocation is a matter of debate.

It is worth noting that the RUT has now experienced a pullback of similar magnitude on three occasions this year and is on its way to a fourth. That is to be expected for an index made up of small cap growth stocks, which is 50% more volatile than the S&P 500 (SPX) and is a favorite by the short term trading momentum crowd.

So, as usual, let the traders worry about these short term movements and let the investors focus on the medium and long term. The medium and long term outlook for the equity markets remain the same – we are in a secular bull market.

Sell Rosh Hashanah; Buy Yom Kippur

The two day Rosh Hashanah Jewish New Year’s Holiday begins this evening. That will leave a void in some market activity and liquidity tomorrow and to a lesser extent on Friday. Recall that the markets tend to sell-off during the Rosh Hashanah holiday.

Live Chat to Discuss Recent MarketWatch Article

Before I take off to celebrate the New Year, we will hold our weekly live chat at 1PM. This week’s topic will be a follow up to my recent MarketWatch article on Warren Buffett and Coca-Cola (KO). I hope you can join.

My best wishes for a Happy and Healthy New Year to all. I will be back on Monday.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, September 23, 2014: Oil Prices, Not China Is the Real Story

Monday’s session was no doubt ugly as growth, tech and small cap shares were off considerably and dragged the overall market down with it. The blame primarily went to China, where an official was quoted as saying that the government would not provide any more economic stimulus to the Chinese economy. Adding insult to injury was an unexpected decline in existing home sales. With the decline in stock prices, we were able to pick up some more First Solar (FSLR).

What seemed to slip everyone’s attention was the continuing decline in oil prices. Driving home from Philadelphia this weekend, I noticed several gasoline stations on Route 1 selling regular gasoline for $2.99/gallon. In fact, according to MarketWatch, gasoline is selling below $3 in 28 states across the USA. Take a look at an EIA historical price chart of the average price of regular gasoline in the USA. This is a tailwind to the economy as we begin to approach the holiday shopping season. Believe it or not, Black Friday is just 66 days away.

Speaking of MarketWatch, I published an article yesterday discussing Warren Buffet and Burger King (BKW) In the article I posit some ulterior motives that Buffet had to finance the Burger King acquisition of Tim Horton’s (THI) in order to protect his investments in Coca-Cola (KO) and Heinz. As it turns out yesterday, I published a LakeView Restaurant & Food Chain newsletter article in which a suggestion to purchase shares in Coca-Cola’s smaller adversary, Dr. Pepper Snapple (DPS) was put forth.

There are certainly many market cross winds which are coming together to confound the best of traders and investors. These cross winds are: the aforementioned decline in energy prices;  breakdown in the Russell 2000 (RUT); the ISIS Crisis; low interest rates; an improving US economy; the Jewish High Holidays; and, the usual quarter-end market manipulation (up or down) games. Once again, the bears are going to have to show their resolve and try to generate follow through to yesterday’s sell-off. I won’t be convinced they can until they do so. As a result, I expect today’s session to be flat to positive, especially after a positive overnight manufacturing report from China.

We have started a new LakeView Asset Management page on Facebook. Please like us!

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long FSLR, KO and DPS — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, September 22, 2014: Just Lock Away Alibaba for the Future

Recalling Alibaba's First Day of Trading

So let’s focus on Alibaba. As I have said in this commentary in the time leading up to the Alibaba IPO, I expected the stock to be priced to the public at $69 and then open for trading at $90. I arrived at those numbers based upon my careful reading and analysis of the company’s SEC F1A filing, something that very few people bothered to do.

As it turns out, the IPO was priced at $68. After nearly two hours of the NYSE specialist matching buy and sell orders, the stock opened at $92.70. It quickly surged to just under $100, $99.70 to be precise, as retail investors put in market orders to buy the stock. Trust me when I say that they did not read the prospectus but acted out of pure undisciplined desire to own the stock. My strategy was to purchase the stock at $90 and before the market opened, I entered orders at that limit and waited. I was not induced into taking action by the retail led run up in the stock.

Those retail orders were rather fleeting and Alibaba's stock price began to retreat. It fell below the $92.70 opening price and was on its way to $90. I was not going to let this one get away, and knowing that there would be professional bids at $90, I inched my bids up to $90.25 and was filled. The stock closed at $93.89. It pays to be patient, disciplined and do your homework.

So what do you do with Alibaba now? You lock it away and don’t pay attention to the noise from the stock’s short term price movements or the talking heads on TV, most of which never read the SEC filing. Please understand; that there are risks to owning Alibaba. I just believe that the rewards outweigh those risks.

As to Apple, that stock took a back seat to Alibaba while sales of its new products, on the internet and at stores surged. Yahoo (YHOO) on the other hand, again as I expected, would get sold on the Alibaba IPO. Up till Friday, Yahoo was a proxy for Alibaba. Yahoo owns a significant stake in Alibaba and was used as a hedge by hedge funds for the Alibaba stock they received in the offering, or as a source of cash (as we did at LakeView Asset Management a few days ago) to fund Alibaba purchases.

While I was waiting for Alibaba to trade, we took a starter position in Lowes (LOW), the home repair retailer. With both of those purchases our Growth Portfolios are nearly fully invested.

Market Slowdown Expected for Rosh Hashanah

This week will be somewhat of a letdown to last week’s excitement. Furthermore, with the Jewish New Year set to begin Wednesday evening with Rosh Hashanah, some market participants will be leaving early and taking off Thursday and perhaps even Friday (I plan on taking off both days). Hence, we have the old Wall Street adage, “Sell on Rosh Hashanah, Buy on Yom Kippur.” Yom Kippur begins a week from Friday evening.

Of course, before the holiday begins we have three days of trading and my newly instituted weekly chat on LakeViewAsset.com this Wednesday at 1PM. All are invited and it is free of charge. Last of all, autumn begins today. The way the summer went, I thought it started several weeks ago.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, BABA, LOW & YHOO — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, September 18, 2014: Time to Put Cash to Work

The FOMC announcement was as expected. Janey Yellen’s press conference was chock full of Fedspeak. The markets did its usual FOMC day dispy doodle, twisting and turning from losses to gains all afternoon only to close fractionally higher. At least that’s better than fractionally in the red.

Scotland Votes on Independence

Today we will have to endure the nail bitter vote in Scotland for independence. It is likely that the vote will be so close that a result will not be available until Friday morning. Also, after the market close, Alibaba (BABA) will be pricing its IPO. I think the stock is priced at $68 - $69 and begins trading at $90. At $90 I will put about 2-2.5% of assets into the stock. Above $90, I will commit a little less and below that, a little more. We shall see how that all plays out on Friday

Market Resilience Warrants Putting Cash to Work

The markets have been incredibly resilient this year and particularly the last few weeks during a period of turmoil in the Middle East, Iraq and Russia. At this point you have to get ready for what I expect to be a strong fourth quarter of 2014 and first quarter of 2015. Let’s not forget the historically positive bias of the midterm election year. With that in mind, I am going to deploy all but 1% of the 5 ¼% cash that we currently hold in our Growth strategy between now and the end of the quarter. As I mentioned before, about 2 – 2.5% will be used for BABA. Another ¾ - 1% will be used to add to existing positions, most likely First Solar (FSLR). The other 2% will be deployed into a new holding, most likely in the retail sector.

I am expecting a quiet day for the markets today. However, there will be more last minute cash raising taking place to fund BABA purchases across Wall Street. So, you might be able to buy some stocks at lower prices and I would suggest putting in some good till cancelled orders for stocks you are interested in below yesterday’s closing prices,

If you missed the live chat yesterday, no problem, you can access it on this website.  The next chat will be held next Wednesday.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long FSLR — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, September 17, 2014: Will the FOMC End QE3?

As it turned out, Monday’s technology and growth sell-off was simply just a one-day blunder as the markets did not follow through to the downside but reversed higher. Some might believe that it was short covering ahead of the FOMC decision today but it was clear to me that was not the case. Buyers who have sat on the sidelines for the past week just stepped up with cash to buy beaten down stocks.

CalPERS Pulls Out of Hedge Funds

There was a major development in the financial markets yesterday, as CalPERS, the California Public Employees' Retirement System; the nation’s largest pension plan announced that it was pulling all of its $4 billion in assets out of hedge fund investments. While this amount may be a small percentage of its $298 billion portfolio, it nevertheless has far reaching implications for the markets. Hedge funds have underperformed the overall marketplace for several years as many are either long/short or short biased. The first implication would force the CalPERS invested hedge funds to buy to cover on a net basis, both stocks and bonds. Secondly, those assets are likely to be redeployed into more traditional index based investments, which are long. Finally, many of the other pension plans and endowments around the county – public, private and academic – will likely take a lead from CalPERS and follow suit, potentially creating a run on the hedge fund complex, further adding to demand for stocks and bonds.

FOMC Will Likely End QE3

As for today, the FOMC announcement will likely keep the markets in check until the monetary decision is handed down and Chairwoman Janet Yellen conducts her press conference. I am expecting that the FOMC will lower their monthly purchases of mortgage backed securities under QE3 from $10 billion to 0 – $5 billion, essentially putting QE3 to bed. The FOMC will also likely lower its monthly purchase of long term Treasury securities from $15 billion to $10 billion. Furthermore, I expect that the US central bank will continue to hold the Fed Funds rate at its current range of 0 – 0.25% and not indicate that it will tighten in the foreseeable future. So, all we really should do is read and analyze what the FOMC’s statement says and then observe how the market reacts.

Don’t forget that today I will hold my first weekly chat on LakeViewAsset.com from 1PM – 2PM today

 

My Gut Feeling For Today, September 16, 2014: Tesla is Overvalued But That is Not Necessarily Bad News

For the second time this year, technology, biotech and growth stocks got hit with the ugly stick. When you invest in these sectors, you have to learn to take the good with the bad. So yesterday we got a dose of the bad. If you trade these sectors, which takes place in short periods of time, and for some, to put food on the table, days like Monday feel like the end of the world. I am an investor and do so not only for my personal money but for clients across a variety of strategies. Hence, I take a day like yesterday in stride in the context of a bigger picture. I raised some cash last week, just in case; the Alibaba (BABA) IPO had some secondary effects on the market. This appears to be occurring.

Tesla Leads Technology and Growth Stocks Lower

However, what lit the fuse yesterday was an analyst’s report from Morgan Stanley (MS) which said that while Tesla (TSLA) will move higher in the long run, in the short run the stock was too expensive. After similar comments last week from Tesla chairman, Elon Musk, the stock had already begun to fall. The Morgan Stanley research report just greased the skids to the downside. Then Tesla took the rest of the growth and technology complex down with it.

My general opinion of Tesla is that this is not an automobile company but a technology company. I was in Henderson, Nevada  outside of Las Vegas, for the past few days, where the announcement of Tesla building a battery factory in the Northern part of the state was creating a buzz. It was so important to the state that the Nevada legislature was called back in session to approve tax breaks and other considerations to make the Tesla deal come to fruition. Yes, the current Tesla model is too expensive for the average person. In order to make an electric car of Tesla’s quality which can be affordable to the average Nissan or Chevy driver, Tesla will have to develop technologies which do not exist today. In essence, Tesla will become the modern day version of Thomas Edison's Menlo Park Laboratories. Think back to the space program of the 1960s and what it took to get a man to the moon. Coincidentally, SpaceX, the private space program is also under the control of Elon Musk. The United States is no longer in the space exploration business, leaving that to the Russians, Chinese and SpaceX.

Trivia Question: Who was Nikola Tesla for whom the Tesla company was named in honor of?

So if you are out there trading Tesla for the short run, you are playing with fire. If you are investing for the future, wait till the stock concludes its correction. However, I will suggest another alternative. Tesla has an interesting convertible note paying a coupon of 1.25% maturing in March 2021 with a yield to maturity of 1.49%. This note, denominated at $1,000 is convertible into 2.7788 shares at a conversion price of 359.87. Thus, you will get paid to hold exposure to Tesla while participating in future upside potential. The stock only has to rise 5.5% annually on a compounded basis to reach the conversion price. Last time Tesla took a dive, I bought these bonds for a few income accounts. This time around, I might spread the exposure across both growth and income oriented accounts.

Be Patient and Raise Some Cash

I am looking to add to positions in First Solar (FSLR) which got hit with the growth stock complex yesterday and will likely put in some bids at lower prices. Let stocks come to you rather than chasing them.

I would also note that on Monday, Apple (AAPL) was barely changed on the day, benefitting from strong iPhone 6 pre-sales. Imagine what the NASDAQ 100 (NDX) would have been like had Apple, the largest index component, also took it on the chin.

For today’s session, we have to see if the sell-off In technology, biotech and  growth stocks spreads to the broader market, such as the S&P 500 (SPX) and Dow Jones Industrials (DJIA), which were only fractionally changed on Monday. Hold onto some cash as the two day FOMC meeting begins today. 

Weekly Interactive Live Chat

So as to not interfere and overlap with my good friend Cody Willard’s weekly chat (I recommend checking out his Trading With Cody site) I am going to schedule my weekly chat on LakeViewAsset.com for Wednesdays from 1PM – 2PM. This  week the interactive chat will take place just before the FOMC announcement and a day before the BABA pricing. I look forward to exchanging ideas with all of you at that time.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, FSLR & QLD — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, September 15, 2014: Alibaba, FOMC and Scotland Highlight a Busy Week

After rising for five straight weeks, the S&P 500 (SPX) suffered a weekly loss. The decline of 1.10% was not enough for the bears to jump up and chest bump each other. Just in case this turns into a bigger decline, while on the road last week, I raised some cash. Some of that cash is being held for this week’s main event, the IPO of Alibaba (BABA). The BABA pricing will likely take place on Thursday afternoon after the market close and will begin trading on Friday. Overnight, reports circulated that BABA will be raising its anticipated IPO price range from the prior estimate of $60 - $66. I would like to hypothesize that the sell-off last week, in part, was a result of assets being sold to raise cash for the BABA offering, which is expected to top the  Visa (V) IPO as the largest IPO of all-time

Not to be outshined, the FOMC will be handing down its interest rate and policy decision on Wednesday. While Janet Yellen’s every syllable will be over analyzed and over interpreted, the monetary mavens are unlikely to tell us anything more than we already know: tapering to continue and interest rate policy to remain as is until at the earliest next year.

The world is awaiting word from Scotland as to whether the Scottish Isles will be separating from England after an independence vote. Scottish independence would have several implications on the banking industry; UK’s debt structure, including its government bonds, Gilts; and, the British Pound (GBP). The vote is so close that gaming the vote’s outcome on Thursday is not a worthwhile endeavor.

Taken together, those last two events are worthy of observation but not preemptive action. As for Alibaba, I plan on buying stock, if the price is right, which we will know sometime on Friday.

Over the weekend, as pre-sales for Apple's (AAPL) new iPhones were being taken, it became apparent that shipment delays are to be expected due to the heavy demand for the products. At one point, the Apple website was unavailable due to the exuberance for the new smart phones

I will be conducting my first live chat on Wednesday from 2PM to 3PM on the LakeView Asset Management website In the meanwhile, I will be heading East once the market closes today and will be back to a normal schedule until the High Holidays commence later this month.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, September 11, 2014: 9/11 Memories and ISIS Fears

I have been on the road the past week, speaking at a Crowdfunding conference in Santa Monica and meeting with clients and brokers in the Los Angeles and Las Vegas areas. We also caught a double filming of the Late Late Show with Craig Ferguson (one for Tuesday and one for next week).

We used the time to upgrade the LakeView Asset Management website which was first launched last December. In the process, the website was taken offline for a few days and migrated to a new server which will help to increase capacity, robustness and speed of the site. Furthermore, we added a new chat page in which from time to time I will host open chats whereby I can answer questions about investing and the markets in a real time environment. The first chat will take place next Wednesday. Thanks to Michael Stadulis of Digital Workhorse for his great work on the website.

In the meantime, a rather confusing labor report was disseminated for the month of August. Apple (AAPL) announced the launch of (larger sized) iPhone model 6 and 6 plus, a payment facility and introduction of the iWatch. The market was initially pleased by the announcement but later was disappointed by the delay of the iWatch premier until next year. By yesterday market participants acted someone more positive to the announcements and drove the stock higher by three points.

Over the course of the last week, we sold several positions and cut back on our Yahoo (YHOO) position. With our cash holdings, which is roughly 6% of our Growth Strategy, we will hold some cash for the Alibaba IPO, add to a few existing positions such as Dunkin' Brands (DNKN) and look to deploy cash in some future ideas.

As for today, the specter of ISIS and memories of 9/11 will likely keep market participants on the sidelines. Overall, I expect a down day as emotion and fear drive trading. Remember to say a prayer for those friends, colleagues and loved ones we lost thirteen years ago to another terrorist organization.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DNKN and YHOO — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, September 2, 2014: Try to Remember the Kind of September

Welcome to September, the month of: back to school; hurricanes; the autumnal equinox; and the Jewish New Year. It is also, historically and on average the worst month for the market. After what has to be considered a spectacular month of August, with the S&P 500 (SPX) rising 3.77% and closing above 2,000 and at all-time high, it should not come as any surprise if the markets trade sideways and even back up a little in September. Also this month is the much anticipated road show and initial public offering for Alibaba.

ECB Meeting and US Labor Report to Highlight a Busy Week

The week ahead is very busy, when it comes to economic events. In the US, the monthly labor report for August will be released on Friday, to be preceded by the usual warm up acts of the Challenger job cuts and ADP (ADP) employment reports. Sprinkled in for good measure will be the FED Beige Book, factory orders, mortgage applications and auto sales.

Eyes will be on Europe for what is likely to be the big story this week, the ECB meeting and monetary decision on Thursday. Expectations are running high that Mario Draghi will announce a Euro quantitative easing (QE) program. If that does occur, expect global markets – both bond and stock – to react positively.

Crude Oil Prices on the Decline

Against the recent backdrop of military action across parts of the Middle East, it is worth noting that crude oil prices have steadily declined since peaking in late June. I would hypothesize that the Russians are dumping what they can as economic sanctions are hitting the ruble and the Russian economy.

I do not believe, nor do I recommend, trying to game what might occur in September based on history or the likely outcome of the ECB meeting. Rather, I prefer to look ahead beyond September when I expect the global equity markets to accelerate. I have spent the last few weeks putting cash to work and adjusting the portfolios. So, while September may have some curves being thrown at us, wait for your pitch to swing at.

I am going to be on the road beginning Wednesday of this week and all of next week – from Philadelphia to Las Vegas to Santa Monica and back to Las Vegas. You will hear from me from the road.  In the meantime, cue up The Fantastics 

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time. 

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 28, 2014: Chinese Internet Stocks Should Command Attention and Attract Capital

As expected, the markets traded in a very narrow range on Wednesday. The most interesting news broke after the market closed. First, was the story that Russian hackers attacked four major US banks in August; including JP Morgan Chase (JPM).The other news was that of Alibaba’s earnings. The company, which is soon to launch its IPO, announced a near tripling of its net income for its fiscal first quarter. This should be the last earnings report before the company goes public. Alibaba’s roadshow is expected to begin in early September. Make sure that you hold some cash on the side to buy Alibaba when the stock is available for trading in the market.

Move Capital Into US Tech and Chinese Internet Stocks

The next two days will be Seinfeld market days – all about nothing. What you should do is use the “down time” to look at your positions to see if there is anything worth eliminating or harvesting some profits. I suggest putting some of that cash into US technology shares, NASDAQ exchange traded funds like Power Shares QQQ Trust (QQQ) and ProShares Ultra QQQ (QLD) or Chinese internet stocks. The four horsemen of the Chinese internet are Baidu (BIDU), Tencent (TCEHY), JD.com (JD) and the aforementioned Alibaba.

The A-Teamers will be back on Tuesday for what should be an action packed week. Enjoy the Labor Day Holiday weekend. I will be back on Tuesday with more of My Gut Feeling.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long QQQ. QLD, BIDU, TCEHY, JD — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 27, 2014: A Busy Media Day But Slow Market Day

Yesterday the S&P 500 (SPX) did managed to close above 2,000, so we can now put all the talk about that behind us. Almost.

I had a rather busy media day yesterday. It began with an article about SPX 2K that was published on MarketWatch’s Trading Deck website. Then, in between my classes at Seton Hall (it was the first day of classes; hard to believe already) I was interviewed by Karina Huber of CCTV on the subject of Burger King’s (BKW) acquisition of Tim Hortons (THI). Unfortunately, I could not make it to NYC for a Bloomberg segment on McDonald’s (MCD) due to my teaching obligation but I am sure to make it back on the air at Bloomberg sometime soon. We own McDonald’s for our Low Volatility / High Dividend Portfolio only.

As for today, I am expecting the markets to trade in a very tight range. There is not much in the way of news to react to and we are getting so close to Labor Day that the ranks on trading desks are rather thin.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long MCD— although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 26, 2014: S&P 500 Hits 2,000

The S&P 500 (SPX) poked its head through the 2,000 level on Monday but closed a tad under at 1,997.92. Just as a matter of course, round numbers for major indexes always attract some technical selling. However, there was less euphoria for SPX 2K than there was for SPX 1K.

It has become somewhat customary of late for the SPX to rise and hold early gains on a Monday session, unlike the long-term market history for Mondays. About midday I deployed nearly the rest of our cash into a semiconductor stock.

Best Buy (BBY) and Bob Evans Farms (BOBE) highlight the earnings calendar today. We own Bob Evans Farms for our Restaurant & Food Chain Portfolios. I have no feel for how Best Buy will report results. It could go either way.

The economic data releases are going to be more telling about the macro economy. Durable Goods, Consumer Confidence and the Case-Shiller Home Price Index will all be reported to the public today. I expect Durable Goods to be better than the prior 1.7% gain. Case-Shiller is certain to show a continuation of home price increases with the preponderance of growth taking place once again in the hardest hit areas of the housing crisis. Consumer Confidence is always a wild card. I am expecting a survey number of above 90.

At this juncture, I am waiting for the market to do its magic and increase our portfolio values into the year end. Along the way, I will trim a few positions such as Apple (AAPL). To be totally honest, I just plan to mark time until after the Labor Day weekend and suggest that you do as well.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL and BOBE   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 25, 2014: Labor Market Still Broken

Jackson Hole gave the interest rate hawks an opportunity to spread their wings. However, in the final analysis, the economic gathering was a non-event. The major concern coming out of the meeting was that of the labor market. With the minimum wage rates rising, for example in New York state it went from $7.25 in 2013 to $8.00 in 2014 and is scheduled to go $8.75 in 2015 and $9.00 in 2016, the propensity to hire decreases and the labor hours will be replaced by technology or by forcing more work out of less workers, i.e. productivity gains. On the supply side, short term unemployment is fast being replaced by long-term disability, which is ever growing. These people will never come back to the workforce. Read this article from the Richmond Fed two years ago. West Virginia should no longer be called the “Mountain State” rather it should be called the disability state. So, as I teach my student at Seton Hall’s Stillman School of Business, a decline in the labor supply and demand curves will keep result in lower hours worked or employment with the price of wages declining, except when constrained by minimum wage rates. Of course, this is short-run unemployment. The Fed’s concern is how this plays out in the long run and from what Janet Yellen tells us, it remains uncertain.

Burger King (BKW) and Tim Horton’s (THI) are in merger talks. Both companies are scheduled to rise on the news today. Furthermore, the companies are sticking their middle finger out to the White House, as it will be structured as an inversion deal with the combined company being headquartered in Canada. This will make for interesting international relations as the Canadian government is still not pleased with the Obama Administration’s failure to approve the Keystone Pipeline.

Get on your SPX Y2K hats because, at least on an intra-day basis, you will need it this week. The summer correction is over and the market bottom is in. This is something that we have been preparing for. Last week we moved more cash into the equity market via purchasing NASDAQ ETFs, both the PowerShares QQQ Trust (QQQ) and the ProShares Ultra QQQ (QLD). Cash balances in our Growth Strategy are now down to about 1.50% and some of that is certain to get spent.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long QQQ & QLD   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 21, 2014: BofA to Settle Mortgage Probes

The markets traded like a teeter totter yesterday – up, down, up – and managed to finish slightly in the plus column. Other than earnings from Hewlett-Packard and the news that Carl Icahn has amassed a 8% stake in Hertz Global Holdings (HTZ), there was not much news overnight.

This morning’s market news is also rather light, with weekly unemployment claims and a few retailers set to report earnings. As a result, index futures are indicating a slightly positive opening, The S&P 500 (SPX) continues to inch toward a new all-time high and the 2,000 level. The former could be eclipsed today and the later will occur, if not the end of the week, then next week.

Bank of America Agrees to Pay $16.65 Billion

Bank of America (BAC) is in the news. First, Angelo Mozilo, the perma-tanned former CEO of Countrywide, now owned by BofA, is apparently close to being indicted for his role in the mortgage debacle. Second, in a related development, BofA is reported to have agreed to pay $16.65 billion to permanently settle all mortgage probes. BofA stock is indicated slightly higher on that news.

Yellen to Speak at Jackson Hole Tomorrow

Let the market continue to do what it is doing as it wants to go higher. Whether the market moves your way in heavy or light volume, it does not matter, so long as it moves the right direction. Tomorrow all eyes and ears will be on Janet Yellen at Jackson Hole. Get out your SPX2K hats as you will need it soon. I will be back Monday with more commentary.


My Gut Feeling For Today, August 20, 2014: If You Never Experienced a Bull Market, You Are Now

I have had the privilege to work in this business for thirty years and along the way lived and worked in London, Tokyo and to a lesser extent, Hong Kong. Right now Europe is comatose – either on vacation or still on high alert for Putin. The US is on vacation but trust me, with mobile telecommunications, the A-Team can be on the phone or email to their B-Teams and deliver more aggressive instructions to the B-Teams for execution. So, why is the market so strong, especially after last Friday’s one-day blunder, or what was really, a one morning blunder?

Asia Likely Behind Strong Buying

The answer is twofold. First, the action in the markets has all the earmarks of Asian sourced equity orders. Strong opens are usually Asian market open orders which can be executed before Japan, China, Hong Kong, Singapore, etc. go to sleep. Second, the continuous flow of buying is typical of US pension funds putting out VWAP (volume weighted average price) orders to index desks.

Apple Trades to New HIgh; Above $100

Of course, helping yesterday’s advance was the stream of excellent retail earnings coupled with tame inflation figures and better than expected housing data. Not to be forgotten was the impact of Apple (AAPL) hitting an all-time high and closing about $100.

Hump Day will see the delivery of the FOMC meeting minutes from July and another steady stream of retail earnings topped off by Hewlett-Packard’s quarterly report. With Apple making a new high and the Standard & Poor’s 500 (SPX) index about 6 index points away from setting an all-time high, the market’s path of least resistance is higher. Until otherwise noted, advances will be material and pullbacks will be modest, with the occasional one-day blunder. If you have never experienced a bull market, you are now.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 19, 2014: Home Depot and Housing Data Will Determine Day’s Direction

The markets had an impressive day considering it was a Monday in the middle of August. Apparently investors cheered a lessening of tensions in Ukraine, decided to put cash to work, which then sucked in short covering. Being close to fully invested, I will take what the market gives me. Perhaps that August low that I recently wrote about is in place after all.

Opportunities in Low Volatility / High Dividend Strategy

I spent the day rebalancing our Low Volatility / High Dividend Portfolio. The portfolio holds thirty positions of which we sold six and purchased another six during the trading day. This is more than we typically will transact, however, many opportunities to reduce risk and increase or maintain yield became available.

Apple Fast Approaching $100

Apple is sneaking up on the magical $100 level, having closed at $99.16 yesterday. The old high, on a stock split adjusted basis was $100.30 on September 19, 2012. We could see that tech stock make an all-time high by the end of the week. We still hold an oversized position in Apple and plan on shaving a little off the top should it make a run after eclipsing and holding the old all-time high price.

Retail Earnings and Housing Data Highlight Trading Day

Whereas Monday was a day without much to react to, Tuesday will be a bit more exciting. Three big names in retail will report before the market opens: Dick’s Sporting Goods (DKS), Home Depot (HD) and TJX Companies (TJX). We have positions in two of those three, so I will be busy in the morning. On the economic calendar will be CPI, housing starts and building permits for July. Thus there will be plenty to set the table before the market opens. Strong results from retailers, particularly Home Depot coupled with strong housing starts and permits could provide the fuel to get the S&P 500 (SPX) back to all-time highs and over the 2,000 index level. I am more certain that will occur than it will not.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, DKS & TJX   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 18, 2014: B-Teamers in Charge for Two Weeks

I had promised to present my findings as to when would be the best time to put money to work in the second half of the year. On Friday, MarketWatch published my article titled Prepare For a Market Bottom.  It was, I am proud to say, the most popular article on the site's Trading Deck page over the weekend.With that article in mind, I will continue to deploy more capital through the end of the month.

Bloomberg Discussion on Coca Cola

Furthermore on Friday, I was interviewed by Pimm Fox of Bloomberg Radio while on the road in Philadelphia. The topic of conversation was Coca-Cola’s (KO) investment in Monster Beverage (MNST). My interview is in the last third of the segment’s podcast. The more I thought about Coca-Cola’s investment, the more I believe that the company is moving in the wrong direction. This gives me an idea for my next MarketWatch article. Stay tuned.

B-Teams Set for Two Weeks at the Helm

For the most part sleep away camps, where for about $8,000 to $10,000 per child, parents send their offspring for seven weeks of living in bunks, singing songs, playing sports, participating in water activities, doing arts & crafts projects, engaging in color war but most of all are away from home, is now over. Those campers are back home which means that the Wall Street A-teamers will be on vacation through Labor Day. That gives us two weeks to pick good spots to put money to work.

This means that we will be in store for two weeks of B-Teamers in charge of the terminals. B-Teamers are the junior staff at trading desks who; for the most part, have instructions to reduce risk or at the most trade around positions. They have little or no freedom to add to risk or take on new positions. Nick Leeson of Barings and David Miller of Rochdale Securities are examples of B-Teamers gone wild. Also note, that B-Teamers at short selling hedge funds (for which there are many) can only reduce risk by buying to cover, hence, a B-Team week can go either way.

This week earnings reports from retailers will continue to hit the market, including TJX Companies (TJX), owner of Marshalls, TJ Max and Home Goods as well as other lesser brands; which as it turns out we started to purchase last week as we began to bottom fish in the retail sector.

Also this week minutes from the last FOMC meeting will be released. Furthermore, the economic cognoscenti will be meeting in Jackson Hole for the Kansas City Federal Reserve Economic Symposium, a summertime version of the Davos World Economic Forum. It is summer camp for economists. The highlight will be FOMC chair Janet Yellen’s Speech. I can guaranty that this time around, Yellen won’t be playing biotech analyst.

As for today, there is just an earnings report from Urban Outfitters (URBN) to chew on. Overnight futures were modestly higher while Asia markets were mixed. Otherwise, it should be a quiet B-Team session, with potential for volatility from the sabre rattling or rumors of sabre rattling from Vladimir Putin.  Lake George is calling to me for some motor boating. I plan to oblige.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long TJX   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 14, 2014: Poor Retail Sales Bode Well For Stocks and Bonds

July retail sales not only missed expectations but also slumped from June. The casual observer would conclude that the stock market would take it on the chin on such disappointing news. However, the retail sales report led market professionals to the conclusion that poor retail sales would keep the FOMC from raising interest rates anytime soon.   As a result, bond prices rose, yields dropped and equities were bought. The strongest sector was technology as the NASDAQ 100 (NDX) rose 1.02%.

Retail Earnings Reports Today

Speaking of retail, JC Penney (JCP), Nordstrom (JWN) and Kohl’s (KSS) will all report earnings today. If the macro retail sales figures are ugly, then the micro numbers will be nasty as well. There could be an exception, as high end retailers such as Nordstrom are outliers and are likely performing well as the upper income consumers are unaffected for the most part by the short term vagaries of the economy. We could be on the cusp of a final washout in retail stocks which will create some opportunity. However, you won’t get a coupon in the mail, so get ready to buy retailers when everyone hates them.

Europe Growth Halted

Overnight we learned that both the German and French economies failed to grow, with Germany’s actual shrinking. We have to attribute this weakness to continuing Russo-Ukrainian tensions and resulting economic sanctions that have been enacted. We need to keep a watchful eye on Europe as that region has secondary effects upon the US economy.  Furthermore, we need to determine if the Russian situation is transitory or of a longer nature.

I get the feeling that after yesterday’s bond led rally in stocks; we could be in for a little retrenchment today. Friday’s economic calendar is loaded with important data, so be prepared for some volatility heading into the weekend. I am headed to Philadelphia on Friday and will be back on with commentary from the Adirondacks on Monday.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time. 

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 13, 2014: King Digital Gets Crushed

As I expected, the market had a rather quiet day without much intraday movement and closed fractionally to the downside. Also, there was really not much in the way of news, so also as expected, the death of Robin Williams took center stage. It was bad timing for Lauren Bacall, who also passed away yesterday and the news of her passing got short shrift. So, let’s not forget her. She was a great actress, both on stage and screen, married to two great actors, Humphrey Bogart and Jason Robards. A little known trivia fact was that she was first cousins to Israeli Prime Minister Shimon Peres who passed away earlier this year.

There is really not much going on today in the markets. Economic data will focus on retail sales. Recall that yesterday, I discussed looking at putting some capital back into that sector as we close out the year. John Deere (DE) is the most exciting company to report earnings today. Given that heavy rains are expected to blanket the North East today, it will be a good day to focus on research.

King Digital Entertainment (KING), the digital games company which produces Candy Crush Saga is getting crushed after reporting disappointing results, despite announcing a $150 special dividend. Recall that earlier this year, KING went public, in a rather disappointing IPO which raised $326 million. So now, the company is returning $150 million of that to shareholders. It sounds like the company did not need those IPO proceeds after all. Given that the stock is set to trade much lower than its IPO price, expect class action attorneys to be all over this company. I still am of the opinion that Apple should buy Nintendo, King Digital and Zynga (ZNGA), which it can do with Apple pocket change, and then put together a world class gaming system to operate in the Apple technosystem.

Markets appear to be headed higher on the open but I expect another low volume day without much movement.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 12, 2014: Looking For Retail Bargains

The markets opened higher on Monday, as expected; then rose even more only to close just about where they opened. The tech and biotech heavy NASDAQ 100 (NDX) and small cap Russell 2000 (RUT) were the day’s big winners, advancing 0.58% and 0.93%, respectively. The Kinder Morgan (KMI) deal put a solid bid into the pipeline and MLP stocks. All told we had nice follow through to Friday’s advance.

Are There Bargains in Retail?

For the most part, industry experts (I guess you can include me in that group) expect that the equity markets will be higher by the time we end the year. In general, they are focusing their capital in technology, healthcare and industrial stocks. This leaves us to question what is to become of the other major sectors for the rest of 2014? To begin with, there is energy which seems to rise and fall with the price of crude, which in turn is a function of geopolitical issues and the weather. Hence, one cannot accurately forecast what to expect in the oil and gas sector. Next there are financials, which unless interest rates rise, which is doubtful, spreads won’t increase and profits will remain capped. Then there are consumer discretionary stocks, specifically retail. The retail sector has been an underperformer this year, thanks to the winter weather that began the year and an obstinate consumer. This could be one of those sectors that is so hated and so under owned, that any pickup in GDP or general economic activity could give this segment a boost. While my exposure to retailers is underweight, I am going to look amongst the bargain basement for opportunities in the sector.

Quiet Calendar Today

As for today, the business calendar is quiet with no major economic or earnings reports due and no new offerings. Instead, the news is going to be focused on the untimely death of comedian and actor Robin Williams. A midday press conference to discuss his death will dominate the air waves. Thus, you can expect a stock picking day where specific news or analysts’ actions will move stocks in either direction. As for the overall market, I am expecting an inside day where we will likely trade within yesterday’s high and low for the major indexes. 

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time. 

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 11, 2014: Consolidation in Oil & Gas Pipelines

Easing geopolitical tensions combined with an oversold market led to a meaningful bounce during Friday’s session. As a result, the major indexes closed in the green for the week and are off ever so slightly for the month of August. Don’t be fooled, this is still August and Putin or Hamas or ISIS could do something crazy anytime to wreak havoc on the financial markets.

Correction is Near an End

Nevertheless, the S&P 500 (SPX), at its lowest point last week, retreated 4.35% from its all-time high set within the past month. This is just shy of my call for a 5 – 10% summer pullback, Talking with my peers and reading some of their commentary (all who were also looking for a summer pullback) are making a case that the markets might still have room to move to the downside but insist that we are closer to the end of the summer correction rather than the beginning. All believe as do I, that after a pullback, the markets will continue their positive trajectory. So while we cannot pinpoint the exact bottom of a pullback, one is near.

Thus, the time to raise cash was in July and early August. Now you can pick spots to put that to work. Two weeks ago we deployed some cash into China. Last Friday we began positions in Raytheon (RTN). All told we have cut our cash positions down to about 2% in the growth portfolio. In the Food & Restaurant Portfolio, on Friday, we took a long position in the grains complex via the iPath DJ-UBS Sub Index ETN (JJG).

As for today, Priceline Group (PCLN), the internet travel company, which typically reports results after the market close, reported quarterly results early this morning. Once again the company exceeded consensus estimates yet provided guidance short of expectations. This is yet another example of a company playing UPOD (under promise over deliver). Why the market plays into these games is beyond me. What is even more unbelievable is why companies continue to provide guidance as doing so has zero benefit to shareholders.

Major Consolidation in Oil & Gas Pipeline Business

Over the weekend Kinder Morgan Inc. (KMI), the oil and gas pipeline giant is consolidating its holdings via the purchase of the remaining minority stakes in various MLPs (Master Limited Partnerships) that KMI does not already own. Those MLPs to be acquired are Kinder Morgan Entergy (KMP), El Paso Pipeline (EPB) and Kinder Morgan Management (KMP). While we hold several MLPs for our income oriented clients, we do not hold any of the companies involved in this Kinder Morgan deal. The deal will benefit our holdings as it is certain to put a bid into the MLP sector.

The markets are looking to open higher this morning. I would not be surprised if we hold early gains given that too many traders are positioned short. That would suggest that the market correction could be over. On the other hand, we should be on the lookout for the Monday morning fade, which could indicate that Friday’s advance was a one-day affair and the market may have more downside in it. Hence, no decisions as to add to positions or start new ones should be made until the afternoon.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long JJG, PCLN & RTN   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 7, 2014: Flat and Bored

The market ended up about flat as it possibly could on Wednesday as the Dow Jones Industrials (INDU) rose 0.08%, the S&P 500 (SPX) rose 0.03 index points or 0%, the NASDAQ Composite (IXIC) inched up 0.05%, and the Russell 2000 (RUT) was the big winner of the day rising 0.36%. The good news was that the markets opened on the day’s lows and rallied into the afternoon.

Zynga Earnings Highlights Today's Calendar

Today’s economic calendar is limited to weekly unemployment claims. The earnings calendar has an eclectic group of companies which are set to report. There are several food and restaurant earnings results, such as Brinker International (EAT) and TreeHouse Foods (THS) on the earnings calendar to keep me busy. What is likely to get the most media attention is the earnings release from Zynga (ZYNG) after the market closes.

Don't Force It

In a boring summer market, there is a tendency to try to force yourself to take some trading or investing positions. The best advice is to do absolutely nothing. There is still a good chance that the recent downward to sideways stock action will continue to last through the end of the month, It is best to use the intervening time to put together a shopping list. For example, I would like to add to First Solar (FSLR) and start a position in Raytheon (RTN).

I am expecting more of the same action today and tomorrow as we had on Wednesday. I will be back on Monday after a weekend in Boston.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long EAT & FSLR   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 6, 2014: Terminated Mergers & Acquisitions

For what seems like the third or fourth time in the last few months, the US markets tumbled on reports or rumors that the Russian Army was assembling on the Ukraine border in preparation for invasion. So, a quiet summer market turned turbulent and dropped dramatically. However, that was a trading opportunity and stocks closed about 1/3% off the day’s lows. In the meantime, south of Ukraine, the Israelis and Hamas began a cease fire and headed to Egypt for peace talks. As it turns out, the Israelis may have already achieved their object of eliminating the tunnel threats and destroyed important weapons cache. I have to say that the Obama administration has handled both situations poorly. That will have an impact on the important midterm elections here in the United States.

Fox and Sprint Pull Out of Potential Deals

We wake up to two merger and acquisition deals getting the thumbs down. First, Ruppert Murdoch’s Twenty-First Century Fox (FOXA) has abandoned its desire to purchase Time Warner (TWX). Shares of FOXA tumbled on the announcement of the prospective deal and have rebounded on today’s news of the deal abandonment. The opposite is true for TWX. Second, Sprint (S) gave up its bid for T-Mobile (TMUS) as concerns for regulatory approval loomed large.

However, there was positive M&A news as Walgreen (WAG) announced that it would purchase the remaining 55% of Alliance Boots that it does not already own. However, the deal would not take advantage of the tax inversion strategy which has recently become popular. As a result, shares of WAG have declined nearly 15% in the premarket.

Tax Inversion Deals

Tax inversion is a legal strategy in which a US corporation acquires an offshore company and then relocates it headquarters and main tax domicile to the foreign nation of the acquired company. Politicians, especially in the Obama Administration are calling this “unpatriotic.” However, these are legal strategies until Congress were to change the tax law. At the heart of the matter are the high corporate tax rates in the United States and the inability for American companies to repatriate overseas earnings without incurring huge tax bills. There are several pending tax inversion deals which are awaiting approval and I am sure that the government will play hardball in the approval process.

Ralph Lauren (RL) has once again reported solid results but guided to lower margin.. The company’s stock which has struggled this year is declining in the pre-market.

The market is poised to open lower as the summer correction continues. Just let it play out.

 

My Gut Feeling For Today, August 5, 2014: Tobacco Treats Disease

The markets rose decisively in a low volume summer market. Unlike what we expect on a typical Monday, an early rise did not get faded. I noticed a fair amount of stocks which had fairly large gains or losses. For example, Priceline Group (PCLN) rose 4.34% and Royal Caribbean which reported results a week ago jumped 3.21%, both on no news. Priceline Group will report earnings next week. On the other hand, Michael Kors (KORS) declined 5.89% after once again reporting better than expected results. That company likes to play the UPOD game (under promise over deliver)

Tobacco Plant Treatment for Ebola

As a result of the slow financial news day, Ebola dominated the headlines. An American doctor infected with the disease returned to the US after taking an experimental drug designed to cure the disease. It appeared that the drug was working. This morning Bloomberg news reports that “A tiny San Diego-based company provided an experimental Ebola treatment for two Americans infected with the deadly virus in Liberia. The biotechnology drug, produced with tobacco plants, appears to be working.” The story goes on to say that a subsidiary of Reynolds American (RAI) working with a small biotech company, Mapp Biopharmaceuticals helped to produce the drug. Who would have guessed that tobacco plants would treat diseases? If this drug is the real thing, Mapp Biopharmaceutical and Reynolds American could be in for a windfall.

Walt Disney Earnings Later Today

The earnings calendar is rather active today. Coach (COH) and CVS Caremark (CVS) will dominate the morning results. Walt Disney (DIS) will take center stage when that media giant reports results after the close. Disney is expected to earn $1.17 versus $1.03 a year ago as revenues are expected to rise 5% year-over-year to $12.16 billion. That company’s stock rose a little over 2% yesterday in anticipation of those earnings. We own shares of Walt Disney and expect excellent results from theme parks and its ESPN unit. My concern is the weak summer box office and the lack of exciting releases in the second half of the year from Disney’s studios.

The market is likely to take back some of yesterday’s gains with investor’s focus on individual stocks rather than the broad market.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long PCLN, RCL, KORS & DIS   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, August 4, 2014: Portugal to the Rescue

When I last wrote My Gut feeling, I mentioned an anecdotal observation that the market always seem to have a poor day when my friends Mitch and Martin come to the Adirondacks for a few days of excitement at Saratoga. Well, true to form, the markets took a bath on Thursday, which as it turns out; I stayed in the office to experience while the others went to Saratoga.  The raison d’etre for the decline was Argentina’s credit default.  Furthermore, the markets declined because profit taking kicked in on the last day of July and the impact was far more pronounced as most investors and money managers were out of town. On Friday, the markets opened higher, declined, rallied and then ended the session fractionally in the red. All is typical for a Friday in August. We have seen Latin American defaults occur before and have survived to tell about it.

Markets Experience First Monthly Decline Since January

In the final analysis, the markets experienced a decline in July. The Standard & Poor’s 500 (SPX) dropeed 1.51% for the month and as of Friday sits 3.16% below its closing high of 1,987.98 set on July 24. It was the first monthly decline for the SPX since January. Is this the summer pullback that I was anticipating? I believe the answer is yes. Does the decline have further to run? Perhaps. Based on my research, which I will write about in greater detail another time, there is a good chance that the SPX will bottom sometime in July or August.

Putting My Tencents Where My Mouth Is

I have begun to put some cash to work, primarily in China as I believe that country’s economy is on the verge of an economic rebound. Most recently I have been accumulating shares in Tencent Holdings (TCHEY). No, this is not the Chinese five and dime (a reference to the old Woolworth or as my late father would call it, the “schlock store”) Rather, Tencent is a fast growing internet ecommerce and advertising giant with a market capitalization of about $155 million.

Overnight, Portugal bailed out one of its largest banking institutions sending markets in the Far East higher, particularly in China and Hong Kong. Emerging markets currencies and US Index futures rallied. Given that we are in August, any market moves – up or down – are likely to get magnified as the entire western world goes on vacation.

P.S. My horse was scratched on Wednesday evening. We are awaiting the vet's report.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long TCEHY   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 25, 2014: Off to the Races

(corrected original commentary replacing Del Mar for Santa Anita and updated with additional paragraphs which appear as second and third to last paragraph)

The major averages traded in tight ranges and closed just about flat by the closing bell during Thursday’s session. It was a stock picking day and luckily we were on the right side of many strong stock moves such as Royal Caribbean Cruises (RCL) which rose nearly 8% and Proto Labs (PRLB) which rose over 6%.  Today, we are getting a nice bounce in Baidu (BIDU). I am not expecting much more on this summer Friday, other than some stocks which will be impacted by earnings reports, such as Amazon (AMZN) and Starbucks (SBUX). Those two stocks will weigh on the NASDAQ 100 (NDX) today.

After hours yesterday Amazon posted a wider than expected loss and the stock dropped like a rock. I bought a few shares after hours with the stock off about $20 in a personal account for a short term trade. Starbucks is also looking lower after reporting its results. This follows up a sell-off for Dunkin’ Brands (DNKN) which reported disappointing results yesterday.

Thin Summer Trading Continues

The markets are trading rather thin resulting is wild moves for stocks in the news. Today being Friday will be no exception. The reason for the thin trading is that many portfolio managers and investors are at their beach houses (i.e. the Hamptons) or at the Spa – Saratoga Race Track in Saratoga Springs, NY. West Coasters will spend their racing days at Del Mar. I will be spending a better part of the next week at the Spa entertaining visiting clients who make the trek for an annual pilgrimage to the races. Thankfully, a few years ago, wi-fi was introduced to the grandstand, so I can keep an eye on the markets while entertaining and make a few wagers.

Professional Investors Hone Their Skills at the Race Track

I kid you not when I say that professional investors will be at the Spa. There are very important skills which investors and racing bettors have in common. I encapsulated those skills in a series of articles for TheStreet (TST) several years ago. First came Five Investing Tips I Learned at the Track  which was then followed up with Investing Lessons From the Race Track. I go so far as to include a lesson for my Finance class at Seton Hall University’s Stillman School of Business in which I discuss how important skills learned at the race track can be for investors.  A must read is Andy Beyer’s Picking Winners.

I have over the course of time been a winner at the race track. Here is an interesting story. When my wife was in law school (we were not married then) we went to the Meadowlands with one of her law school friends. On the way out the man who would become my father-in-law, Art, handed us about $20 or $25 to wager. We went to the Meadowlands for a nice evening and came back to her house (which we subsequently bought and now live in, in New Jersey). I handed Art a pile of cash – about $75 – and told him that was his. He asked what I was doing. I said that you won money. He replied, “I don’t know anyone who wins at the track.” He has since learned that I do.

What happens now is that I partner up with a close friend and client, Mitch, who with his old friend and another client, Martin drive up to Lake George for a week and we head out to the spa for a few days. As the track is closed on Tuesday (we call it a dark day), that day is reserved for time on the lake. Mitch is an excellent handicapper. In fact, he could do it professionally. I use my mathematical skills to determine the best way to place wagers. I have even built a web site for Mitch to post his handicapping ideas, HorsePicking.com Fair warning, and this is anecdotal, there always seems to be a day in which the market drops when Mitch and I are at the track. Again, thanks to mobile telecommunications and the internet, it is no different than sitting in my office.

Also anecdotally, many of the portfolio managers are also top rated Texas Hold’em players. Other people see card playing or track pari-mutuel wagering as gambling. In the legal sense it is. However, those in the investment world it see it as a method to hone their skills and get some entertainment at the same time. So, if you want to head north or east, depending where you call home to Saratoga Springs, and spend a day at this beautiful and historic race track, please let me know.

I had a wonderful dinner with old friends Eric and Billy in Glens Falls after today's races. Eric and some other old friends from Camp Echo Lake who get together every year at the Spa were featured in Anthony Alonso's "The Replay" a copy of which is framed in my office. See if you can find me in the picture.

Over the winter I bought a share in a standard bred filly pacer. Another Delight. The filly ran third in her first outing at Buffalo and fourth in her second race at Yonkers (we collected a purse in each race). This coming Wednesday she will race in the second race at the Saratoga  Harness Casino & Raceway in post position #6.

I will pick up My Gut Feeling the first week Monday in August.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long RCL, PRLB, BIDU & AMZN, DNKN and short SBUX   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 24, 2014: Technology is Back, So Get On Board

I finally was able to retrieve my files after my old data drive was rescued and restored. However, it took me a rather long time to update many files. Thus I had to make a decision. Do I publish my commentary yesterday, or do I forge ahead with getting my files in order? I chose the latter. So, today I will provide you with a two-day look at the financial markets.

Apple and Facebook Are Forging Ahead

On Tuesday, earnings from Apple (AAPL) and Microsoft (MSFT) highlighted the earnings calendar. Yesterday Facebook (FB) dominated the news. Apple and Facebook’s quarters both exceeded analysts’ expectations. Apple’s quarter lacked any new product rollouts (or introductions) and was not advantaged by seasonality such as back to school or December holidays. In other words, the quarter was a test of how well Apple’s portfolio of products continues to be purchased by the public in a steady state. The company focused its efforts during the quarter to expand its portfolio to include Beats headphones and a partnership deal with International Business Machines (IBM). I was quoted by Troy Wolverton in the San Jose Mercury News on my thoughts about the Apple quarter.

Microsoft Was Left Behind

So while the ancient tech companies like IBM are trying to reinvent itself and old tech companies such as Apple and Intel are transitioning well into the new tech age, another old tech company, Microsoft clearly has its challenges. The company was lost in the wilderness during the Steve Ballmer years. Ballmer will likely go down as one of the worst CEOs of the last decade. He even overpaid for the LA Clippers. The company clearly missed the digital and mobile revolution. That led to Microsoft’s acquisition of Nokia’s devices and services business just under a year ago. That acquisition was a bust. Now IBM, as I mentioned before, is partnering with Mr. Softie’s arch enemy Apple. Luckily for Microsoft, the personal computer business is experiencing a rebound as is quite evident from results for its old tech compatriot, Intel (INTC).

Then there is new tech such as Facebook (FB) and Netflix (NFLX). Credit has to be given to Facebook's Hoodie Man Mark Zuckerberg for rebounding from the poor execution of the company’s IPO two years ago by focusing the company on mobile applications and advertising. Facebook’s results last night were outstanding and the stock is set to surge in today’s trading. The company is rapidly expanding and growing into a more reasonable valuation.

The NASDAQ Composite Index peaked at an intra-day high of 5,132.52, and closed at an all-time high of 5,048.62 on March 10, 2000. That index closed yesterday at 4,473.70, just over 11% below its all-time closing high of over fourteen years ago. Despite both the S&P 500 (SPX) and Dow Jones Industrial Average (INDU) indexes either at or near all-time highs, the tech world still languishes. Part of that problem has to do with the intricacies of index formation and calculation. The other part has to do with investors still being shell shocked and gun shy after that 2000 tech crash and the subsequent financial crisis.

Make no mistake about it, technology is back. There are old tech companies that have reinvented their business models as I described above. There are some survivors of the dot.com bubble that are performing extremely well, such as EBay (EBAY), Amazon (AMZN) and Priceline (PCLN). Then there are some of the new tech companies that must be owned. There is certain to be another round of technology on the forefront such as 3-D printing, drones, wearable devices and self-driving cars. If you are still in the mind frame of the year 2000 or of main frame computers, it is time that you look at the present or into the future. Embrace tech but as always be selective. There are plenty of tech companies that are working but there will always be disappointments, such as Juniper Networks (JNPR) which once again delivered a poor quarter and forward guidance.

As for today, last evening's earnings earnings reports and this morning's weekly unemployment claims were both quite positive. As a result, the markets are poised to open higher. I expect the S&P 500, which closed at an all-time high yesterday, to make an even higher high today. The 2,000 level for the SPX is within spitting distance and could be breached today or early next week. Tomorrow I will take you to the races.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, FB, PCLN and JNPR   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 22, 2014: Gearing Up For Apple Results

It was a slow Monday for the markets. The S&P 500 (SPX) traded in a narrow range of about 10 index points. At this time of the year, absent any major news, both Mondays and Fridays are pretty much beach days for money managers and traders. This is one of the reasons why most significant earnings results are concentrated from Tuesday through Thursday.

There was one noteworthy earnings result last evening, Chipotle Mexican Grill (CMG). This company continues to forge ahead, while companies like McDonald’s (MCD), which reported results early this morning are showing signs of aging. Chipotle’s results outperformed expectations across many metrics and the stock was bid up over 10% after hours. Chipotle is one of those stocks that you regret having sold, even after making some nice profits. I still believe that on a valuation basis that Chipotle is too expensive to own.

McDonald’s has its own set of problems, Chipotle being one of them. Simply put, McDonald’s is losing market share in the United States to healthier alternative restaurants while its growth regions of China and Russia continue to struggle. After owning McDonald’s for a decade, we sold the stock in our growth portfolio earlier this year. We do hold a small position in McDonald's for our Low Volatility / High Dividend Portfolio. McDonald’s will have to boost stock buybacks or dividends to support its stock price. The best news for shareholders would be if the company split into two companies - a restaurant and real estate company.

The spigot of earnings is turned on to full today. Besides McDonald’s, Dupont (DD), Polaris (PII), Verizon (VZ), CIT Group (CIT), Travelers (TRV), United Technology (UTX), Harley Davidson (HOG), Altria (MO), Comcast (CMCSA) and Coca-Cola (KO) are amongst companies reporting before the market opens. Reporting after the market close today will be a slew of technology companies such as: Microsoft (MSFT), Broadcom (BRCM), Juniper Networks (JNPR), Intuitive Surgical (ISRG) and last but not least Apple (AAPL).

The market is expecting Apple to increase earnings per share by 15% to $1.23 with sales rising about 8% to $38 billion. Whereas last quarter Apple announced some major capital news – stock split, stock buyback and dividend boost, this time around, investors and analysts will want to hear about news products – iPhone 6 and wearable technology, likely an iWatch.

Apple will take the spotlight away from Microsoft, and deservingly so. However, given that new CEO, Satya Nadella’s goal is to reinvigorate Microsoft, its earnings results will take a backseat to restructuring plans. For the record, Microsoft is expected to deliver a 9% decline in earnings per share to 60 cents.

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Disclosure: At the time of his commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, HOG, MCD, KO, MO and JNPR   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, July 21, 2014: What Happened on Thursday and Friday?

So exactly what happened on Thursday and Friday? There is more to that question than meets the eye.

On Thursday, the markets were poised to move lower based on pre-market futures, by just over 1/2%. The excuse seemed to be weak data out of China. However, by the time the markets opened, the pre-market decline was for the most part reduced to a fraction. The markets opened slightly lower and then moved ever so slightly into the green. It seemed rather mundane action to be quite honest, but no doubt, buyers were willing to step up.

Not One But Two Exogenous Events

So, after my son was admitted to the New York Bar we took in a late breakfast / early lunch at Panera Bread (PNRA) in Albany. Of course the first thing that I did was link my wireless device to the free wi-fi at Panera (a tip for the business traveler: Panera and Starbucks (SBUX) both offer free wi-fi at their restaurants). Then the markets began to tumble and I received word from colleagues and push notifications from my Bloomberg app, that a Malaysian airplane was shot down over Ukraine.

A few things went through my mind. First I wondered whether the report was authentic, the reason being because I have worked long enough on Wall Street to know that false rumors are spread around from time to time, at a rapid rate. Steve Jobs died several times  before he actually did pass away. An accident in the United States or other country with a highly developed media infrastructure would certainly have an authentic report right away. This time though, I had to ask – how does Malaysia and Ukraine figure in together? Perhaps, I hypothesized; this incident was related to the  missing Malaysia Air flight that disappeared a few months ago. Why though I wondered? There were more questions than answers at the moment.

Without any knowledge of what truly happened (the world is still trying to ascertain the truth), and as rumors of the story became authenticated by major networks, I then put on my risk management hat. Recall that I discussed dealing with exogenous events on April 16, 2013, the day after the Boston Marathon bombings. I suggest taking a look at that installment of My Gut Feeling before reading here any further. Essentially, I recognized that a one-day exogenous event had occurred. As I often do for such events, I look to buy into the  panic using  index EFTs, rather than join the panic and sell. That is indeed what I did, purchasing some ProShares Ultra S&P 500 Index ETF (SSO), while sitting in Panera Bread, for a day trade, when the market appeared to have bottomed out at around noon.

My timing was right and the markets did bottom at that time.  However, what then happened was totally unexpected and highly improbable; a second exogenous event occurred. The Israel Defense Forces or IDF, began ground operations in the Gaza strip. I won’t go into my personal opinion of what is occurring there other than to say, in Hebrew, Am Yisrael Chai. So, with the IDF incursion into Gaza underway, the markets did an about face and closed just about on the day’s lows, a loss of over 1% for the S&P 500 (SPX).

While my training and experience, as well as my gut feeling said to hold onto those EFTs for another day, as a post-panic rebound was certain, the markets were so kooky on Thursday that I decided to play it safe and took some small trading losses on those index ETFs.

Reversal on Friday

There was some gain to go with Thursday’s pain. Google (GOOG / GOOGL) reported disappointing earnings results but much stronger top line revenues than were expected. As a result, the stock popped about 4% on Friday.

So now let’s get to Friday. My Friday was to begin by publishing a My Gut Feeling containing all of the above. Then my Samsung external hard drive failed. I spent hours, including the time I would normally write and publish my daily commentary trying to resurrect my data, but to no avail. So, I was unable to produce My Gut Feeling on Friday. To make matters worse, in the late morning, I came down with a horrible headache, likely a migraine or headache related to last winter’s concussion that I suffered. Nevertheless, I worked from my lap top watching the markets surge back from Kooky Thursday, while tuned into Bloomberg TV, sitting on my couch at home in Lake George. By the time the closing bell rang, the SPX recouped all but three index points of Thursday’s losses. I then took my data drive to a profession to seek repair and slept upon return until late in the evening.

The markets can frustrate you longer than you can remain sane. Thursday and Friday were such examples. As for today, we can put last week in the rear view mirror and get back to other frustrations. While some of the major indexes are at or near all-time highs, there has been a consistent and never ending rotation taking place under the surface. This makes stock picking and portfolio management very frustrating.  Let me provide a recent example.

We have held positions in Gilead Sciences (GILD), a major biotech company for a few weeks. After rising several points from our original purchase price, on average between $80 and $81, I decided to add to those positions. We paid just over $90 for our add-on stock. That was the day that Janet Yellen became a biotech analyst in front of Congress. The stock declined that same day after we made our purchases and the following day, taking over $5 off our most recent round of purchases. A professional biotech analyst took exception with Yellen’s comments and biotech shares surged on Friday. On Friday, Barron’s ran a story suggesting that Gilead may have a dividend in its future.

Despite the expectation on the part of many professionals, myself included, that a summer correction will occur, one does not seem to want to materialize. We still have five weeks left to July and August, so there is time for the correction to occur, or for the markets to continue to frustrate us all. Barring any other new exogenous event, we are looking at a flattish open to today’s markets.

This week earnings reports will be spewed out at a fevered pitch, with the main event on the schedule to be Apple’s (AAPL) quarterly report on Tuesday.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, GILD, GOOG & GOOGL and short SBUX   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 16, 2014: Janet Yellen Speaks Out On Stocks

Tuesday’s trading session was for the most part dominated by FOMC Chairwoman Janet Yellen’s testimony on Capitol Hill. She gave a dissertation on jobs and inflation which gets economists all excited but is rather boring for the average legislator or investor. Somewhere within her testimony she hinted that valuations in biotechnology, social media and small capitalization stocks were stretched. That caught the eye of traders who then hit the sell button. Buyers took advantage of the sell-off and stepped up to buy stocks in the afternoon. By the time the bell rang, the major indexes were flat with the NASDAQ taking nearly a ½% hit which was due to its concentration of stocks which were mentioned by Ms. Yellen.

Yellen’s words were no help to me as I added ever so slightly to positions in Gilead Sciences (GILD) prior to her comments. Yet, Johnson & Johnson’s (JNJ) reported sales of its Hepatitis C drug foretold good news for Gilead Sciences and hence the latter did not perform as poorly as the biotech averages did for the day.

Apple Gets Boost from IBM

There was interesting news after the market closed. Intel (INTC) reported solid quarterly results putting a healthy bid into the stock. International Business Machines (IBM) reported that the company would be teaming up with Apple (AAPL) to sell that company’s products. This is a departure from IBM’s history of hawking Microsoft (MSFT) software and related hardware products. Let me put it this way – it would be like having General Motors (GM) selling Lincoln vehicles made by Ford (F). Clearly Apple is a big winner in this deal. I would go so far as to say that this news will jettison Apple to an all-time high, which on a split adjusted basis is about $100.30.

Good and Bad News For Yahoo

Then there was Yahoo (YHOO). Let’s start with the good news which is the reduction of Yahoo’s mandatory sales of Alibaba in that company’s IPO and potential return of cash to shareholders from the proceeds of those sales. Then the bad news is that the rest of its business stinks as the company missed analysts’ estimates by a penny. YHOO should start aggressively buying back stock right now, before the Alibaba IPO. In the final analysis, Marissa Mayer is just another in a long line of hyped up yet disappointing Yahoo CEOs. I will likely unload Yahoo shares in the next few days.

Today we pick up where we left off with more earnings reports before and after the close. Overnight economic data from China indicated that the economy is picking up in the Middle Kingdom. International Game Technology (IGT) received a takeover offer from Gtech for total consideration of about $18.25 per share versus a closing price of $15.50. However, considering where IGT traded just a few months ago, it is a take under.

I am heading out on the road tomorrow afternoon to once again change my venue back to Lake George. Thursday I will be attending the New York State Bar Association ceremony for new attorneys when my son will be admitted. See you on Friday. 

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, GILD, JNJ & YHOO   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 15, 2014: Utility Stocks At Critical Juncture

The equity markets opened higher and for the most part did not get faded at all. This is contrary to what we expect to occur on a Monday. Mr. Market likes to keep you on your toes and will do its best to befuddle you, which is exactly what occurred on Monday. As any statistician would note, one data point is not indicative of a whole series, so if we repeat today’s opening 99 more times, it would likely result in what we have come to expect – a strong Monday opening gets faded.

Is the Utility Boom Stock Over?

With all those statistics aside, the continued easing in oil prices and Citicorp (C) earnings results, energy and financial shares led the market higher. Utilities were the only S&P sector to decline and did so by 1.2%. Whether we are seeing the end of the demand for dividend stocks or it was just profit taking, I cannot say just yet. It is worth noting that the Philadelphia Utility Index (UTY) peaked at 563.62 on June 30 and closed at 538.68 yesterday, a decline of 4.42% which has also taken the index below its 50-day moving average. However, if market participants decide to exit the utility sector, it is certain to benefit technology, growth and small cap stocks. Let’s get ready to act if that indeed comes true.

Yahoo Also At Critical Juncture

Earnings kicks into high gear today, as I outlined in yesterday’s My Gut Feeling. My greatest interest is in the earnings report from Yahoo (YHOO). With the Alibaba IPO just less than four weeks away, we will get a glimpse into how the Chinese internet giant performed in the second quarter. We are about flat on our Yahoo position, which was initiated with Alibaba in mind. Should Marissa Meyer fail to deliver a respectable quarter or the stock falls, it is likely that I will jettison the Yahoo positions and just wait to buy Alibaba after its IPO.

With earnings on the docket and the July labor report in the books, economic data will likely take a back seat to earnings reports. Today’s retail sales might impact retail stocks but we have come to expect the worst for that sector, such that even a bad report could be viewed as good news for retailers. I have a shopping list of retail stocks that I want to purchase later in the quarter or when I see a sustainable turnaround in the sector.

So, as you can see, I have several conditional opportunities on the horizon. That is all the more reason to raise cash and keep that capital idle for deployment at the right time.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long YHOO   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 14, 2014: Financial Services Headline Earnings Reports

Earnings season kicks off in earnest today with the first round of earnings being reported by financial services companies. Citicorp (C) already reported better than expected earnings and a $7 billion mortgage settlement with the US Justice Department. Tomorrow Goldman Sachs (GS) and JP Morgan Chase (JPM) will report. Bank of America (BAC), Blackrock (BLK) and US Bancorp (USB) report on Wednesday. Finally, Morgan Stanley (MS) will pick up the rear on Thursday.

Interspersed between all of those financial service companies will be several other meaningful earnings reports such as Whirlpool (WHR) today; Intel (INTC), Johnson & Johnson (JNJ) and Yahoo (YHOO) on Tuesday; eBay (EBAY), Las Vegas Sands (LVS), San Disk (SNDK), United Rentals (URI) and Yum Brands (YUM) on Wednesday; Auto Nation (AN), Google (GOOG / GOOGL), International Business Machines (IBM) and  Schlumberger (SLB) on Thursday; and, Johnson Controls (JCI) on Friday. So, we will have our hands full in the middle part of the week.

Earnings Season Themes

I am expecting that some common themes will be woven across corporate America during earnings season such as:

  1. A visible pick-up in the second quarter after the first quarter’s winter related slowdown
  2. Sluggish behavior by consumers on small ticket items at the retail level with strong expenditures by consumers for big ticket items – i.e. automobiles, houses and appliances
  3. Companies will play the UPOD (under promise and over deliver) game as it does not benefit management to do otherwise
  4. Another strong round of corporate buybacks thanks to continuing low interest rates will be announced

Waiting For Opportunities in Financial Services and Retail

I am conspicuously not invested in any financial services companies. Furthermore, we hold only a single non-restaurant retail company. I expect that come the end of the summer, as we approach the third quarter, to allocate assets back into those laggard sectors.

Today, other than the positive reaction to Citigroup’s results,  a failure to follow through on the Portuguese banking “crisis” has buyers stepping back into stocks. Oil and gold look lower while stocks are headed higher at the open.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long JNJ, YHOO, LVS, URI, GOOG, GOOGL &SLB and short YUM  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 11, 2014: Portugal All Over Again

It was only about time until the bears found a “new” “crisis” to make us worry about. This time around it was Portugal’s banking system that sent shivers through the global equity markets. So, the Pavlovian response by traders resulted in markets taking a dive at the open, bottoming in the first hour and then regained ground ever thereafter for the rest of the session. Of course, helping to feed the selling frenzy, no doubt, was Marc “Doom & Gloom” Farber who is calling for a 30% drop in the S&P 500 (SPX).

The Portugal stories seem to be nothing more than the usual summertime European worries. It is really getting predicable like an old I Love Lucy repeat. As for Faber, I cannot understand why he gets any media attention given his poor predictive track record.

I spent the day in Philadelphia, part of which was at the Perelman Center for Advanced Medicine at the University of Pennsylvania. It is a magnificent medical facility and a testament to the good that people in corporate America and Wall Street do.

Can Microsoft Reinvent Itself?

Microsoft’s (MSFT) new CEO, Satya Nadella sent out a memo to employees setting out his vision for the company. On Wednesday, I received a brand new Windows 8.1 Lenovo Yoga Laptop from the university where I teach. Well, Mr Nadella, Windows 8.1 is the worst operating system that I have ever used. The Yoga is the Yugo of laptops. Take this from someone who learned to program in FORTRAN and use computers going back to the old IBM 1130. At least I had the common sense to buy my old Think Pad that ran on Windows 7 which I will continue to operate. I expect to limit the use of the Yoga with Windows 8.1 to web browsing in the bathroom or as a coaster for drinks.

Wells Fargo Set to Report Earnings

Today we get the first money center bank earnings report from Wells Fargo (WFC). There are two metrics that need you need to be focused in on. The first is net interest margins or NIM. This tells us, on average how much of an interest spread, that the bank is earning on loans. Second are mortgage originations. We would like to see positive growth in this metric with the growth being generated from new home sales rather than refinancing activity. For the record, Wells Fargo is expected to earn $1.01.

I still believe that a more significant pullback is in the cards but I am also seeing several stocks begin to trade down to levels where I would be adding to or starting new positions. One of those stocks is Marathon Petroleum (MPC). On the other hand, Gilead Sciences (GILD) is trading at or near and all-time high. I would like to add to the stock but am reticent about doing so at these levels.

It is highly likely that by the time the markets have been able to absorb and react to the Well Fargo results that the early Friday slide will begin as market participants try to get a jump on the Friday summer traffic. As it turns out, I am staying put and for a change will likely work from my terminals the entire trading day.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long GILD & MPC — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 9, 2014: Correction Does Not Point to End of Cyclical Bull Market

I spent the day walking around Manhattan yesterday in ninety degree weather with what felt like equal humidity. It helped to obfuscate of the day’s market sell-off. I capped the day off with an appearance on Bloomberg Radio’s Taking Stock show with Pimm Fox and Carol Massar in a nice cool studio. In the evening I had to treat myself to buy one get one free sundaes at Baskin Robbins (DNKN).

Industry Analysts Call For Correction But Not End of Bull Market

The market got crunched on the back of some commentary made a few days ago by Jeffrey Saut, a highly respected analyst at Raymond James. However, while he was quoted as saying that a 20% correction was on its way, he was misquoted and actually clarified his opinion yesterday in his morning commentary. It was too late and the damage was done with the tech and small cap sectors once again taking the brunt of the damage. Today, Saut sharpened his opinion saying “The next few days will be crucial to determine whether we are in the midst of just another small dip that will be heavily bought or if this would be a good time to join Mr. Market on vacation while the markets correct. If it's the latter, the focus will shift toward figuring out where and when the next buying opportunity will arrive. On a technical basis, there are several key areas that should provide at least some support if we see further declines. Speculative investors could attempt some trial buys at these levels if it looks like the support is holding, but remember that cash is an asset too and even Mr. Market has to take a break at some point.”

My good friend Tony Dwyer of Canaccord Genuitiy wrote yesterday, “While there is solid evidence suggesting a 5-10% correction over the next few weeks/months, that same evidence argues for aggressive buying as it plays out. Although we are not changing our positive view on Info Tech, Industrials, Health Care and Financials, we would only add to those areas as the market corrects. Clearly, from a near-term perspective we would take a more market neutral sector approach as an expected correction plays out.”

So as you can see these two analysts’ opinions calling for a short term correction are in agreement with my opinion. At lunch with a client yesterday, I was asked why am I inclined to only raise about 6 – 10% cash if I am looking for a decline of 3 – 10% and not say 40%. That is a very good question to which I answered: i) we are focused in long term growth opportunities and hence a short term correction does not change terminal valuations of our holdings which remain higher; ii) it is difficult to predict at what point a correction starts and at what point it ends; iii) we have to consider tax consequences for clients such that creating long term capital gains for stocks now and then repurchasing those same stocks after a correction is actually economically inefficient; and, iv) had I expected the bull market in stocks to end, then I would get more aggressive raising cash. However, I do expect that the cyclical bull market in stocks which began a few years ago to last for several more years. Both Saut and Dwyer also believe that the cyclical bull market has more time to run.

 Crude Oil Begins To Slip

Alcoa (AA) reported better than expected results after the market close yesterday. The FOMC minutes from its last meeting will be released at 2PM. That always has potential to move markets. Pre-market futures indicate a slightly positive opening. Keep an eye on crude oil. That commodity appears to have peaked in late June and has since begun to slip ever slowly.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DNKN  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 8, 2014: Alcoa Reports as Crumbs Crumbles

After last week’s holiday shortened week, market participants began to return to their trading stations yesterday and today, although some do remain on vacation. Whereas the unofficial kick-off to earnings season begins today when Alcoa (AA) reports results, for the most part, we kick into high gear next week when the money center banks report their second quarter results, although Wells Fargo (WFC), the largest US bank will report this Friday. Thanks to smartphones, such as my Apple (AAPL) iPhone, most money managers will read about Wells Fargo on the beach or by their pools on Friday.

Money Managers Begin to take Profits

We have now accumulated about 6% in cash and I anticipate ratcheting that amount to close to 10% as the month progresses. The Russell 2000 (RUT) small cap index has already pulled back from its highs of 1,213.55 by about 2.20%. We sold our RUT related index EFTs last week. The pullback in that index indicates to me that money managers are taking some profits and a cautious view ahead of earnings season. The S&P 500 (SPX) is less than 1% off of its highs but I expect that index to consolidate in the coming weeks as well. However, it could make a preemptive move to 2,000 before pulling back in a more significant manner. By more significant, I am saying something in the range of 3 to 10%.

From my vantage point, which until last night was in the Adirondacks, it appears that, at least in the North East, consumers were on the road travelling, eating and amusing themselves at summer attractions over the 4th of July holiday weekend. One thing that they might not be eating are cupcakes, at least the premium priced ones at Crumbs. Crumbs Bake Shop (CRMB) has filed for chapter 7 bankruptcy liquidation.

Scott Rothbort to Appear on Bloomberg Radio Today

I am expecting a quiet but modestly lower market for the day. My busy travel schedule this week continues as today at about 3:45 PM I will be appearing on Bloomberg Radio’s Taking Stock show with hosts Pimm Fox and Carol Massar to discuss the markets and restaurant stocks. You can tune in on: WBBR 1130AM New York; Bloomberg 1200AM and 94.5FM-HD2 Boston; http://www.bloomberg.com/radio/, and Sirius/XM Satellite Radio channel 119. Tomorrow I will be in the office and Thursday I am headed to Philadelphia.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 2, 2014: Employment Reports To Dominate Markets Through July 4th

As I fully expected, the equity markets were greeted with beginning of the month cash inflows. The major indexes posted solid advances and then gave up some territory in the last half hour, when as I suggested, traders and money managers were headed off to watch the USA – Belgium World Cup match. Not to be overlooked were strong manufacturing and auto sales data which helped to propel the strong rally. None of that helped the USA team which fell 2-1 to Belgium.

Raise Cash As Markets Rise to New Levels


That being said, first day of the month rallies are not uncommon. Furthermore, they don’t portend future follow through. An exchange traded fund linked to the Russell 2000 (RUT) which we owned since January rose to our limit price levels and we used the opportunity to bank some profits and accumulate cash. All told, we now hold about 4.5% in cash for our Equity Growth Portfolio and nearly 6% for our Restaurant & Food Chain Portfolio (contact me at scott.rothbort.lakeview@gmail.com or 973-564-8139  for more information on those investment opportunities).


I expect, by the time the S&P 500 (SPX) hits the magic 2,000 level, which is just 1.35% higher, we could increase that cash position to a range of 7% to 10%. This is all in anticipation of a summer pullback that is likely to occur in the neighborhood of 5 to 10%, from whatever level we top out at. It is foolish to try to pick a top. Rather, just raise cash as the market rises and then keep that dry powder for after the pullback runs its course.

3-D Printing Stocks Are Hot Once Again


Yesterday’s hot sector was the 3-D printing stocks, such as ExOne (XONE), Stratasys (SSYS), 3D Systems (DDD) and Proto Labs (PRLB).  Last year we made some nice profits in 3D Systems. While we got out of the stock a bit early, we also got out before it tumbled. We have owned Proto Labs for a few weeks, although it is not a pure 3-D play like those other stocks I just mentioned. Proto Labs dropped like a rock after we bought it but has since rallied nicely into the green. Be forewarned, this sector is not for the faint of heart.


Today, we begin a two day look at the nation’s labor market. Automatic Data Processing (ADP) will release its Employment Change Report and the Challenger Job Cut Report issued by Challenger, Day and Christmas (I kid you not, that’s the name of  the company), a global outplacement firm, will also be released early today. As Friday is Independence Day, the Bureau of Labor Statistics will release its report for June on Thursday.


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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long PRLB  — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com

– Read Scott’s intra-day thoughts and comments on Scutify

– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 1, 2014: Previewing the Second Quarter of 2014

A confluence of events preempted me from writing yesterday. Amongst those events was the dying of my beloved HP12C which sent me scrambling to purchase another one for the quarter end. However, I would have saved you time and me effort because my expectations were for a quiet session to end the month and quarter. That was indeed what happened. It also came as no surprise to see some last minute profit taking hit the tape which resulted in a flattish close.

Dividend Stocks Outperform in Second Quarter 2014

Today we begin the third quarter of 2014. Before that, let’s review the second quarter a little bit. All major asset classes – stocks, bonds, gold and oil - rose during the second quarter. Within the world of equities, greater gains were earned in the dividend oriented stocks such as utilities which can be evidenced from the 6.01% rise in the Philly Utility Sector Index (UTX) and 6.78% jump in the S&P 500 Low Volatility High Dividend Index (SP5LVHD). Also a stellar performer was the NASDAQ 100 (NDX) which rose 7.06%, after a flat first quarter, thanks to the 21.19% surge in Apple (AAPL). The more risky small-cap and growth stocks, as I wrote all quarter long, were relative underperformers, gaining on average between one and two percent. Thanks to higher interest rates around the globe, US Government bonds continued to get bid higher in price. Al Qaeda activity in Iraq and Syria put global tensions on high alert leading to a rise in both oil and gold.

Expect a Dull Third Quarter

While normally in a mid-term election year, the S&P 500 (SPX) historically declines in the second quarter, clearly the 4.69% rise in that index was a statistical surprise. During mid-term election years, that large cap index historically traded flat during the third quarter. My expectations are that the third quarter will be rather flattish to lower. That will occur after the SPX makes a run to SPX2K or the 2,000 index level, which is only 2.03% away from its June 30 closing level. I have begun to raise some cash as the second quarter drew to a close and have some limit orders above the market to scale out of parts of existing positions. After breaching SPX2K, I see the markets pulling back for the summer, which can normally be a slow time for stocks but is also a period of time when equities are most vulnerable to exogenous behavior – political, economic and military/terrorist – and tends to see an escalation in volatility, which has remained low so far this year. I want to get prepared for what I expect to be a very bullish fourth quarter.

World Cup Fever Will Lead to Early Exit Today

As for today, expect an early rise in the stock market as beginning of month/quarter asset flows get put to work. Then, as we approach the closing bell, most likely around 3:30, traders and investors will leave their turrets and screens early to watch the USA – Belgium World Cup Soccer match at 4PM. I am rooting for Disney’s (DIS) ESPN and Buffalo Wild Wings (BWLD) to prosper on World Cup fever in the USA. Just by getting to this game, the USA and those companies are winners. A USA win today will likely be the biggest international sporting win for the Americans since the USA beat Russia in ice hockey at the 1980 Winter Olympics in Lake Placid.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, BWLD & DIS  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 25, 2014: Off to the Races

(corrected original commentary replacing Del Mar for Santa Anita and updated with additional paragraphs which appear as second and third to last paragraph)

The major averages traded in tight ranges and closed just about flat by the closing bell during Thursday’s session. It was a stock picking day and luckily we were on the right side of many strong stock moves such as Royal Caribbean Cruises (RCL) which rose nearly 8% and Proto Labs (PRLB) which rose over 6%.  Today, we are getting a nice bounce in Baidu (BIDU). I am not expecting much more on this summer Friday, other than some stocks which will be impacted by earnings reports, such as Amazon (AMZN) and Starbucks (SBUX). Those two stocks will weigh on the NASDAQ 100 (NDX) today.

After hours yesterday Amazon posted a wider than expected loss and the stock dropped like a rock. I bought a few shares after hours with the stock off about $20 in a personal account for a short term trade. Starbucks is also looking lower after reporting its results. This follows up a sell-off for Dunkin’ Brands (DNKN) which reported disappointing results yesterday.

Thin Summer Trading Continues

The markets are trading rather thin resulting is wild moves for stocks in the news. Today being Friday will be no exception. The reason for the thin trading is that many portfolio managers and investors are at their beach houses (i.e. the Hamptons) or at the Spa – Saratoga Race Track in Saratoga Springs, NY. West Coasters will spend their racing days at Del Mar. I will be spending a better part of the next week at the Spa entertaining visiting clients who make the trek for an annual pilgrimage to the races. Thankfully, a few years ago, wi-fi was introduced to the grandstand, so I can keep an eye on the markets while entertaining and make a few wagers.

Professional Investors Hone Their Skills at the Race Track

I kid you not when I say that professional investors will be at the Spa. There are very important skills which investors and racing bettors have in common. I encapsulated those skills in a series of articles for TheStreet (TST) several years ago. First came Five Investing Tips I Learned at the Track  which was then followed up with Investing Lessons From the Race Track. I go so far as to include a lesson for my Finance class at Seton Hall University’s Stillman School of Business in which I discuss how important skills learned at the race track can be for investors.  A must read is Andy Beyer’s Picking Winners.

I have over the course of time been a winner at the race track. Here is an interesting story. When my wife was in law school (we were not married then) we went to the Meadowlands with one of her law school friends. On the way out the man who would become my father-in-law, Art, handed us about $20 or $25 to wager. We went to the Meadowlands for a nice evening and came back to her house (which we subsequently bought and now live in, in New Jersey). I handed Art a pile of cash – about $75 – and told him that was his. He asked what I was doing. I said that you won money. He replied, “I don’t know anyone who wins at the track.” He has since learned that I do.

What happens now is that I partner up with a close friend and client, Mitch, who with his old friend and another client, Martin drive up to Lake George for a week and we head out to the spa for a few days. As the track is closed on Tuesday (we call it a dark day), that day is reserved for time on the lake. Mitch is an excellent handicapper. In fact, he could do it professionally. I use my mathematical skills to determine the best way to place wagers. I have even built a web site for Mitch to post his handicapping ideas, HorsePicking.com Fair warning, and this is anecdotal, there always seems to be a day in which the market drops when Mitch and I are at the track. Again, thanks to mobile telecommunications and the internet, it is no different than sitting in my office.

Also anecdotally, many of the portfolio managers are also top rated Texas Hold’em players. Other people see card playing or track pari-mutuel wagering as gambling. In the legal sense it is. However, those in the investment world it see it as a method to hone their skills and get some entertainment at the same time. So, if you want to head north or east, depending where you call home to Saratoga Springs, and spend a day at this beautiful and historic race track, please let me know.

I had a wonderful dinner with old friends Eric and Billy in Glens Falls after today's races. Eric and some other old friends from Camp Echo Lake who get together every year at the Spa were featured in Anthony Alonso's "The Replay" a copy of which is framed in my office. See if you can find me in the picture.

Over the winter I bought a share in a standard bred filly pacer. Another Delight. The filly ran third in her first outing at Buffalo and fourth in her second race at Yonkers (we collected a purse in each race). This coming Wednesday she will race in the second race at the Saratoga  Harness Casino & Raceway in post position #6.

I will pick up My Gut Feeling the first week Monday in August.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long RCL, PRLB, BIDU & AMZN, DNKN and short SBUX   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 24, 2014: Technology is Back, So Get On Board

I finally was able to retrieve my files after my old data drive was rescued and restored. However, it took me a rather long time to update many files. Thus I had to make a decision. Do I publish my commentary yesterday, or do I forge ahead with getting my files in order? I chose the latter. So, today I will provide you with a two-day look at the financial markets.

Apple and Facebook Are Forging Ahead

On Tuesday, earnings from Apple (AAPL) and Microsoft (MSFT) highlighted the earnings calendar. Yesterday Facebook (FB) dominated the news. Apple and Facebook’s quarters both exceeded analysts’ expectations. Apple’s quarter lacked any new product rollouts (or introductions) and was not advantaged by seasonality such as back to school or December holidays. In other words, the quarter was a test of how well Apple’s portfolio of products continues to be purchased by the public in a steady state. The company focused its efforts during the quarter to expand its portfolio to include Beats headphones and a partnership deal with International Business Machines (IBM). I was quoted by Troy Wolverton in the San Jose Mercury News on my thoughts about the Apple quarter.

Microsoft Was Left Behind

So while the ancient tech companies like IBM are trying to reinvent itself and old tech companies such as Apple and Intel are transitioning well into the new tech age, another old tech company, Microsoft clearly has its challenges. The company was lost in the wilderness during the Steve Ballmer years. Ballmer will likely go down as one of the worst CEOs of the last decade. He even overpaid for the LA Clippers. The company clearly missed the digital and mobile revolution. That led to Microsoft’s acquisition of Nokia’s devices and services business just under a year ago. That acquisition was a bust. Now IBM, as I mentioned before, is partnering with Mr. Softie’s arch enemy Apple. Luckily for Microsoft, the personal computer business is experiencing a rebound as is quite evident from results for its old tech compatriot, Intel (INTC).

Then there is new tech such as Facebook (FB) and Netflix (NFLX). Credit has to be given to Facebook's Hoodie Man Mark Zuckerberg for rebounding from the poor execution of the company’s IPO two years ago by focusing the company on mobile applications and advertising. Facebook’s results last night were outstanding and the stock is set to surge in today’s trading. The company is rapidly expanding and growing into a more reasonable valuation.

The NASDAQ Composite Index peaked at an intra-day high of 5,132.52, and closed at an all-time high of 5,048.62 on March 10, 2000. That index closed yesterday at 4,473.70, just over 11% below its all-time closing high of over fourteen years ago. Despite both the S&P 500 (SPX) and Dow Jones Industrial Average (INDU) indexes either at or near all-time highs, the tech world still languishes. Part of that problem has to do with the intricacies of index formation and calculation. The other part has to do with investors still being shell shocked and gun shy after that 2000 tech crash and the subsequent financial crisis.

Make no mistake about it, technology is back. There are old tech companies that have reinvented their business models as I described above. There are some survivors of the dot.com bubble that are performing extremely well, such as EBay (EBAY), Amazon (AMZN) and Priceline (PCLN). Then there are some of the new tech companies that must be owned. There is certain to be another round of technology on the forefront such as 3-D printing, drones, wearable devices and self-driving cars. If you are still in the mind frame of the year 2000 or of main frame computers, it is time that you look at the present or into the future. Embrace tech but as always be selective. There are plenty of tech companies that are working but there will always be disappointments, such as Juniper Networks (JNPR) which once again delivered a poor quarter and forward guidance.

As for today, last evening's earnings earnings reports and this morning's weekly unemployment claims were both quite positive. As a result, the markets are poised to open higher. I expect the S&P 500, which closed at an all-time high yesterday, to make an even higher high today. The 2,000 level for the SPX is within spitting distance and could be breached today or early next week. Tomorrow I will take you to the races.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, FB, PCLN and JNPR   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 22, 2014: Gearing Up For Apple Results

It was a slow Monday for the markets. The S&P 500 (SPX) traded in a narrow range of about 10 index points. At this time of the year, absent any major news, both Mondays and Fridays are pretty much beach days for money managers and traders. This is one of the reasons why most significant earnings results are concentrated from Tuesday through Thursday.

There was one noteworthy earnings result last evening, Chipotle Mexican Grill (CMG). This company continues to forge ahead, while companies like McDonald’s (MCD), which reported results early this morning are showing signs of aging. Chipotle’s results outperformed expectations across many metrics and the stock was bid up over 10% after hours. Chipotle is one of those stocks that you regret having sold, even after making some nice profits. I still believe that on a valuation basis that Chipotle is too expensive to own.

McDonald’s has its own set of problems, Chipotle being one of them. Simply put, McDonald’s is losing market share in the United States to healthier alternative restaurants while its growth regions of China and Russia continue to struggle. After owning McDonald’s for a decade, we sold the stock in our growth portfolio earlier this year. We do hold a small position in McDonald's for our Low Volatility / High Dividend Portfolio. McDonald’s will have to boost stock buybacks or dividends to support its stock price. The best news for shareholders would be if the company split into two companies - a restaurant and real estate company.

The spigot of earnings is turned on to full today. Besides McDonald’s, Dupont (DD), Polaris (PII), Verizon (VZ), CIT Group (CIT), Travelers (TRV), United Technology (UTX), Harley Davidson (HOG), Altria (MO), Comcast (CMCSA) and Coca-Cola (KO) are amongst companies reporting before the market opens. Reporting after the market close today will be a slew of technology companies such as: Microsoft (MSFT), Broadcom (BRCM), Juniper Networks (JNPR), Intuitive Surgical (ISRG) and last but not least Apple (AAPL).

The market is expecting Apple to increase earnings per share by 15% to $1.23 with sales rising about 8% to $38 billion. Whereas last quarter Apple announced some major capital news – stock split, stock buyback and dividend boost, this time around, investors and analysts will want to hear about news products – iPhone 6 and wearable technology, likely an iWatch.

Apple will take the spotlight away from Microsoft, and deservingly so. However, given that new CEO, Satya Nadella’s goal is to reinvigorate Microsoft, its earnings results will take a backseat to restructuring plans. For the record, Microsoft is expected to deliver a 9% decline in earnings per share to 60 cents.

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Disclosure: At the time of his commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, HOG, MCD, KO, MO and JNPR   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, July 21, 2014: What Happened on Thursday and Friday?

So exactly what happened on Thursday and Friday? There is more to that question than meets the eye.

On Thursday, the markets were poised to move lower based on pre-market futures, by just over 1/2%. The excuse seemed to be weak data out of China. However, by the time the markets opened, the pre-market decline was for the most part reduced to a fraction. The markets opened slightly lower and then moved ever so slightly into the green. It seemed rather mundane action to be quite honest, but no doubt, buyers were willing to step up.

Not One But Two Exogenous Events

So, after my son was admitted to the New York Bar we took in a late breakfast / early lunch at Panera Bread (PNRA) in Albany. Of course the first thing that I did was link my wireless device to the free wi-fi at Panera (a tip for the business traveler: Panera and Starbucks (SBUX) both offer free wi-fi at their restaurants). Then the markets began to tumble and I received word from colleagues and push notifications from my Bloomberg app, that a Malaysian airplane was shot down over Ukraine.

A few things went through my mind. First I wondered whether the report was authentic, the reason being because I have worked long enough on Wall Street to know that false rumors are spread around from time to time, at a rapid rate. Steve Jobs died several times  before he actually did pass away. An accident in the United States or other country with a highly developed media infrastructure would certainly have an authentic report right away. This time though, I had to ask – how does Malaysia and Ukraine figure in together? Perhaps, I hypothesized; this incident was related to the  missing Malaysia Air flight that disappeared a few months ago. Why though I wondered? There were more questions than answers at the moment.

Without any knowledge of what truly happened (the world is still trying to ascertain the truth), and as rumors of the story became authenticated by major networks, I then put on my risk management hat. Recall that I discussed dealing with exogenous events on April 16, 2013, the day after the Boston Marathon bombings. I suggest taking a look at that installment of My Gut Feeling before reading here any further. Essentially, I recognized that a one-day exogenous event had occurred. As I often do for such events, I look to buy into the  panic using  index EFTs, rather than join the panic and sell. That is indeed what I did, purchasing some ProShares Ultra S&P 500 Index ETF (SSO), while sitting in Panera Bread, for a day trade, when the market appeared to have bottomed out at around noon.

My timing was right and the markets did bottom at that time.  However, what then happened was totally unexpected and highly improbable; a second exogenous event occurred. The Israel Defense Forces or IDF, began ground operations in the Gaza strip. I won’t go into my personal opinion of what is occurring there other than to say, in Hebrew, Am Yisrael Chai. So, with the IDF incursion into Gaza underway, the markets did an about face and closed just about on the day’s lows, a loss of over 1% for the S&P 500 (SPX).

While my training and experience, as well as my gut feeling said to hold onto those EFTs for another day, as a post-panic rebound was certain, the markets were so kooky on Thursday that I decided to play it safe and took some small trading losses on those index ETFs.

Reversal on Friday

There was some gain to go with Thursday’s pain. Google (GOOG / GOOGL) reported disappointing earnings results but much stronger top line revenues than were expected. As a result, the stock popped about 4% on Friday.

So now let’s get to Friday. My Friday was to begin by publishing a My Gut Feeling containing all of the above. Then my Samsung external hard drive failed. I spent hours, including the time I would normally write and publish my daily commentary trying to resurrect my data, but to no avail. So, I was unable to produce My Gut Feeling on Friday. To make matters worse, in the late morning, I came down with a horrible headache, likely a migraine or headache related to last winter’s concussion that I suffered. Nevertheless, I worked from my lap top watching the markets surge back from Kooky Thursday, while tuned into Bloomberg TV, sitting on my couch at home in Lake George. By the time the closing bell rang, the SPX recouped all but three index points of Thursday’s losses. I then took my data drive to a profession to seek repair and slept upon return until late in the evening.

The markets can frustrate you longer than you can remain sane. Thursday and Friday were such examples. As for today, we can put last week in the rear view mirror and get back to other frustrations. While some of the major indexes are at or near all-time highs, there has been a consistent and never ending rotation taking place under the surface. This makes stock picking and portfolio management very frustrating.  Let me provide a recent example.

We have held positions in Gilead Sciences (GILD), a major biotech company for a few weeks. After rising several points from our original purchase price, on average between $80 and $81, I decided to add to those positions. We paid just over $90 for our add-on stock. That was the day that Janet Yellen became a biotech analyst in front of Congress. The stock declined that same day after we made our purchases and the following day, taking over $5 off our most recent round of purchases. A professional biotech analyst took exception with Yellen’s comments and biotech shares surged on Friday. On Friday, Barron’s ran a story suggesting that Gilead may have a dividend in its future.

Despite the expectation on the part of many professionals, myself included, that a summer correction will occur, one does not seem to want to materialize. We still have five weeks left to July and August, so there is time for the correction to occur, or for the markets to continue to frustrate us all. Barring any other new exogenous event, we are looking at a flattish open to today’s markets.

This week earnings reports will be spewed out at a fevered pitch, with the main event on the schedule to be Apple’s (AAPL) quarterly report on Tuesday.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, GILD, GOOG & GOOGL and short SBUX   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, July 16, 2014: Janet Yellen Speaks Out On Stocks

Tuesday’s trading session was for the most part dominated by FOMC Chairwoman Janet Yellen’s testimony on Capitol Hill. She gave a dissertation on jobs and inflation which gets economists all excited but is rather boring for the average legislator or investor. Somewhere within her testimony she hinted that valuations in biotechnology, social media and small capitalization stocks were stretched. That caught the eye of traders who then hit the sell button. Buyers took advantage of the sell-off and stepped up to buy stocks in the afternoon. By the time the bell rang, the major indexes were flat with the NASDAQ taking nearly a ½% hit which was due to its concentration of stocks which were mentioned by Ms. Yellen.

Yellen’s words were no help to me as I added ever so slightly to positions in Gilead Sciences (GILD) prior to her comments. Yet, Johnson & Johnson’s (JNJ) reported sales of its Hepatitis C drug foretold good news for Gilead Sciences and hence the latter did not perform as poorly as the biotech averages did for the day.

Apple Gets Boost from IBM

There was interesting news after the market closed. Intel (INTC) reported solid quarterly results putting a healthy bid into the stock. International Business Machines (IBM) reported that the company would be teaming up with Apple (AAPL) to sell that company’s products. This is a departure from IBM’s history of hawking Microsoft (MSFT) software and related hardware products. Let me put it this way – it would be like having General Motors (GM) selling Lincoln vehicles made by Ford (F). Clearly Apple is a big winner in this deal. I would go so far as to say that this news will jettison Apple to an all-time high, which on a split adjusted basis is about $100.30.

Good and Bad News For Yahoo

Then there was Yahoo (YHOO). Let’s start with the good news which is the reduction of Yahoo’s mandatory sales of Alibaba in that company’s IPO and potential return of cash to shareholders from the proceeds of those sales. Then the bad news is that the rest of its business stinks as the company missed analysts’ estimates by a penny. YHOO should start aggressively buying back stock right now, before the Alibaba IPO. In the final analysis, Marissa Mayer is just another in a long line of hyped up yet disappointing Yahoo CEOs. I will likely unload Yahoo shares in the next few days.

Today we pick up where we left off with more earnings reports before and after the close. Overnight economic data from China indicated that the economy is picking up in the Middle Kingdom. International Game Technology (IGT) received a takeover offer from Gtech for total consideration of about $18.25 per share versus a closing price of $15.50. However, considering where IGT traded just a few months ago, it is a take under.

I am heading out on the road tomorrow afternoon to once again change my venue back to Lake George. Thursday I will be attending the New York State Bar Association ceremony for new attorneys when my son will be admitted. See you on Friday. 

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, GILD, JNJ & YHOO   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 15, 2014: Utility Stocks At Critical Juncture

The equity markets opened higher and for the most part did not get faded at all. This is contrary to what we expect to occur on a Monday. Mr. Market likes to keep you on your toes and will do its best to befuddle you, which is exactly what occurred on Monday. As any statistician would note, one data point is not indicative of a whole series, so if we repeat today’s opening 99 more times, it would likely result in what we have come to expect – a strong Monday opening gets faded.

Is the Utility Boom Stock Over?

With all those statistics aside, the continued easing in oil prices and Citicorp (C) earnings results, energy and financial shares led the market higher. Utilities were the only S&P sector to decline and did so by 1.2%. Whether we are seeing the end of the demand for dividend stocks or it was just profit taking, I cannot say just yet. It is worth noting that the Philadelphia Utility Index (UTY) peaked at 563.62 on June 30 and closed at 538.68 yesterday, a decline of 4.42% which has also taken the index below its 50-day moving average. However, if market participants decide to exit the utility sector, it is certain to benefit technology, growth and small cap stocks. Let’s get ready to act if that indeed comes true.

Yahoo Also At Critical Juncture

Earnings kicks into high gear today, as I outlined in yesterday’s My Gut Feeling. My greatest interest is in the earnings report from Yahoo (YHOO). With the Alibaba IPO just less than four weeks away, we will get a glimpse into how the Chinese internet giant performed in the second quarter. We are about flat on our Yahoo position, which was initiated with Alibaba in mind. Should Marissa Meyer fail to deliver a respectable quarter or the stock falls, it is likely that I will jettison the Yahoo positions and just wait to buy Alibaba after its IPO.

With earnings on the docket and the July labor report in the books, economic data will likely take a back seat to earnings reports. Today’s retail sales might impact retail stocks but we have come to expect the worst for that sector, such that even a bad report could be viewed as good news for retailers. I have a shopping list of retail stocks that I want to purchase later in the quarter or when I see a sustainable turnaround in the sector.

So, as you can see, I have several conditional opportunities on the horizon. That is all the more reason to raise cash and keep that capital idle for deployment at the right time.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long YHOO   — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 14, 2014: Financial Services Headline Earnings Reports

Earnings season kicks off in earnest today with the first round of earnings being reported by financial services companies. Citicorp (C) already reported better than expected earnings and a $7 billion mortgage settlement with the US Justice Department. Tomorrow Goldman Sachs (GS) and JP Morgan Chase (JPM) will report. Bank of America (BAC), Blackrock (BLK) and US Bancorp (USB) report on Wednesday. Finally, Morgan Stanley (MS) will pick up the rear on Thursday.

Interspersed between all of those financial service companies will be several other meaningful earnings reports such as Whirlpool (WHR) today; Intel (INTC), Johnson & Johnson (JNJ) and Yahoo (YHOO) on Tuesday; eBay (EBAY), Las Vegas Sands (LVS), San Disk (SNDK), United Rentals (URI) and Yum Brands (YUM) on Wednesday; Auto Nation (AN), Google (GOOG / GOOGL), International Business Machines (IBM) and  Schlumberger (SLB) on Thursday; and, Johnson Controls (JCI) on Friday. So, we will have our hands full in the middle part of the week.

Earnings Season Themes

I am expecting that some common themes will be woven across corporate America during earnings season such as:

  1. A visible pick-up in the second quarter after the first quarter’s winter related slowdown
  2. Sluggish behavior by consumers on small ticket items at the retail level with strong expenditures by consumers for big ticket items – i.e. automobiles, houses and appliances
  3. Companies will play the UPOD (under promise and over deliver) game as it does not benefit management to do otherwise
  4. Another strong round of corporate buybacks thanks to continuing low interest rates will be announced

Waiting For Opportunities in Financial Services and Retail

I am conspicuously not invested in any financial services companies. Furthermore, we hold only a single non-restaurant retail company. I expect that come the end of the summer, as we approach the third quarter, to allocate assets back into those laggard sectors.

Today, other than the positive reaction to Citigroup’s results,  a failure to follow through on the Portuguese banking “crisis” has buyers stepping back into stocks. Oil and gold look lower while stocks are headed higher at the open.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long JNJ, YHOO, LVS, URI, GOOG, GOOGL &SLB and short YUM  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 11, 2014: Portugal All Over Again

It was only about time until the bears found a “new” “crisis” to make us worry about. This time around it was Portugal’s banking system that sent shivers through the global equity markets. So, the Pavlovian response by traders resulted in markets taking a dive at the open, bottoming in the first hour and then regained ground ever thereafter for the rest of the session. Of course, helping to feed the selling frenzy, no doubt, was Marc “Doom & Gloom” Farber who is calling for a 30% drop in the S&P 500 (SPX).

The Portugal stories seem to be nothing more than the usual summertime European worries. It is really getting predicable like an old I Love Lucy repeat. As for Faber, I cannot understand why he gets any media attention given his poor predictive track record.

I spent the day in Philadelphia, part of which was at the Perelman Center for Advanced Medicine at the University of Pennsylvania. It is a magnificent medical facility and a testament to the good that people in corporate America and Wall Street do.

Can Microsoft Reinvent Itself?

Microsoft’s (MSFT) new CEO, Satya Nadella sent out a memo to employees setting out his vision for the company. On Wednesday, I received a brand new Windows 8.1 Lenovo Yoga Laptop from the university where I teach. Well, Mr Nadella, Windows 8.1 is the worst operating system that I have ever used. The Yoga is the Yugo of laptops. Take this from someone who learned to program in FORTRAN and use computers going back to the old IBM 1130. At least I had the common sense to buy my old Think Pad that ran on Windows 7 which I will continue to operate. I expect to limit the use of the Yoga with Windows 8.1 to web browsing in the bathroom or as a coaster for drinks.

Wells Fargo Set to Report Earnings

Today we get the first money center bank earnings report from Wells Fargo (WFC). There are two metrics that need you need to be focused in on. The first is net interest margins or NIM. This tells us, on average how much of an interest spread, that the bank is earning on loans. Second are mortgage originations. We would like to see positive growth in this metric with the growth being generated from new home sales rather than refinancing activity. For the record, Wells Fargo is expected to earn $1.01.

I still believe that a more significant pullback is in the cards but I am also seeing several stocks begin to trade down to levels where I would be adding to or starting new positions. One of those stocks is Marathon Petroleum (MPC). On the other hand, Gilead Sciences (GILD) is trading at or near and all-time high. I would like to add to the stock but am reticent about doing so at these levels.

It is highly likely that by the time the markets have been able to absorb and react to the Well Fargo results that the early Friday slide will begin as market participants try to get a jump on the Friday summer traffic. As it turns out, I am staying put and for a change will likely work from my terminals the entire trading day.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long GILD & MPC — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 9, 2014: Correction Does Not Point to End of Cyclical Bull Market

I spent the day walking around Manhattan yesterday in ninety degree weather with what felt like equal humidity. It helped to obfuscate of the day’s market sell-off. I capped the day off with an appearance on Bloomberg Radio’s Taking Stock show with Pimm Fox and Carol Massar in a nice cool studio. In the evening I had to treat myself to buy one get one free sundaes at Baskin Robbins (DNKN).

Industry Analysts Call For Correction But Not End of Bull Market

The market got crunched on the back of some commentary made a few days ago by Jeffrey Saut, a highly respected analyst at Raymond James. However, while he was quoted as saying that a 20% correction was on its way, he was misquoted and actually clarified his opinion yesterday in his morning commentary. It was too late and the damage was done with the tech and small cap sectors once again taking the brunt of the damage. Today, Saut sharpened his opinion saying “The next few days will be crucial to determine whether we are in the midst of just another small dip that will be heavily bought or if this would be a good time to join Mr. Market on vacation while the markets correct. If it's the latter, the focus will shift toward figuring out where and when the next buying opportunity will arrive. On a technical basis, there are several key areas that should provide at least some support if we see further declines. Speculative investors could attempt some trial buys at these levels if it looks like the support is holding, but remember that cash is an asset too and even Mr. Market has to take a break at some point.”

My good friend Tony Dwyer of Canaccord Genuitiy wrote yesterday, “While there is solid evidence suggesting a 5-10% correction over the next few weeks/months, that same evidence argues for aggressive buying as it plays out. Although we are not changing our positive view on Info Tech, Industrials, Health Care and Financials, we would only add to those areas as the market corrects. Clearly, from a near-term perspective we would take a more market neutral sector approach as an expected correction plays out.”

So as you can see these two analysts’ opinions calling for a short term correction are in agreement with my opinion. At lunch with a client yesterday, I was asked why am I inclined to only raise about 6 – 10% cash if I am looking for a decline of 3 – 10% and not say 40%. That is a very good question to which I answered: i) we are focused in long term growth opportunities and hence a short term correction does not change terminal valuations of our holdings which remain higher; ii) it is difficult to predict at what point a correction starts and at what point it ends; iii) we have to consider tax consequences for clients such that creating long term capital gains for stocks now and then repurchasing those same stocks after a correction is actually economically inefficient; and, iv) had I expected the bull market in stocks to end, then I would get more aggressive raising cash. However, I do expect that the cyclical bull market in stocks which began a few years ago to last for several more years. Both Saut and Dwyer also believe that the cyclical bull market has more time to run.

 Crude Oil Begins To Slip

Alcoa (AA) reported better than expected results after the market close yesterday. The FOMC minutes from its last meeting will be released at 2PM. That always has potential to move markets. Pre-market futures indicate a slightly positive opening. Keep an eye on crude oil. That commodity appears to have peaked in late June and has since begun to slip ever slowly.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DNKN  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 8, 2014: Alcoa Reports as Crumbs Crumbles

After last week’s holiday shortened week, market participants began to return to their trading stations yesterday and today, although some do remain on vacation. Whereas the unofficial kick-off to earnings season begins today when Alcoa (AA) reports results, for the most part, we kick into high gear next week when the money center banks report their second quarter results, although Wells Fargo (WFC), the largest US bank will report this Friday. Thanks to smartphones, such as my Apple (AAPL) iPhone, most money managers will read about Wells Fargo on the beach or by their pools on Friday.

Money Managers Begin to take Profits

We have now accumulated about 6% in cash and I anticipate ratcheting that amount to close to 10% as the month progresses. The Russell 2000 (RUT) small cap index has already pulled back from its highs of 1,213.55 by about 2.20%. We sold our RUT related index EFTs last week. The pullback in that index indicates to me that money managers are taking some profits and a cautious view ahead of earnings season. The S&P 500 (SPX) is less than 1% off of its highs but I expect that index to consolidate in the coming weeks as well. However, it could make a preemptive move to 2,000 before pulling back in a more significant manner. By more significant, I am saying something in the range of 3 to 10%.

From my vantage point, which until last night was in the Adirondacks, it appears that, at least in the North East, consumers were on the road travelling, eating and amusing themselves at summer attractions over the 4th of July holiday weekend. One thing that they might not be eating are cupcakes, at least the premium priced ones at Crumbs. Crumbs Bake Shop (CRMB) has filed for chapter 7 bankruptcy liquidation.

Scott Rothbort to Appear on Bloomberg Radio Today

I am expecting a quiet but modestly lower market for the day. My busy travel schedule this week continues as today at about 3:45 PM I will be appearing on Bloomberg Radio’s Taking Stock show with hosts Pimm Fox and Carol Massar to discuss the markets and restaurant stocks. You can tune in on: WBBR 1130AM New York; Bloomberg 1200AM and 94.5FM-HD2 Boston; http://www.bloomberg.com/radio/, and Sirius/XM Satellite Radio channel 119. Tomorrow I will be in the office and Thursday I am headed to Philadelphia.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 2, 2014: Employment Reports To Dominate Markets Through July 4th

As I fully expected, the equity markets were greeted with beginning of the month cash inflows. The major indexes posted solid advances and then gave up some territory in the last half hour, when as I suggested, traders and money managers were headed off to watch the USA – Belgium World Cup match. Not to be overlooked were strong manufacturing and auto sales data which helped to propel the strong rally. None of that helped the USA team which fell 2-1 to Belgium.

Raise Cash As Markets Rise to New Levels

That being said, first day of the month rallies are not uncommon. Furthermore, they don’t portend future follow through. An exchange traded fund linked to the Russell 2000 (RUT) which we owned since January rose to our limit price levels and we used the opportunity to bank some profits and accumulate cash. All told, we now hold about 4.5% in cash for our Equity Growth Portfolio and nearly 6% for our Restaurant & Food Chain Portfolio (contact me at scott.rothbort.lakeview@gmail.com or 973-564-8139  for more information on those investment opportunities).

I expect, by the time the S&P 500 (SPX) hits the magic 2,000 level, which is just 1.35% higher, we could increase that cash position to a range of 7% to 10%. This is all in anticipation of a summer pullback that is likely to occur in the neighborhood of 5 to 10%, from whatever level we top out at. It is foolish to try to pick a top. Rather, just raise cash as the market rises and then keep that dry powder for after the pullback runs its course.

3-D Printing Stocks Are Hot Once Again

Yesterday’s hot sector was the 3-D printing stocks, such as ExOne (XONE), Stratasys (SSYS), 3D Systems (DDD) and Proto Labs (PRLB).  Last year we made some nice profits in 3D Systems. While we got out of the stock a bit early, we also got out before it tumbled. We have owned Proto Labs for a few weeks, although it is not a pure 3-D play like those other stocks I just mentioned. Proto Labs dropped like a rock after we bought it but has since rallied nicely into the green. Be forewarned, this sector is not for the faint of heart.

Today, we begin a two day look at the nation’s labor market. Automatic Data Processing (ADP) will release its Employment Change Report and the Challenger Job Cut Report issued by Challenger, Day and Christmas (I kid you not, that’s the name of  the company), a global outplacement firm, will also be released early today. As Friday is Independence Day, the Bureau of Labor Statistics will release its report for June on Thursday.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long PRLB  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, July 1, 2014: Previewing the Second Quarter of 2014

A confluence of events preempted me from writing yesterday. Amongst those events was the dying of my beloved HP12C which sent me scrambling to purchase another one for the quarter end. However, I would have saved you time and me effort because my expectations were for a quiet session to end the month and quarter. That was indeed what happened. It also came as no surprise to see some last minute profit taking hit the tape which resulted in a flattish close.

Dividend Stocks Outperform in Second Quarter 2014

Today we begin the third quarter of 2014. Before that, let’s review the second quarter a little bit. All major asset classes – stocks, bonds, gold and oil - rose during the second quarter. Within the world of equities, greater gains were earned in the dividend oriented stocks such as utilities which can be evidenced from the 6.01% rise in the Philly Utility Sector Index (UTX) and 6.78% jump in the S&P 500 Low Volatility High Dividend Index (SP5LVHD). Also a stellar performer was the NASDAQ 100 (NDX) which rose 7.06%, after a flat first quarter, thanks to the 21.19% surge in Apple (AAPL). The more risky small-cap and growth stocks, as I wrote all quarter long, were relative underperformers, gaining on average between one and two percent. Thanks to higher interest rates around the globe, US Government bonds continued to get bid higher in price. Al Qaeda activity in Iraq and Syria put global tensions on high alert leading to a rise in both oil and gold.

Expect a Dull Third Quarter

While normally in a mid-term election year, the S&P 500 (SPX) historically declines in the second quarter, clearly the 4.69% rise in that index was a statistical surprise. During mid-term election years, that large cap index historically traded flat during the third quarter. My expectations are that the third quarter will be rather flattish to lower. That will occur after the SPX makes a run to SPX2K or the 2,000 index level, which is only 2.03% away from its June 30 closing level. I have begun to raise some cash as the second quarter drew to a close and have some limit orders above the market to scale out of parts of existing positions. After breaching SPX2K, I see the markets pulling back for the summer, which can normally be a slow time for stocks but is also a period of time when equities are most vulnerable to exogenous behavior – political, economic and military/terrorist – and tends to see an escalation in volatility, which has remained low so far this year. I want to get prepared for what I expect to be a very bullish fourth quarter.

World Cup Fever Will Lead to Early Exit Today

As for today, expect an early rise in the stock market as beginning of month/quarter asset flows get put to work. Then, as we approach the closing bell, most likely around 3:30, traders and investors will leave their turrets and screens early to watch the USA – Belgium World Cup Soccer match at 4PM. I am rooting for Disney’s (DIS) ESPN and Buffalo Wild Wings (BWLD) to prosper on World Cup fever in the USA. Just by getting to this game, the USA and those companies are winners. A USA win today will likely be the biggest international sporting win for the Americans since the USA beat Russia in ice hockey at the 1980 Winter Olympics in Lake Placid.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, BWLD & DIS  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 26, 2014: Taking Advantage of Marathon Petroleum’s Decline

I was driving with my young cousin a few days ago and he remarked to me that he just saw, for the first time, a bug getting squished by a car windshield. I quickly responded by saying that sometimes you are the bug and sometimes you are the windshield. Of course, is always better to be the windshield. On Tuesday, the Bulls were the bugs and the Bears were the windshield. Yesterday, they traded places and the Bears were the bugs and the Bulls were the windshield. For the two days combined, the markets barely budged. The NASDAQ 100 (NDX) was the big winner advancing just over 1/2% over the two days.

Investing in Marathon Petroleum for its Asphalt Business

The news that the United States will permit export of crude oil for the first time in nearly 40 years sent domestic refiners lower and domestic based drillers higher. It also might lead to a narrowing of the US based West Texas Intermediate and North Atlantic Brent crude prices. However, this is not a complete opening of the spigot for crude oil exports. Rather, two companies, Pioneer Natural Resources (PXD) and Enterprise Products Partners (EPD), will be allowed to export certain oil, known as condensate, which can be turned into gasoline, jet fuel and diesel.

One of those stocks that got clobbered on this announcement was Marathon Petroleum (MPC) which closed off by $5.48 or 6.34%. I have had an eye on Marathon Petroleum (not to be confused with the exploration and production company, Marathon Oil (MRO) ) and placed it on my shopping list several months ago. Besides being a refiner, what really sparked my interest with Marathon Petroleum is the fact that the company is one of the largest manufacturers of asphalt in the United States.

According to the company’s website: “Marathon Petroleum Company LP (MPC) is a major producer and marketer of liquid asphalt used primarily as a binder in constructing and maintaining road surfaces. The liquid asphalt is combined with aggregate to produce Hot Mix Asphalt, used for roadways. Other uses for asphalt include the manufacture of roofing products. MPC has the largest domestic asphalt production capacity in the United States, producing base asphalt binders from four of its seven refineries… MPC markets asphalt through 26 owned or leased terminals located throughout the Midwest and Southeast. The MPC customer base includes asphalt paving contractors, government entities (states, counties, cities, and townships), and asphalt roofing shingle manufacturers.”

My thesis for investing in Marathon Petroleum is two-fold. First, the nation’s roads were and continue to be pockmarked by the brutal winter weather across most of this nation’s most highly populated states. Those repairs are still slow to occur. Every day I drive over or around pot holes which were formed last winter. Furthermore, there is an effort on Capitol Hill to properly fund the United States Highway Trust Fund, which for the most part has run out of money. Once the winter related repairs commence in earnest and the nation can get back to repairing its infrastructure, demand for asphalt will surge. Asphalt is also used in roofing shingles. With new home construction and sales back on the upswing, there will be additional demand for asphalt from those sectors.

Let's also not dismiss the company's 2.07% dividend yield which is greater that of the Standard & Poor's 500 (SPX).

Needless to say, with the price of Marathon Petroleum down nearly $5.50 in the afternoon, I jumped on the opportunity to put capital to work in the company’s stock. I used cash on hand plus the proceeds of yesterday’s profitable sale of Boeing (BA) to fund the purchase. I am willing to add to my asphalt investment should the stock be offered even lower, of if the stock begins to rebound from Wednesday’s news in confirmation of my thesis. Right now it is an average sized position in our main Equity Growth Portfolio.

Broadcasters Win Important Supreme Court Decision

The Supreme Court handed down an important decision yesterday concerning streaming content over the internet. The high court ruled that Aereo’s online streaming service violated broadcaster copyrights. This was a big victory for broadcast networks such as CBS (CBS), Disney (DIS), Comcast’s (CMCSA) NBC, Viacom (VIA) and Twenty-First Century Fox (FOX). IAC Interactive (IACI) run by Barry Diller is the big loser. CBS, a stock we once owned but sold, in retrospect too early, is also on my shopping list. Not only does the broadcaster interest me, but the ability to exchange shares into those of CBS Outdoor (CBSO) advertising REIT (real estate investment trust) is also intriguing.

Enjoy your first weekend of summer. I have my sights set on boating on Lake George. I will return on Monday with more of My Gut Feeling.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DIS & MPC — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 25, 2014: Biotechs and Utilities Rise In a Down Session

Strong consumer confidence and new home sales helped to move markets higher in the first half of yesterday’s market session. However, the same old worries over Iraq triggered profit taking in the afternoon. It felt a lot worse than it actually was. In the morning I sold a small laggard position to raise some cash. Otherwise, it was a rather unexciting session.

The fact that the CBOE Volatility Index rose about 10% got some attention, but I consider that to be statistically insignificant given the low nominal levels of that index.

Energy Stocks Get Hit; Biotechs and Utilities Rise

Energy stocks really took it on the chin, especially the exploration companies. Again, this is all in reaction to rising crude oil prices and the conflict in Iraq. On days like yesterday, I like to look at what was trading higher in a down tape. Two sectors stood out there – biotech/pharmaceuticals and utilities all caught bids.

Today there will be a few earnings calls to keep us stimulated, such as General Mills (GIS), Monsanto (MON) and Bed, Bath & Beyond (BBY).  Durable goods orders for May and mortgage applications for last week will be released in the morning. I do not see any micro data – economic or corporate - that can move the markets today.  Rather, goings on in Iraq and Russian will likely dictate market direction.

IPO Calendar Starts Early Summer Vacation

There has been a dearth of initial public offerings this month. Some pundits equate markets tops with a flushing out of bad IPOs. Clearly that has not occurred. I expect that the calendar gets a little more exciting come September.

The game plan remains the same – lighten up a little bit heading into the first week of July and figure out ways to best enjoy your summer.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long GIS — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 24, 2014: Housing Data Highlighted Today

In a photo finish the S&P 500 (SPX) declined for the first time on a Monday since early April. The day’s decline was a paltry 0.01%, nothing worth pulling one’s hair out over. Yesterday’s market action was typical of the recent strength of the equity markets which is characterized by shallow pullbacks and streaky advances of moderation.

Buffalo Wild Wings Surges

One of our top picks in both the Equity Growth and Restaurant & Food Chain portfolios, Buffalo Wild Wings (BWLD) surged nearly 6%, just over 9 points. Contributing to that gain was both a Investors’ Business Daily (IBD) story on the stock and a strong showing at branded restaurants due to the ongoing World Cup. IBD is like the Daily Racing Form for momentum traders. We could see Buffalo Wild Wings turn into the next Chipotle Mexican Grill (CMG) and begin to gather some steam to the upside. As it is a large position, I will sell part of our positions into any mo-mo (that’s the term for momentum traders) related lift.

Housing Data ibnFocus Today

The earnings calendar has a few noteworthy companies reporting: Hertz (HTZ), Carnival Cruise Lines (CCL) and Walgreen (WAG). The economic calendar is more interesting with housing data and consumer confidence expected to be disseminated. Housing data in the form of the Case-Shiller Index will first be reported at 9AM. Then at 10AM, consumer confidence and new home sales will be released. Yesterday, existing home sales were reported to be better than expected. I can tell you this much, my wife who is a real estate attorney in New Jersey, and specializes in residential closings and landlord-tenant litigation, is busier now than she was during the last residential real estate boom.

I have this sneaking suspicion that the markets will rally up through the Independence Day holiday and then back off for a few weeks. The retreat will be shallow and create opportunities. Hence, before the Fourth of July fireworks are launched, I plan on raising some cash.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BWLD — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 23, 2014: Subjective Measures Indicate Market is Not Topping Out

The S&P 500 (SPX) comes into the week at an all-time closing high and within 2% of the magic 2,000 figure. Also today, that index will attempt to closer higher for the tenth consecutive Monday. Helping the cause will be a positive Chinese and Japanese PMI (purchasing managers’ report) which was released overnight. The PMI for the US will be reported today. Unfortunately, there are no new merger and acquisitions which were announced this morning to give the markets a head start and European PMI was disappointing.

Focus on Objective Financial Measures

When you are playing in unchartered territory, for major indexes, it can provide for some uneasy feelings. On the one hand, one’s portfolio, if they are on the right side of the market will be performing well. However, it also brings a torrent of naysayers out of the woodwork, leaving one to question if this is a market top. This is where financial objectivism versus subjectivism comes into play.

On an objective basis, indeed the markets appear to be overstretched. After all, we are at all-time highs. If this subjective thinking was the predominant view of financial experts, then the stock market would never be able to grow on a nominal basis and on a chart would look like one giant continuous sine curve (think of a series of peaks and valleys that never end). Yes, the market has tops and bottoms but those are determined by economics, which is where objective financial data has to come into play.

Fortunately, there are textbooks full of objective financial market measures. The first one which comes to mind is market price to earnings (PE) multiple. As it now stands, the PE multiple for the SPX is around 18 (depending on how you calculate the “E” part). That statistic is far from being in overvalued territory when compared to historical market tops. Doug Short has a nice analysis of market tops based on the PE ratio. While he is cautious on the market, he is also not overtly bearish.  Another metric compares the stock market PE with that of the bond market. You do this by taking the inverse of the Treasury market yield. For example, the 10-year US Treasury yield is about 2.5%, the inverse of which is 40. Hence, the PE for the “risk free” bond market at 40 implies a much great level of risk than the stock market at 18. Other objective measures include earnings growth, employment, gross domestic product (GDP), etc. If one were to call a market top, we would need a preponderance of objective measures which are exhibiting weakness. That is not the case right now. My colleague Jeff Miller composes an excellent weekly article which looks at a variety of objective measure in his A Dash of Insight blog.

Expiration Is Over, Time to Look Ahead to Quarter End

Friday’s quarterly expiration was a non-event. Now we have the end of the quarter to contend with, which occurs next Monday. I expect that managers will be putting some cash to work as the week progresses but overall the week should be a tug of war between the haves (the Bulls) and the have nots (the Bears). I am continuing to put out some offers to skim the tops off of some positions.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time. 

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 20, 2014: Family Dollar Investor Activism Heats Up Again

FOMC Chairwoman Janet Yellen’s commentary sent the equity markets higher on Wednesday. In essence, she removed most of the bearish case for stocks to fall and yields to rise. Furthermore, her commentary on stock market volatility took the wind out of the sails of those who, and in my opinion mistakenly, pray at the feet of the CBOE Market Volatility Index (VIX). I have written extensively as to how that index is misleading, subjective and imperfect. Now perhaps the media might give it less attention, as it deserves.

Quarterly Derivative Expiration Will Guide Markets Today

Thus, Wednesday afternoon, the equity markets rose to new highs, as defined by the S&P 500 (SPX). On Thursday the markets waded in shallow negative territory for most of the day until a late flurry of orders sent the SPX once again higher, albeit modestly, into record territory. Gold also broke out to a two-month high, but I would not hang my hat on that fact to guide your investment or trading decision.

Yesterday’s late buying flourish was likely due to the mega quarterly derivatives expiration which will occur today. Today’s opening which looks to be fractionally higher and the closing action will also be impacted by the derivative expiration. In our newest strategy, the LakeView Dividend Capture Buy-Write Strategy, we have many positions that expire on today’s close and will be looking to roll those options or sell stock and enter into new positions on Monday.

Carl Icahn Calls For Family Dollar to Put Itself Up For Sale

In micro stock news, Oracle (ORCL) delivered lousy results after the market closed yesterday and is looking to decline by about 6% at the market open. I do not expect that individual stock’s decline to spread amongst other Nasdaq 100 (NDX) stocks today. Carl Icahn is pushing for Family Dollar (FDO) to put itself up for sale. There are some other major activist investors in Family Dollar such as Nelson Pelt and Peter May’s Trian and John Paulson’s fund. This story seems to fester ever few months. Let’s see if all these egos can come together and make something happen.

Harley Davidson (HOG), one of our investment holdings has unveiled an electric motorcycle. Having recently spent a week at Americade and having done so for the past several years, I welcome the reduction in noise pollution. Our price target for Harley Davidson at the end of this year remains at $78, about 11% higher from yesterday’s closing price of $70.14.

Enjoy the first day and weekend of summer.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long HOG — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 17, 2014: Airlines Ready to be Grounded

It was another teeter totter day – higher open, then sell-off into the red followed by a positive afternoon closing. All told, the bulls won, but by a modest amount. The risk-on stocks led the advance.

S&P 500 Up On Nine Consecutive Mondays

Despite historical averages, the S&P 500 (SPX) has advanced on nine consecutive Mondays (please note that does not include the day after Memorial Day Monday, which for those of you keeping score at home was also a positive session). You have to go back to April 7 for the last time that the S&P 500 declined on a Monday.

CPI and housing starts will be released today. Adobe (ADBE) is one of the few earnings releases / conference calls of note today. None of those are market movers in my opinion. The FOMC will begin its two-day meeting today. As a result, the markets are likely to remain in slow motion as was the case Monday, until tomorrow’s decision and subsequent press conference by Chairperson Janet Yellen. Then we could be in store for some intra-day volatility.

Getting Cautious on Airlines

It looks like another round of sector reallocation may be forming. This time around, the airlines may be the victim of selling. We still hold a position in Delta Airlines (DAL) even after recently trimming back on our exposure to the stock. I am going to give the stock a little breathing room but I will ground the flight if it declines below its 200 day moving average when selling could accelerate. I would also be inclined to let go of Boeing (BA) should that occur. I also have my eye on consumer staples and financials as those seem to be bending but not yet breaking down.

I am hitting the road the next few days and will return with commentary on Friday in time for quarterly triple witching expiration.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BA & DAL — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 16, 2014: I Love the Smell of Mergers & Acquisitions in the Morning

Borrowing a line from Apocalypse Now, I love the smell of mergers and acquisitions in the morning. It smells like victory. Today we get three deals: Level 3 Communications (LVLT) will buy TW Telecom (TWTC) for $5.6 billion; SanDisk (SNDK) will buy Fusion IO (FIO) for $1.1 billion; and last but most important is the $43 billion takeover of Covidien (COV) by Medtronic (MDT). This marks the second consecutive trading session that one of our holdings is the subject of an acquisition. On Friday, it was Open Table (OPEN) which we held in our Restaurant & Food Chain Portfolio and subsequently sold that day. Today it is Covidien in our Equity Growth Portfolio.

Medtronic to Buy Covidien for Cash and Stock Worth $43 Billion

I had seen some value in Covidien several months ago and accumulated an average sized position. The stock for the most part traded in a range over that time but before the deal was announced, we were in the green and held it with an $80 year-end price target in mind. Apparently Medtronic thinks enough of Covidien to offer a package of stock and cash, which as of last Friday was worth about $93.22 per share. With Medtronic’s stock rising in the pre-market, the package deal for Covidien is worth slightly more than $93.22. Part of the motivation behind the deal was to enable Medtronic to domicile in Ireland and save on taxes. The other motivation was commercial in nature.

As for the other two deals this morning, Fusion IO has been a disappointing stock and perhaps SanDisk is getting some good technology. To be honest, I have no opinion either way on the Level 3 acquisition, although, the market is greeting it positively in the pre-market.

Market Environment is Perfect for More M&A

One has to ask, what does this merger & acquisition activity mean for the market? As most of these deals are for cash or cash and stock, it means that: companies have plenty of excess capital to invest; the cost of capital remains cheap with low interest rates; companies value one another more than the market does; and, the US tax code is so screwed up that it pays to move business offshore.

Today, Industrial Production and Capacity Utilization for May will have some fleeting impact on the markets. Expectations are that both metrics will rise over April levels. Once we get past Merger Monday (a throwback to the corporate raider and LBO days of the 1980s), we will focus on this week's FOMC meeting. It does seem that the monetary authority's policy is well defined heading into that meeting. Then on Friday, quarterly derivative expiration will capture trading activity. Throughout the week, we will keep one eye on the goings on in Iraq and Syria.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long COV — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 12, 2014: Are the Bears Desperate?

My friend and Wall Street-All Stars co-founder Cody Willard, likes to ask “who is more scared, the bulls or the bears?” I like to ask, who is more desperate, the bulls or the bears? When you wake up and see this story front and center on Yahoo (YHOO) finance, “This chart shows the market to be 'a ticking time bomb' “, you know that the market has more room to run on the upside. With the S&P 500 (SPX) approaching 2K, you hear nobody talking about that. Rather, the negative stories get all the attention. Only the bears and shorts, who seem to wake up every morning and perform triage on their portfolios, need the market to go their way, down. The bears are very desperate.

Markets Still on a Course to Move Higher

Absent a move higher in interest rates or an exogenous event, the equity markets will continue to grind higher. However, never dismiss the likelihood of an exogenous occurring, as we have learned in the past. When it does happen, we have to decide if it was a one day event or not, as I explained in April 2013 after the Boston Marathon bombing. Thus, even an exogenous event could have fleeting impact on the market. An exogenous event like the Greek debt crisis is far more long lasting.

The market finally had a down day across the board. The S&P 500 (SPX) had its worst down day since May 20. However a decline of 0.35% is, to quote Monty Python, merely a flesh wound. Thus, we continue to digest recent gains. Overall, the markets have been quite boring the last four sessions, and I am not expecting a change of character today. Most money managers are more focused on the NBA Finals and the NHL Stanley Cup Finals; speaking of which, the Rangers won, extending the series to a fifth game in LaLa Land.

Taking Some Profits in Schlumberger

I used the quiet market activity to take profits on a portion of our positions in Schlumberger (SLB). We have owned the stock since 2009. Who says that you can’t buy and hold anymore?

Other than earnings from Hertz (HTZ) and Nathan’s Famous (NATH) and May retail sales and weekly unemployment claims on the economic front, there is a dearth of news to move the markets today. Pre-market futures are indicating a flattish open. Expect another wishy washy session.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long NATH, SLB and YHOO — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 11, 2014: Market Digests Gains

The broad market indexes spent the last two days digesting its recent games. While the S&P 500 (SPX) broke a four day winning streak with a fractional decline, the Dow Jones Industrials (INDU) kept its streak alive at five sessions with a small gain. You have to go back to May 20 to account for a decline in the SPX by more than 2 points. Since that day, the index has gained 4.16%. The Russell 2000 (RUT) has surged 6.88% since May 20.

These two days of sideways action is quite constructive for the markets. We have an old saying on Wall Street: “don’t short a dull market.” However, the bears never learn and likely were reloading shorts over these past two days.

Apple Split Has Behavioral Importance

I was quoted yesterday by Troy Wolverton, an excellent newsman, in the San Jose Mercury News on the importance of Apple’s (AAPL) stock split. Most of the content Troy published was provided by me and he gave me a nice quote at the end of the article. Now that Apple is at a more reasonable price, I can recalculate desired holdings with greater precision than before the split, and raise some cash in the process. If only Priceline Group (PCLN) would do the same, it would make risk management all that easier.

Manage the Micro for Now

Speaking of raising cash; as several of our holdings are fast approaching target price levels for this year, I am putting out some offers to shave off some stock. This is not an opinion of the overall market but rather some individual positions. There are some stocks I would be inclined to add to and others on my shopping list as well.

Cantor Defeat

The big news today is likely to come out of Virginia where House Majority Leader, Eric Cantor was defeated in his primary election by a Tea-Party candidate. Retail sales for May will also be front and center. Other than that, the earnings calendar is quiet and the markets will likely continue to consolidate at these levels. We have to recognize that we are in a quiet period for the markets, other than the unexpected merger and acquisition, which will likely last until the last week of the month when quarter end positioning will take place.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, PCLN and UWM — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 9, 2014: Stock Splits for Apple and Union Pacific

There are several corporate actions which should dominate the financial media and headlines today. First up are stocks splits for Apple, 7 for 1 and Union Pacific, 2 for 1. While splits really have no impact on a company’s financial performance, it does have positive psychological implications for individual investors. Also in the news today is Merck’s acquisition of Idenix Pharmaceuticals for $24.50 in cash or $3.95 billion. Idenix closed at $7.23 of Friday. The company specializes in treatments for hepatitis C. Finally, Tyson Foods (TSN) won the battle to buy Hillshire Brands (HSH) for $63 per share or about $7.7 billion, outbidding its smaller rival Pilgrim’s Pride (PPC). Recall that last week I talked about the takeover saga in the meat industry and expected that Tyson would be victorious.

After rocketing to new highs last week, the S&P 500 (SPX) and Down Jones Industrials (INDU) are in need of a rest. That is indicated by today’s per-market futures. However, over the course of the last several days, lower opens were opportunities to buy the markets. The Dow Jones Industrials is fast approaching the round 17,000 level, being less than 1 percent away from that mark and the S&P 500 (SPX) is about 2.5% from the SPX 2K (2000) level. The former is likely to be accomplished this week and the later by the time we hit the July 4th weekend.

Market Dominated by Mergers & Acquisitions

There is clearly a change in character for the markets versus that of just a month ago. Small caps, techs and growth stocks are back in favor. The spate of merger and acquisition activity can make any stock, of any market capitalization a takeover candidate, although the focus should be on small and midcap sized companies as targets. This merger & acquisition boom is not like that of the 1980s which was fuel by debt and leveraged buyouts. The current activity is fueled by solid corporate balance sheets, higher stock prices and most of all cash. The best way to play in mergers and acquisitions is via the investment banks. My top choices in this category are Goldman Sachs (GS), Morgan Stanley (MS) and Lazard (LAZ).

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, UNP and TSN — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 6, 2014: Next Stop for Equity Market is SPX2K

The Labor Report for the month of May contained no surprises, was for the most part as expected and relatively unchanged from the April report. There appears to be modest wage pressures of 2.1% which does not move the inflation needle. Jobs gains were most concentrated in the health care sector. Coming into the report futures were flat. The reaction to the report was slightly positive. So, we can expect a positive bias at the market open.

Growth and Small Cap Stocks Back in Favor

The ECB report yesterday, as expected, resulted in a flight to US Dollar assets. Shorts were caught off balance in the growth, small and mid cap sectors which led the market higher. The Russell 2000 (RUT) which recently corrected just over 10% has rallied about 6.5% off of its recent lows. The shorts and bears like to extrapolate. Thus they looked at growth stocks being off 10% and drew a straight line on a chart which implied that it will decline 20%. Then they piled in on the short side. This is a mistake that shorts and bears often do. Buy low sell high is the way to make money and they sold low and are buying higher. It is a similar mistake to what momentum traders do – buy high and hope to sell higher.

Take Some Profits As Markets Rise

Speaking of selling higher, it is time to look at some positions that have or will soon approach target prices. Recently, I shaved off two such positions – Delta Air (DAL) and Aberdeen Israel Fund (ISL), using that money to buy other beaten down stocks we did not own like Gilead Sciences (GILD). Another favorite in our portfolio is United Rentals (URI). That stock is fast approaching my target price of $110 and consensus analysts’ target price of $107.50 after surging $3.74 yesterday to $105.95. It is a stock we own on average at prices between $55 and $56. Hence with a near double on the stock, we have put orders in to shave off part of our holdings at $110. Since we like it for the longer term, we will keep the balance of the position.

SPX2K Is On The Way

When you put together this week’s news and market reaction I can only come to these conclusions:

  1. The equity markets want to go higher and will. The S&P 500 Index (SPX) has a date with 2,000 or SPX2K, which is just over 3% from yesterday’s closing level. You heard it here first SPX2K.
  2. Not until we hit SPX2K will individual investors who are out of the market finally wake up and begin to invest once again in stocks as an asset class
  3. Valuations in the bond market are stretched but given central bank policy tendencies, they can remain that way for an extended period of time
  4. Another 3 – 5% pullback in stocks is likely in the next three months, but from what level that occurs is uncertain. Hence, you can’t time it and might get hurt doing so.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DAL, ISL, GILD, URI, UWM — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 5, 2014: Europe Goes Negative on Rates

Mario Draghi, President of the European Central Bank (ECB) is taking extraordinary measures for the Eurozone’s monetary policy. The ECB has announced that it will drop its deposit rate to below zero percent. In the process he also lowered the benchmark rate from 0.25% to 0.15%. The benchmark rate is equivalent to the Federal Reserve’s Fed Funds Rate. Furthermore, the ECB will launch its own form of quantitative easing.

ECB Fears Deflation Not Inflation

Clearly, the ECB is doing what it should have done several years ago, but resistance from Germany, who is still haunted by memories from the hyper-inflationary Weimar Republic, kept the ECB on a more cautious stand. It appears that inflation is not a concern in Europe.

The reason for these moves is that the ECB fears deflation, which is also problematic for an economy. Recall that the ECB does not have the dual mandate of inflation control and economic growth as does the FOMC. Rather its powers are focused solely on inflation. Of course, there is some linkage between the two.

The reaction to these moves is multifold. First, the Euro (EUR) is getting sold. Second, the European markets are surging to new records. Third, US futures are moving higher, again to new levels.

Markets in US Will Trade Higher Ahead of Labor Report

While the markets on Wednesday were a carbon copy of Tuesday which in turn was a carbon copy of Monday – lower opens which were then bought – today, we are likely to open higher and build onto those gains as foreigners buy dollar assets. By the end of the day, we could see a little bit of profit taking to square away trading positions ahead of tomorrow’s US labor report for May.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time. 

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 4, 2014: Pent Up Demand For Autos Boosts Sales

Auto sales from US car manufacturers were better than expected for the month of May, putting a slight bid into stocks like Ford (F) and General Motors (GM). This confirms to me the pent up demand coming out of the winter by consumers. My automobile related play remains with parts manufacturer Magna International (MGA) which traded to an all-time high on the news.

Apple surged nearly 11 points on the day after its World Wide Developers Conference. Don’t forget the upcoming 7 for 1 stock split.

The Soap Opera Continues in the Meat Industry Takeover Battle

The soap opera takeover continues in the meat market. Pilgrim’s Pride (PPC) topped Tyson Foods (TSN) offer to purchase Hillshire Brands (HSH). Tyson had previously topped Pilgrim Pride’s bid. As it now stands, the stock is trading at $58.65, a premium to the best offer out there of $55 at this juncture. In the end I think that Tyson will make a winning bid. Also we can’t ignore Hillshire’s friendly offer to purchase Pinnacle Foods (PF).

Markets Are in Wait and See Mode

Yesterday’s market played right to my script – a lower open followed by a rally and then a flattish close. The market appears to be waiting for Thursday’s ECB meeting and Friday’s US Labor report until making any material capital commitments. As today is Wednesday, we will still be in wait and see mode as the markets continue to digest recent gains. Hence I expect a repeat of Monday and Tuesday’s market today. It is a summertime-like boring market. Remember not to short a dull market.

Finally - - - Let’s Go Rangers !!! I have my sweater all ready to wear for the Stanley Cup Finals.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, MGA and TSN — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 3, 2014: ISM Teaches Market a Lesson

While the Apple (AAPL) World Wide Developers Conference was a well-orchestrated and quite amusing performance, it was as intended, a method by which Apple could present its new operating system to developers. To the extent that new whiz bang consumer products were not introduced, it may have disappointed some market watchers, but in the final analysis had little impact on the stock. In classic Apple style, management kept to their script and will unveil new products as we get closer to the fall.

ISM Error Results in Upward Revision

Overall, the markets traded in a tight range, using the day to consolidate recent gains. I expect that it will continue to churn today as well. Tomorrow we get a preview of Friday’s labor report when Automatic Data Processing (ADP) provides its own employment report. Today’s market moving news will come from the release of May automobile sales and factory orders. Yesterday the Institute for Supply Management or ISM had to revise its previously reported data because it used the wrong seasonal adjustment factor, which ISM blamed on software error. Software error? Somebody screwed up. The upward revision in those figures turned the market from early losses to gains but at the closing bell the markets were mixed with little change.

The lesson we should take away, something that investors and economists already know but unfortunately most traders and bears are ignorant to, is to ignore single economic data points. The reasons are manifold – one data point does not make a trend; one data point is more subject to revisions; and, one data point cannot be looked at in isolation as it needs to be put into the greater context of multiple variables.

Carry Trade Explained

Yesterday, I discussed the absolute differential in government bond yields for countries with large established economies. Not only does that differential attract buyers to US Government Treasury issues but it also sets up a popular hedge fund strategy, the carry trade. The carry trade, using my data from yesterday would have a hedge fund selling short Japanese JGBs at 0.57% and buying US Treasuries for a 2.47% yield over the same 10-year period. In doing so, the hedge fund will earn 1.90% annually less the cost of reversing in the short JGBs, a minor cost. Given the ability to lever government securities at high levels, the return on capital is much greater than 1.90%.

While the market appears to be skewed slightly to the downside at the open, we could be in for a repeat of Monday’s session – a lower open and then a reversal higher resulting in a flattish sort of day. It is days like these where you get a good opportunity to take a hard look at your portfolio to make some adjustments for the coming weeks and months.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, June 2, 2014: US Treasuries More Attractive Than JGBs or Bunds

After the manic / depressive behavior of stocks for the month of April, May was spent forming support for stocks resulting in the major market indexes posting record highs by the time the month drew to a close. Concurrently, US Treasuries prices are rising with yields for the 10-year bond declining from about 3.03% at the end of last year to 2.47% at the end of May. This begs the question –why? Most money managers have expected that money would be flowing out of bonds into stocks, but that does not appear to be occurring as both stocks and bonds have a persistent bid.

US Treasury Yields Are More Attractive Than Those of JGBs or Bunds

My explanation is that the bid for stocks is occurring from domestic investors – pension plans, individuals and hedge funds (who for the most part are covering shorts) while the bid in Treasuries is coming from overseas investors. The reason for this is that as much as rates on US Treasuries may be low, those yields are still greater than those for bonds of similar maturities in other major economies. For example, the 10-year Japanese Government Bond or JGB yields 0.57%; the 10-year German Bund yields 1.36%; and, France’s 10-year bond yields 1.76%. Thus, US Treasuries are attracting capital from all around the globe.

Apple World Wide Developers Conference and Stock Split

Apple (AAPL) is going to be in the news this week. The company’s worldwide developers conference or WWDC takes place today. Beyond the Beats purchase which was confirmed last week, the WWDC will give us a peak into Apple’s new products, innovations and upgrades. Rumors are running rampant as to what Apple might unveil, ranging from: an iWatch to operating system upgrades to a wireless home appliance operating platform. Entering the WWDC, Apple shares are at multi-year highs. The company’s stock split will be issued on Friday, so expect to own seven shares for each one that you now possess.

Today also brings us more deals or potential deals in the merger and acquisition market. Health care real estate investment trust Ventas (VTR) is paying $2.6 billion cash and stock for competitor American Realty Capital Healthcare Trust Inc. (HCT). Broadcom (BRCM) is surging this morning on reports that the company is seeking to sell its wireless modem business.

Lastly, let’s keep in the back of our mind Friday’s monthly labor report for May.

When you put everything together, I expect the rally in stocks to continue. The S&P 500 (SPX) after surpassing and maintaining the 1,900 level is now going to gather some steam and make a run at 2,000 this summer. Last week we put our cash to work resulting in purchases of Gilead Sciences (GILD) and Sanchez Energy (SN) as well as adding to positions in Juniper Networks (JNPR).

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, GILD, JNPR and SN — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, May 29, 2014: GDP Report Confirms Winter Slowdown

Yesterday’s market delivered us that day of rest that I anticipated would occur after the strong rally in stocks. There was really not much we could read into the action. Also, the market was marking time ahead of today’s 1st quarter Gross Domestic Product (GDP) report.  I used the wishy washy action to raise a little cash by taking profits in parts of two positions: Delta Air Lines (DAL) and Aberdeen Israel Fund (ISL). The former has hit my price target. The latter I have owned for over a decade and it was just ripe for some pruning.

Winter Weather Confirmed by GDP and Retailers

Today’s market offers two retail earnings releases of interest: Costco (COST) and Abercrombie & Fitch (ANF). Costco will likely be hurt by the winter weather, especially in terms of its gasoline sales. Abercrombie & Fitch is one of those out of favor retailers which fickle teen/tween shoppers no longer favor, as I discussed yesterday.

Of greater importance today is the second look at 1st quarter GDP. Due to the adverse wintry weather, GDP is expected to decline 0.5%. This should come as no surprise as consumers were stranded at home, shippers could not transport goods, construction ground to a halt and inventories were buried under snow (think automobiles)

Another Quiet Market Day Expected

I am expecting another relatively quiet session today as the GDP data and the recent stock market rally gets absorbed. Tomorrow, I will be on the road, but I would expect the markets to continue its move to the upside. With that cash I have accumulated, I will be adding to existing positions or perhaps start a new one.

Finally, I am expecting the Broadway Blues to wrap up their Eastern Conference Championship today against the Habs at Madison Square Garden tonight. I am already seeking out tickets in Los Angeles should the Rangers meet the Kings in the Stanley Cup Final.  Let's Go Rangers. I will be back on Monday with My Gut Feeling.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DAL and ISL — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, May 28, 2014: Kors Benches Coach

The American consumer can be very fickle. You see that most in the teen / tween retail sector. One day, Abercrombie & Fitch (ANF) in on top. The next thing you know, American Eagle is hot and Abercrombie is not. Then out of left field, Gap (GPS), a store that most kids would not be caught dead in becomes trendy. Soon that trendiness wears off. Hence, the difficulty in investing in American or even global fashion trends.

Kors Takes Away Business From Coach

Coach (COH) for nearly a decade was the go-to leather and handbag retailer for Americans, Europeans and Asians. It was so hot that Coach opened up a multitude of outlet stores and discounted year old products so that the middle class consumer could purchase their goods. Then along came Michael Kors (KORS). Kors took Coach out of their own game. It is the trendiest upscale leather, handbag and accessory company in the world right now. Kors has been successful at selling in multiple channels including Macy’s (M), its own regular price stores and even taking a page from Coach’s book, in outlet stores. Women who wanted Coach bags two years ago now want Kors bags. Kors reported a superlative March quarter today, earning 78 cents versus 50 cents a year ago and analysts’ estimates of 68 cents. Same store sales surged 26.2%, nearly 6% more than what was expected.  If you want to see a negative report on Kors, just read what bear cheerleader Herb Greenberg had to write. Boy did he get it wrong.  We have been in and out of KORS since it went public a few years ago. Our latest purchase was just under $80 in the beginning of last November.

Also reporting strong results today were Toll Brothers (TOL) and Cracker Barrell (CBRL). The former company is telling us that the luxury home market is alive and well, despite what some economic data points may be indicating. The latter beat estimates by a penny in a difficult winter operating environment.  However, once again they are playing the UPOD game (under promise and over deliver) when it comes to forward guidance. Hence, its stock can trade either way today. Cracker Barrel Old Country Stores is a long term holding in both our growth and food/restaurant portfolios.

Summer Rally trying to Get Started Early

As for the overall markets, the positive trend continued yesterday with the small caps, growth companies and technology stocks making up for lost ground while the broad market S&P 500 (SPX) surged to a new record. Hedge funds are being caught short and individual investors are still holding bonds over stocks. Pre-market futures are indicated higher. However, after a strong four day advance, do not be surprised if we take a rest for a day or two. A summer rally is being pieced together as both of those groups turn into buyers while the institutions continue to put money to work which they raise in the last month. The train is leaving the station earlier than expected and too many people are not getting their tickets punched.

(errata -  yesterday’s My Gut Feeling email title had the incorrect date which should have been May 27)

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long CBRL and KORS — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, May 27, 2014: Trading In Banks for Biotech

After a long and I would add pleasant Memorial Day weekend, we wake up to some pleasant news. To begin with, the S&P 500 (SPX) closed last week above 1,900 for the first time ever. A pro-European candidate, billionaire Petro Poroshenko won the Ukraine election. While in Europe, anti-Europe parties also won elections. In France, a far-right anti-EU party took 25% of the French vote, voicing displeasure with the ruling Socialist Francoise Hollande.  Meantime back home, Durable Goods orders rose 0.8% versus an expected decline and the Case-Shiller Index of home price sales rose 12.4%, also stronger than expected.

When we put all the above together, the markets are indicated to rise at today’s open. This follows a positive pre-holiday week where the S&P 500 (SPX) rose 1.21%. More importantly, the Russell 2000 (RUT) gained 2.11% and the NASDAQ 100 (NDX) rose 2.23% exhibiting important bullish leadership. It appears that the small cap and tech pull back is over.

Apple Back In Favor

Apple is rumored to be working on a smart home application to control home appliances. Apple (AAPL) now stands at its highest closing level since October 2012. With a seven for one stock split set for next Monday, June 2, I see the stock setting up for a post-spilt move toward $100 and a likely new all-time high not long thereafter.

The bears are going to say that last week’s advance was on low volume. That will make little consequence if, as it appears, we continue last week’s rally today as the major portfolio managers return from the long holiday weekend.

 Sold Bank of America

On Friday, we liquidated our positions in Bank of America (BAC) which we purchased nearly three years ago. While I can make an argument for the stock to go higher, there is too much uncertainty and continued government interference with the money center banks to risk capital at this juncture.

Let’s see how this market absorbs the early advance. We are close to a point where individual investors might be afraid that they are going to miss a move higher in the stock market. I have some cash to put to work and am likely to do so in the beaten down biotech sector.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL and UWM — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, May 22, 2014: Markets Close at Highs Despite FOMC Volatility

If there is one thing that I can’t stand about the markets these days, it is traders’ obsession with anything related to the Federal Reserve Open Market Committee (FOMC). Traditionally, the FOMC would meet eight times a year and issue its monetary decision immediately following that meeting. The markets would then react to that decision in a flurry of trading activity and be done with it. Now the FOMC issues a statement after their meetings, then the chairperson hold a press conference, that same day and, three weeks later the minutes of the meeting are released. Now we have three opportunities for traders to bet on the come out roll.

Market on FOMC Related Roller Coaster Ride

Yesterday was one of those come out roll days. The markets opened on a solid footing. Then at about 11AM, the wise-guy traders tried to front run the release of the FOMC meeting minutes. Investors stepped up to buy stocks at noon after the sell-off. Then at 2PM when the minutes were released we went on a roller coaster ride – first up then down and finally up again – closing at the day’s highs. So while the market seems to have no memory from day to day, as my friend Doug Kass likes to say; yesterday was one of those times when it has no memory from hour to hour.

The conga line of retail earnings reports continues today with Best Buy (BBY), Game Stop (GME), Aeropostale (ARO), Dollar Tree (DLTR), Children’s Place (PLCE), Zumiez (ZUMZ) and Gap (GPS) releasing quarterly results. Expect much of the same today as we have heard over the last week: 1) the weather continued to impact retail sales through April and then picked up and 2) the low end is weak and the high end is strong.

 JD Com IPO is a Preview of Alibaba

JD com (JD) priced its IPO last night at $19.00. Expect that stock to pop at the open today. I put in for stock and got lucky for one client who received a small allocation. JD com is just a warm up for Alibaba.

Equity futures are flat heading into the open. Marc Faber, the author of the Gloom, Boom and Doom report who in my opinion produces the financial analysis equivalent of broken Swiss clocks, was on CNBC saying that the market is not healthy. That is just about the equivalent of a strong buy signal.

I suspect that the markets want to rally to new highs once again but with the upcoming three day Memorial Day weekend, market participants will turn it into a four or five day weekend. So expect more low volume action over the next two days.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long JD — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, May 21, 2014: Stuck In a Trading Range

The negativity in retail stocks were too much for the market to handle and dragged the entire equity complex lower. Stocks of all market caps, both growth and value, were impacted by the sell-off. The bond market continued to rally, sending yields even lower. It is becoming very hard to find good quality bonds at reasonable prices. This tells me that the pendulum has swung too far away from stocks to fixed income.

S&P 500 Trading in a Range of 1,850 to 1,900

It is becoming apparent that the stock market wants to trade in a range of say 1,850 to 1,900 for the S&P 500 (SPX), which is about a 3% trading range. There is not enough enthusiasm to break and hold above 1,900 while there are buyers ready to step up when the SPX gets down to the lower end of the range. This condition which has persisted since February can continue through the summer. It is also going to frustrate traders and investors alike. The overall uptrend for the markets is still in place, but it is going to take a holiday, until the end of August or beginning of September. That is what the tea leaves are telling me right now.

It Is a Goldilocks Market With No Memory

My friend Doug Kass of Seabreeze Partners likes to talk of a market with no memory. That is what we seem to have. A positive move one day does not generate any follow through the next day. Similarly, a negative move one day does not have any legs to the downside.

As we approach the trading day, retail reports from Tiffany (TIF), Lowes (LOW), Target (TGT) and PetSmart (PETM) have hit the tape. The first was hot with shares jumping about 5%, the middle two, for Lowes and Target were indifferent and those stocks look about flat, while; the last one, PetSmart is a train wreck, looking about 7% lower. Unlike yesterday which was across the board disappointing, today’s results are a bit more of the Goldilocks variety – not too hot not too cold.

Pre-market indicators, when factoring in the retail reports today appear to be headed marginally higher. In the afternoon, at 2PM, the FOMC will release the minutes from its most recent meeting. It could be a market mover, more so for bonds than stocks. Otherwise, expect a Goldilocks market without any memory from day to day.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC have no positions in stocks mentioned — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com

– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, May 20, 2014: Small Cap Stock Bounce Continues

I want to pass along some quick notes as I am travelling back and forth to Philadelphia today.

I neglected to mention yesterday in my discussion of merger & acquisition activity that AT&T (T) is buying Direct TV (DTV). This comes after the Comcast (CMCSA) acquisition of Time Warner Cable (TWC). I expect that consolidation to continue. Next on the auction block will likely be Dish Networks (DISH). It would take a large company to swallow Dish Networks. I would venture a guess that you might see Viacom (VIA) or Fox (FOX) in some deal for or with Dish Networks.

Dick's Sporting Goods Hit By Weakness in Golf and Hunting

Early today, so far, some retail earnings have hit the tape. They are not pretty. Home Depot (HD) appears to be negatively impacted by a late start to the spring. For what it is worth, my azaleas and rhododendron are first starting to show signs of getting ready to bloom. Normally, that occurs in early May. Dicks Sporting Goods (DKS), a stock I have owned personally and for clients since its initial public offering, is striking out after reporting disappointing results and guidance. The justification for the poor report and guidance is weak golf and hunting segments. Part of that weakness is certainly due to weather, while part is economic. As a longtime owner of the stock, I have seen the company hit by short term headwinds every few years. Urban Outfitter is also looking lower after missing results by a penny.

The Bounce in Small Cap Stocks Continues

In the meantime, the small cap bounce continues. Simply put, the small cap sector got too cheap as momentum traders fled for the safety of value stocks and are now being bought by patient money managers who see bargains. From peak to trough, the Russell 2000 (RUT) declined 10.74% and has since rebounded nearly 3%. So while the damage to some individual stocks may seem disastrous, on a macro basis we just had a correction.

Heading into the day, futures are straddling the closing prices of yesterday. I expect  a slightly lower open, followed by meandering and then a positive finish to the session, but nothing to get excited about in either direction.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DKS and UWM — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, May 19, 2014: Retail Earnings Reports Aplenty This Week

I guess that Astra Zeneca (AZN) thought that their company was worth more than $115 billion (70 billion GBP) and rejected Pfizer’s final offer. Astra Zeneca stock then tumbled over 10% in Europe after the company rejected Pfizer’s final overture. Pfizer shares look a bit higher as arbitrageurs unwind shorts in Pfizer.In the meanwhile, Deutsche Bank (DB) raised $11 billion in additional capital from existing shareholders and a Qatar investment fund. So, as you can see there is plenty of cash floating around for the right deals.

The S&P 500 (SPX) posted a second consecutive weekly loss. However, last week’s loss was negligible.  From the weekly lows on Thursday, the Russell 2000 (RUT) and NASDAQ 100 (NDX) led the markets higher. If the bid to techs and smaller caps can continue, then a reversal of recent trends of capital flow from growth to value will begin to reverse.

This week will be a little busy on the economic front. Tomorrow the FOMC minutes are released. Those always tend to get a reaction from traders and Fed watchers. Weekly initial claims, leading economic indicators and existing home sales will be released on Thursday. Finally on Friday, which should be a slow day ahead of the Memorial Day Weekend will see another market moved data point release, Durable Goods.

Busy Week For Retail Earnings Reports

There is a fair amount of earnings worth watching out for this week, especially in the retail sector: Monday - Campbell’s Soup (CPB), Urban Outfitters (URBN); Tuesday – Dick’s Sporting Goods (DKS), Home Depot (HD), TJX (TJX), Red Robin Gourmet Burgers (RRGB), Staples (SPLS); Wednesday – American Eagle Outfitters (AEO), Lowe’s (LOW), Hewlett- Packard (HPQ), Hormel Foods (HRL), PetSmart (PETM), Target (TGT), Tiffany (TIF) and Williams-Sonoma (WSM); Thursday – Best Buy (BBY), Aeropostale (ARO), Dollar Tree (DLTR), GameStop (GME), Gap (GPS), Ross Stores (ROST), Sears Holding (SHLD); Friday – Foot Locker (FL), Hibbett Sports (HIBB).

Last week's pair of bookends Wal-Mart (WMT) and Nordstrom (JWN) proved once again that the high-end consumer still has money to spread around.

Look For The Risk-On Trade To Reappear

I expect with a lack of economic data and earnings on today’s calendar that we will have a slow day. On Friday, I expect market participants to exit early ahead of the long holiday weekend. In between, Tuesday through Thursday the markets should be quite active. As I alluded to above, keep an eye on small caps and tech to see if the risk-on trade is coming back.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DKS and UWM — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, May 15, 2014: Retail Bookends Wal-Mart and Nordstrom Set to Report

The S&P 500 (SPX) poked its head over 1,900 but succumbed to profit taking, reversed lower and closed in the red for the day. Overall for the major indexes it was a rather orderly day. Once again the Russell 2000 (RUT) got hit hard. It fair to conclude that Monday’s rally was a one-day event without follow through.

Wal-Mart, Nordstrom and JC Penney Report Earnings Today

The main culprit could be retail. The hypothesis that weak macro data would not indicate weak micro data is still a work in progress. Macy’s (M) performed well but a troika of reports from Wal-Mart (WMT), Nordstrom (JWN) and JC Penney (JCP) will put the theory to a thorough test. First to note are the retail bookends. Wal-Mart (before the market opens) is an indicator of the lower end consumer while Nordstom (after the market closes) will tell us how the upper end shopper is spending. JC Penney is a special situation because that company and its stock are in secular decline. So, we will find out if JC Penney is turning around or if the bloodletting is still taking place there.

Ruling Over Net Neutrality Expected

Also on today’s agenda is an expected ruling from the Federal Communications Commission (FCC) on net neutrality rules. Net neutrality deals with the concept that internet speed and access should be egalitarian. However, what currently occurs is that the internet is segregated into an express lane of sorts where companies like Netflix (NFLX) can purchase faster access for its subscribers while other users remain in the slower local lanes.

Minimum Wage Strike

Lastly, a nationwide one-day strike of fast food employees will take place. Workers will demand $15 per hour minimum wages. This is not as easy a concept as people are led to believe. Most entry level workers get paid at minimum wage. As you gain experience you earn more wages. Furthermore, at casual dining or higher-end restaurants, many servers also earn tips which push those effective wages well beyond $15. Increasing the minimum wage will result in several offsetting actions: increasing prices; cutting back on labor hours; and/or replacing labor with technology. I know this first hand being the owner of From Bagels to Burgers in Lake George, NY. Between the increase in the New York State minimum wage (from $7.25 to $8.00) and higher food costs, I have had to raise prices on this year’s menu by as much as 11% for our more popular items. Speaking of From Bagels to Burgers, we are reopening for the summer season tomorrow. So if you are in Lake George, please stop by.

(We made some cosmetic changes to the LakeView Asset Management website on Friday, which I hope you will enjoy. On the bottom of My Gut Feeling you will see links to social networking sites. Please “like” us or share My Gut Feeling on your favorite social networking site. Also, don’t forget to join Scutify, the fast growing financial micro blogging site. My intra-day commentary on Scutify now feeds into In The Media on this site. Thanks ! – Scott)

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long UWM — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, May 14, 2014: Were April Retail Sales Really That Awful?

Despite underwhelming retail figures for April, the markets generally traded higher for the day, albeit modestly. However, it was more akin to last week’s action with minor movement for the headline indexes and a sour day for the Russell (2000). It was also enough to made new closing highs in the S&P 500 (SPX) and Dow Jones Industrials (DJIA). The SPX is within an earshot of the 1,900 level; which should be eclipsed today.

Retailers Earnings Are Likely to Contradict April Sales Data

As for those retail data points, there are several possible explanations. March data was revised higher which means that either March stole some sales from April, or we should expect an upward revision for April in a month's time. It is also quite possible that the Easter shift was less of a phenomenon than usual. With retailers set to begin reporting their most recent quarter's results (which ends in April) over the next few days, investors are of the opinion that the macro data will not be supported by the micro data. Of course, there will be some disappointments, Target (TGT) being the leading candidate. This hypothesis will be put to test when Macy’s (M) reports first thing in the morning.

Appearance on CNBC

My day was rather hectic, particularly as I scrambled to fit a late morning request to appear on CNBC in the afternoon. Don’t get me wrong, I appreciate being asked by CNBC to appear, as I enjoy doing so immensely.  It just caught me off guard, but I managed to make the drive back and forth to Albany from Lake George where I am setting shop for the week. The subject was: should Warren Buffett’s Berkshire Hathaway (BRK/a; BRK/b) takeover Kellogg (K)? I thank everyone for their positive feedback and concur with their not too kind remarks about the gentleman I squared off with. CNBC has posted part of the interview for which the link is here, so you can draw your own conclusions.

As for today, I expect that the S&P 500 will cross the 1,900 threshold. The questions are: what happens to those growth stocks today and was Monday a one day wonder? Reversion to the mean is not in straight line. We will get there; it is not a matter of if but when.

(We made some cosmetic changes to the LakeView Asset Management website on Friday, which I hope you will enjoy. On the bottom of My Gut Feeling you will see links to social networking sites. Please “like” us or share My Gut Feeling on your favorite social networking site. Also, don’t forget to join Scutify, the fast growing financial micro blogging site. My intra-day commentary on Scutify now feeds into In The Media on this site. Thanks ! – Scott)


My Gut Feeling For Today, May 13, 2014: Returning to the Mean

We broke out of the narrow range that the major indexes were trading in while the small and mid-caps staged an impressive rally. I expected a reversal of recent relative under performance and a return to the mean, but I did not expect that it would happen with such enthusiasm from opening to closing bell on Monday.

Strong Showing By Laggard Small and MidCap Indexes

The stocks that were hated the past six weeks were loved once again. That is at least for one day. As Shakespeare would say, “that is the rub.” We will need to string together more than just a one day advance for the more risky growth stocks. If we can do so, then the broad based rally than ensued last year can continue once again. So, it will not be enough for the Dow Jones Industrials (INDU) and S&P 500 (SPX) to make new highs as they did on Monday, but we will need to have the NASDAQ 100 (NDX) and Russell 2000 (RUT) do some heavy lifting as have Caterpillar (CAT) +16.9%, Disney (DIS) + 7.9%, Johnson & Johnson (JNJ) +9.7% and Merck (MRK) +10.5% done this year for the Dow Jones Industrials. Nineteen of thirty stocks in that senior market index have advanced this year. The same cannot be said for the NASDAQ 100 and Russell 2000.

Retail Sales Data For April is a Key Announcement For Today's Market

Retail sales and business inventories for April will be released today. I expect that the former data which is expected to increase by 0.6% (ex-autos) could deliver a positive surprise. If so, that will be more fuel to the fire for the bulls to follow up yesterday’s moonshot.

You should have been putting money to work last week as did I. If not, the time to nibble and put cash to work has arrived. However, before we get euphoric and declare victory for the bulls and put the bear and technicians back into their caves, let’s wait for the market to show us that it is ready for the next move. Then you can go all in.

(We made some cosmetic changes to the LakeView Asset Management website on Friday, which I hope you will enjoy. On the bottom of My Gut Feeling you will see links to social networking sites. Please “like” us or share My Gut Feeling on your favorite social networking site. Also, don’t forget to join Scutify, the fast growing financial micro blogging site. My intra-day commentary on Scutify now feeds into In The Media on this site. Thanks ! – Scott)


My Gut Feeling For Today, May 12, 2014: Crude Oil Trending Lower

+3; -17; +11; -3; +3. That was the daily changes for the S&P 500 (SPX) last week. All told the large cap index declined 3 index points or 0.14%. It was one uneventful week for the broad market. The Down Jones Industrials (INDU) tacked on 0.42% to close at an all-time high. The real damage was to the Russell 2000 (RUT) which declined 1.91%.

Normal Seasonal Divergence Occuring

Now, while all the bears are trying to spread the notion of market diversion, as an apocalyptical prophesy, we might be engaged in a normal seasonal asset allocation out of small cap stocks. As I pointed out on Scutify the other day, the MidCap 400 (MID) and Smallcap 600 (SML) indexes have diverged recently. This divergence tends to occur in April-May every year, only to revert to the mean. So while there may be some short term pain in growth and small cap stocks, patient investors will get rewarded in the long term.

The economic calendar is rather busy this week, except for Monday. Any data point release on this week’s calendar: CPI, retail sales, industrial production, housing stars / permits and/or Michigan consumer sentiment can be a market mover. There are a few interesting earnings such as Fossil (FOSL), Macy’s (M), Cisco (CSCO) and Kohl’s (KSS) but for the most part, that calendar is rather quiet. The IPO calendar is also quiet, so expect to hear more about Alibaba.

Without much news to report, the Ukraine referendum and political situation will continue to put bricks in the market’s “wall of worry.”  This is getting old real quickly. However, without any theme to move the market, in either direction, we could be on a financial treadmill and therefore not move much in the coming week.

Crude Oil Is Trending Lower

Instead, let’s keep an eye on the energy markets. Crude Oil – both WTI (West Texas Intermediate) and Brent have been trending lower after trading to a one-year high in April. With Memorial Day just around the corner, this trend could give consumers and vacationers a nice boost to begin the summer.

(We made some cosmetic changes to the LakeView Asset Management website on Friday, which I hope you will enjoy. On the bottom of My Gut Feeling you will see links to social networking sites. Please “like” us or share My Gut Feeling on your favorite social networking site. Also, don’t forget to join Scutify, the fast growing financial micro blogging site. My intra-day commentary on Scutify now feeds into In The Media on this site. Thanks ! – Scott)

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long UWM — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com


My Gut Feeling For Today, May 8, 2014: Love Affair with Utilities Continues

It was a weird day in the markets yesterday. The market opened lower as it appeared that shorts were trying to front run Janet Yellen’s testimony. Once her testimony began, the markets caught a bid, which clearly fouled up their strategy. As the day wore on, another round of selling took place. Then in the late afternoon buyers stepped up, as I expected they would, and drove the markets higher.

The Love Affair With Utilities Continues

However, once the dust settled, tech stocks took it on the chin again, albeit closing well of their lows. Furthermore, the love affair with Utilities continues. The Philly Utility Index (UTY) surged 1.60% and is up just over 13% this year, without dividends. This is where momentum is piling into as it extricates it capital out of tech. The only difference is that tech has growth in its future while utilities don't. I own both for different strategies. However, one has to wonder why Pepco Holdings (POM) is selling above its takeover price of $27.25. Utilities as flavor of the month will end but growth in technology is still quite alive. The former is a slow and steady strategy while the latter has a more volatile long term growth profile.

The hubbub yesterday was all about Alibaba. We are going to hear about this company and its IPO, ad nauseum, for the next few months. I remain on record as saying that in the long run this company could be the world leader in global market capitalization. Unfortunately, the news of Alibaba’s IPO dragged down Yahoo (YHOO) stock.

Today Apple (AAPL) went ex-dividend for $3.29 per share. That is cash in the bank, at least on May 15 when the payments are received. The stock price will be adjusted lower by the amount of the dividend on today’s market open.

Direct TV is in Talks to Sell to AT&T

In the economic world, the ECB will be announcing its rate decision and US weekly unemployment claims will be released. AT&T (T) is rumored to be in talks to purchase Direct TV (DTV). CBS (CBS) and Priceline (PCLN) will report results today. Early morning futures indicate an uncertain direction for the market open. We could be in for another teeter totter session. The hatred of technology may spill over into today’s session but the growth to value trade is starting to get long in the tooth.

Finally, the NFL draft is today. I predict that Texas A&M’s Johnny “Football” Manziel (no relation to Broadway star Idina Manzel) will be selected by the Cleveland Browns without help from Kevin Costner.  The Giants need help on their offensive line. Disney's (DIS) ESPN and the NFL Network will be winners with draft coverage. I will be in the road tomorrow and will return with more of My Gut Feeling on Monday.

(We made some cosmetic changes to the LakeView Asset Management website on Friday, which I hope you will enjoy. On the bottom of My Gut Feeling you will see links to social networking sites. Please “like” us or share My Gut Feeling on your favorite social networking site. Also, don’t forget to join Scutify, the fast growing financial micro blogging site. My intra-day commentary on Scutify now feeds into In The Media on this site. Thanks ! – Scott)

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, DIS, YHOO, POM & PCLN — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, May 7, 2014: Alibaba Files for IPO

The markets were rather boring for the first half of the day. By 1PM EDST, the S&P 500 (SPX) was nominally down. Then some sell programs hit the tape. You could tell it was sell programs because all categories of stocks – small cap, mid cap, large cap, technology, value, high dividend – were sold across the board. The justification for the sell-off was attributed to Twitter (TWTR). TWTR reported disappointing results a few days ago and the company's IPO lock-up is expiring. By 1PM that stock was down over 5%. It closed lower by nearly 18%. I think that justification was the lazy way of explaining the market. I have been in this business long enough to spot sell programs when they occur and that was what happened yesterday. Likely, pension plans were at work yesterday and are the real culprits. High Frequency Traders (HFTs) will also get blame because yesterday was the anniversary of the flash crash; but HFTs are only toll takers not position takers. Add to all of that a sprinkling of more Ukraine concerns.

Alibaba File for Initial Public Offering

The big news yesterday came after the close. Some of it was earnings related. Most of it was the filing of Alibaba’s initial public offering (IPO). Recall that Yahoo (YHOO) owns about 24% of the Chinese internet company and will sell about 40% of its holdings. Valuations for Alibaba range from $100 billion to $200 billion. Alibaba is a combination of Ebay (EBAY), Google (GOOGL, GOOG) and Amazon.com (AMZN), plus a few other companies. On the scale of the Chinese economy and the world perhaps, this could turn into the largest market capitalization company in the world. We have several months until Alibaba does go public, so expect plenty of analysis, commentary and even hyperbole along the way. I have yet to read the filing but plan to do so when I have a chance.

Earnings were excellent for Walt Disney (DIS) and lousy for Whole Foods (WFM). Luckily we have an investment position in Disney in our growth portfolio and just a small trading position in Whole Foods for our Food & Restaurant portfolio. This is the third consecutive poor earnings report for Whole Foods. Put simply, Whole Foods is no longer the only source of fresh and organic products for consumers. I will take my lumps on Whole Foods and move on. My price target for Walt Disney is $90.

Janet Yellen to Speak Today

There are no economic releases today but FOMC Chair Janet Yellen will be speaking on Capitol Hill, so that will catch some attention. I hope that she has learned how to speak publically and will stick to the FOMC’s recent statement. The earnings calendar is rather deep but uninspiring.

I am going to classify yesterday as a one day blunder and expect a mild rebound today as the market regains its footing. The technicians will be declaring a downtrend, the bears will be saying here comes the “big one” and the investors will be gobbling up stocks that still look attractive.

(We made some cosmetic changes to the LakeView Asset Management website on Friday, which I hope you will enjoy. On the bottom of My Gut Feeling you will see links to social networking sites. Please “like” us or share My Gut Feeling on your favorite social networking site. Also, don’t forget to join Scutify, the fast growing financial micro blogging site. My intra-day commentary on Scutify now feeds into In The Media on this site. Thanks ! – Scott)

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long GOOG, GOOGL, YHOO, DIS, WFM — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, May 6, 2014: Apple Closes Above $600

On Monday the markets opened lower, rebounded after the April ISM Services report came in much stronger than expected and well above March levels. There was no big news yesterday, so the departure of Target’s (TGT) CFO captured the headlines. All said, the markets traded in a rather tight range and ended marginally higher for the session. As Monday’s go, it was what the doctor ordered. Both value and growth caught bids.

Apple Closes Above $600 for the First Time Since 2012

An interesting highlight came from Apple (AAPL). Apple traded at $600 for the first time since November 1, 2012. The stock managed to close above 600 for the first time since October 26 of the same year. Mark your calendar as Apple goes ex-dividend on Thursday. In other words you have to own Apple stock by tomorrow's market close to be eligible for the dividend.

The type of market we had yesterday was very conducive to making some portfolio changes. I took some rather hefty profits in Blackstone Group LP (BX), which follows up on similar profits we took a few weeks back in Apollo Global Management (APO). The level of IPOs in general and the recent  IPO of another private equity company, Ares Management, LP (ARES) told me that we ought to get on the sidelines for this sector. With the proceeds of the Blackstone sale, I started positions in Rite Aid (RAD) and added to existing positions in Yandex (YNDX). Yandex has been hit by the cat and mouse game going on over Ukraine but found a bottom in the last few days and has an excellent long term outlook;  if you have some patience.  My price target for Rite Aid is at least $10.

Disney and Whole Foods Lead Earnings Reports Today

Today, the economic data is limited to the March trade balance report. This is old data, back from the winter and usually not a market mover. Earnings reports are concentrated after the market close with Activision Blizzard (ATVI), Allstate (ALL), Disney (DIS), Whole Foods (WFM), Chuy’s (CHUY), Potbelly (PBPB) and Walt Disney (DIS) reporting results. Apparently, Papa John’s Pizza (PZZA) did not report yesterday and will do so after today’s close.

The markets look to open flat to the downside today. We could have another teeter totter day like yesterday where we open lower and trend higher. Overall though, I expect another slow day.

(We made some cosmetic changes to the LakeView Asset Management website on Friday, which I hope you will enjoy. On the bottom of My Gut Feeling you will see links to social networking sites. Please “like” us or share My Gut Feeling on your favorite social networking site. Also, don’t forget to join Scutify, the fast growing financial micro blogging site. My intra-day commentary on Scutify now feeds into In The Media on this site. Thanks ! – Scott)

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, RAD, YNDX, DIS, WFM — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com


My Gut Feeling For Today, May 5, 2014: Cinco de Mayo Features Food and Restaurant Earnings

A positively constructive April payroll report last Friday was fraught with several internal inconsistencies. This resulted in a mixed market as traders and investors found reading the report’s tea leaves rather blurry. Also contributing to the mixed market was profit taking ahead of the weekend and following a third weekly advance for the S&P 500 (SPX). More importantly, the NASDAQ 100 (NDX) is beginning to attract cash flows and outperform the broader market. If that continues, then the SPX which ended the week at 1,881.14 could be led higher such that it will leap over the 1,900 level. I call it 50/50 that it happens this week and more likely by Memorial Day.

Today we wake up to more disappointing PMI data out of China. We have to recognize that China is still growing but at lesser rates than in the last decade. From an economic and mathematical perspective, this is to be expected. Also, Target (TGT) announced that its CEO will step down. This comes a week after the company made a major hire to beef up its credit card technology. For a change, pre-market futures on a Monday are headed lower. This will help to avoid the disappointing Monday morning fade which occurs after strong Monday openings.

Busy Day for Food and Restaurant Stocks

While earnings flow will slow down; several earnings reports of interest will be out this week. On today’s calendar are reports from Pfizer (PFE), Occidental Petroleum (OXY), Papa John’s Pizza (PZZA), OPKO Health (OPK), Sysco (SYS), Texas Roadhouse (TXRH) and Tyson Foods (TSN). As you can see, someone like me who follows the food, restaurant and related industries will be busy. May I suggest, as today is Cinco de Mayo, that you enjoy a burrito at Chipotle Mexican Grill (CMG) and a cold Dos Equis cerveza.

Don’t party too much for Cinco de Mayo. Jack Bauer (Keiffer Sutherland) returns to Fox (FOX) after a four year hiatus in 24: Live Another Day. However this time, the clock will be sped up into 12 episodes. I hope that this installment of the series will answer the questions I have had since the series began in 2001, namely, will we see Jack ever enjoy a meal or use the men’s room?

(We made some cosmetic changes to the LakeView Asset Management website on Friday, which I hope you will enjoy.On the bottom of My Gut Feeling you will see links to social networking sites. Please "like" us or share My Gut Feeling on your favorite social networking site. Also, don't forget to join Scutify, the fast growing financial micro blogging site. My intra-day commentary on Scutify now feeds into In The Media on this site. Thanks ! - Scott)

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long OPK, TSN, TXRH  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
– Read Scott’s intra-day thoughts and comments on Scutify
– You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, May 2, 2014: Markets Poised to Make New Highs on Labor Report

Sorry about yesterday. The massive rains on Wednesday (on top of my normal schedule) kept me busy all day and night and then I had an early morning breakfast meeting at the university on Thursday. Luckily we did not get flooding but many homes throughout New Jersey did. On Wednesday after the FOMC announced its rate and policy decision, the market advanced modestly with the Dow Jones Industrials (INDU) setting a new all-time high. On Thursday the markets marked time ahead of today’s monthly labor report. The market is expecting 210,000 non-farm jobs being added to the economy in April.

The flow of economic data, the FOMC’s recent statement and Janet Yellen’s commentary all continue to confirm that the winter weather had an unexpected adverse impact on the economy and pent up demand for goods, services and labor will result in greater than average expansion in the second quarter. Overall, I expect that when you smooth out economic activity in the first half of the year, growth will be back to the modest trend that we have been experiencing.

Casino Business Getting Stronger

Data was released and reported by Reuters stating that Macau gambling revenue rose 10.6% in April. This should bode well for the two major American casino chains that have operations there: Las Vegas Sands (LVS) and Wynn Resorts (WYNN). Have you heard about the tussle going on between Steve Wynn and George Clooney?  It is conservative business versus left wing Hollywood. However, reports of Clooney’s being publically drunk are beginning to appear. With the money that Wynn and peer Sheldon Adelson have, it would not surprise to me to see the 2016 RNC convention in Las Vegas. No matter what you may think, Las Vegas Sands and Wynn Resorts are good bets to have in one’s portfolio. Those stocks should rise today on the Macau news.

Adding to Stock Purchase Plans

On Wednesday I wrote about the Exelon (EXC) takeover of Pepco Holdings (PEP) and my history of investing in dividend reinvestment plans (DRIPs) in a Talmudic version of My Gut Feeling. I decided to reinvest the proceeds of the sale of my Pepco shares into three other plans which I set up on Wednesday: Altria (MO), Realty Income (O) and UPS (UPS).

The employment report is going to drive today's market action. A better than expected report, which is quite possible, will help send markets to new highs. A lesser than expected report will give the bears another breath of life. I am expecting a Goldilocks reports – not too hot not too cold. – but one which proves true the economic thesis I have been espousing and outlined once again above.

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long LVS, EXC, POM, MO, O, UPS  — although positions can change at any time.
LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
- Read Scott’s intra-day thoughts and comments on Scutify
- You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, April 30, 2014: A Lesson From the Book of Dividends

Today’s lesson is from the Book of Dividends, a lesser known but vitally important piece of scripture written by the ancient Israelis and kept in a secret secure location for centuries.

My paternal grandfather died in 1980. As he was predeceased by my father, I was left a modest amount of money which I received about a year later. Some of that money was already in the form of bonds which eventually went to the down payment on my first house. The lesser parts went into the stock market. At the time, there was a tax regulation which exempted dividends from electric utilities for tax purposes. So, I bought 100 shares of Philadelphia Electric at $14.38 per share. I then immediately placed those shares into the company’s dividend reinvestment plan or DRIP.

DIVIDEND REINVESTING ADDS UP

The reinvestment of those dividends quickly added up. By 1989 those original 100 shares become nearly 250 shares just through dividend reinvestment. Over time I added smaller amounts of money (a total of about $2,000) to that company's DRIP. Philadelphia Electric become PECO Energy and then in 2000 merged with Unum to become Exelon, the nation’s largest nuclear power producer. In 2004 Exelon spit its shares 2 for 1. By 2006 I had about 1,400 shares (after gifting 50 shares to my youngest brother for his college graduation). I sold a little bit after then (I would note most near Exelon’s all-time high) to buy some investment real estate and renovate our kitchen but still continued to reinvest dividends. The stock price rose and fell over time but I still have over 1,000 shares.

I also diversified into the DRIP plans of other companies along the way such as: Northeast Utilities (NU) in 1982 (just after that first Philly Electric purchase); Southern Company (SO); Duke Energy (DUK) and Progress Energy which merged a few years ago; and Pepco Holdings (POM), building up a nice portfolio of utility DRIPs along the way. I would note that there were others, some of which were taken over, some of which I sold and some others I still hold. A few years ago, I diversified once again, this time into non-utility stocks such as Pepsi (PEP); McDonald’s (MCD) and Caterpillar (CAT).

EXELON TO PURCHASE PEPCO FOR $27.25 IN  CASH

This morning we wake up to news that Exelon is purchasing Pepco Holdings for $27.25 per share in cash. I will be on the hunt for more DRIPs to put that cash into.

Computershare , Bank of NY Mellon (BK) and Wells Fargo (WFC) are three of the largest DRIP custodians / agents, although there are others as well. You can search the site of those service providers or the shareholder services / investor relations site of most companies for more information as to how to get started.

And to this we say …. Amen

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long EXC, POM, NU, SO, DUK, PEP, MCD, CAT — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com

 


My Gut Feeling For Today, April 29, 2014: I Don’t Like Mondays

All that I could think of yesterday for most of the session was the Boomtown Rats’ song “I Don’t Like Mondays.”  They were shooting the whole day down.

A Day of Pain and Pleasure But Mostly Pain

A positive opening quickly brought on the tech and growth haters who sold the market off hard. Eventually buyers stepped up to drive the markets back into the green, but it was not fun. NASDAAQ and small cap stocks ended in the red but well off the lows of the day. It seems that every time the bears get a little traction, the smart large money pool managers put their bundles of cash back to work. Still, by the end of the day, there was still pain to be felt for the growth oriented investors and pleasure for the value/dividend crowd.

Apple Surges BofA Reneges

Apple (AAPL) was the star performer; rising nearly 4% for the session, making that new 52-week high that I expected and closed about 6 points within $600. Bank of America (BAC) was the goat; declining over 6% as the company was forced to renege on its plan to raise dividends and buyback shares after making a mistake on its capital calculations included in the recent banking stress test.

Buffalo Wild Wings (BWLD) was a winner in the growth stock arena rising 5% after hours in reaction to better than expected earnings results and increased forward guidance. Today earnings season continues with companies of interest such as: 3D Systems (DDD), Archer Daniels Midland (ADM),  Bristol Myers Squibb (BMY), EBay (EBAY), Coach (COH), Marriot (MAR), Seagate (STX) and US Steel (X) all set to report.

Is the growth sell-off getting long in the tooth? Perhaps it is, but the proof will be in the pudding. If Apple can turn from laggard into leader as it is trying to do then we might finally get money flowing back into techs and NASDAQ in general for more than just one session, or part thereof.

You can find my interview on Bloomberg Radio from last Friday on site’s On The Radio Page. It is the last thumbnail on the bottom.

 

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, BAC and BWLD — although positions can change at any time. 

 LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                   

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, April 28, 2014: Mergers & Acquisitions Should Trump Putin

In the first quarter the markets were obsessed with the brutal winter weather. Now in the second quarter, the markets are obsessed with the battle of wills and words between Russian President Vladimir Putin and the USA and Europe. What this does is to feed the fear factor of traders and obfuscates the positive aspects of the market such as strong first quarter earnings and increasing merger and acquisition activity. Those strong first quarter earnings have put the winter weather worries to rest.

Mergers & Acquisitions Will Fuel Next Leg of Bull Market

Speaking of merger and acquisitions, this morning, Pfizer (PFE) proposed purchasing the United Kingdom’s AstraZeneca (AZN) for nearly $100 billion. Furthermore, General Electric (GE) is not giving up on its desire to purchase France’s Alstom. Not only has Siemen’s apparently gotten into the fray but GE Chairman Jeff Immelt met directly with France’s President Hollande this weekend to discuss the proposal. So while the market might be fretting about the level of social networking and tech IPOs that have recently hit the market; rest assured that more stock is coming out of the market as acquisition activity has heated up. As stock comes out of the market, cash comes in. That cash will then buy shares of other companies’ stock feeding another round of bullish activity.

Apple Set to Make New High

After another ugly tech market on Friday, the merger and acquisition activity is taking attention away from Putin and futures are indicated higher. Apple (APPL) after reporting strong earnings last week is back on track and could make a new 52-week high today. I think  once Apple hits $600 it will begin to attract momentum buyers  again and could rise to an all-time high. As it now stands, Apple is only up about 2% for the year.

On Friday, I went to the New York International Auto Show after which I appeared on Bloomberg Radio with Carol Massar and Pimm Fox. A podcast of the show will be loaded to the LakeView Asset Management website later today and I will provide a link tomorrow.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website.                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, April 24, 2014: Markets Paused Before Apple Surges

On what would have been a seventh day of a winning streak, the equity markets decided to take a Sabbath Day and rested. Despite a slew of positive pre-market earnings beats, the equity markets reacted negatively to new home sales data. For the most part though, the markets paused while waiting for Apple (AAPL) and Facebook (FB) to report results after the market closed. Then those two the two technology companies reported stronger than expected results and the fun began.

Apple Boosts Dividend and Splits Stock

It was Apple that really stole the show. The company earned $11.62, 14% better than consensus estimates of $10.17. Contributing to those strong results were iPhone sales which increased to 43.7 million units versus expectations of 37.7 million units, thanks to sales in China though a recent deal struck with the country’s largest carrier, China Mobile (CHL). But that was not all. Apple also announced that the company would: increase its share buyback program to $90 billion from $60 billion; increase its quarterly dividend by 8% to $3.29; and, split the company’s stock 7 for 1. Furthermore, the company hinted that new products and product upgrades would roll out later this year, including a larger screen iPhone, an enhanced Apple TV box, and a watch. Shareholders were rewarded with an 8% jump in the price after hours.

 

The significance of a stock split is normally psychological and cosmetic. However, in Apple’s case it has greater significance. First, with the stock at $566, it is still a pricey stock, from an absolute perspective, for most individual investors to own. Splitting that stock to about $80 will allow more individuals to purchase the shares and expand holdings across a greater base of shareholders. On a relative basis, the stock is still cheap selling at less than the market multiple. Furthermore, a split of Apple as announced would for certain, guaranty that the company would, in the future, be included in the Dow Jones Industrial Average Index (INDU). Given the way in which the Dow Jones Industrial Average is constituted, every stock is represented on a price weighted basis, i.e. every company contributes one share of stock to the index. By my calculations; currently, Apple would be the largest weighted stock in the index at close to 20%, compared to the now highest weighted stock, Visa (V) at just over 8%. Post spilt, once Apple is part of the index, it would be in the middle of the pack with about a 3% weighting as is for Proctor & Gamble (PG).

So, for today, we can expect that Apple and Facebook will lead the market higher, especially the downtrodden tech laden NASDAQ (NDX) Index. Also today weekly unemployment claims and March’s durable goods orders will be released. More earnings are on the calendar but they pale in comparison for excitement to those on Wednesday. The most interesting reports will come from Caterpillar (CAT) and United Parcel Service (UPS).

Scott Rothbort to Appear on Bloomberg Radio

Tomorrow I am crossing the Hudson to experience the New York International Auto Show. Then in the afternoon I am headed to the East Side to Bloomberg Studios where I will be a guest on Pimm Fox’ Taking Stock Show on Bloomberg Radio. While I don’t have an exact time for my appearance, the show airs from 3 to 5PM. You can tune in on AM 1130 in the NYC area, on a Bloomberg Terminal page BBR, on Sirius XM satellite Radio or on the internet at http://www.bloomberg.com/radio/

Have a great weekend; I will be back on Monday.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL and FB — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, April 11, 2014: Just a Correction, Not a Bear Market

The bulls fumbled the ball just as they got it, giving the bears ample opportunity to rout the market again. There was no real news to support any selling. Instead we actually got some positive news from the weekly jobless claims. It just seemed that bond buyers were active, biotechs continued their decent and took the rest of the equity market lower.

From the Mailbag

I asked readers to send some questions for me to answer.  Here are a few:

  1. Are we going to get a 15% correction to get in the markets?
  2. There are several questions in one here. First as to the correction. We will likely get a correction, the magnitude of which is uncertain. It is likely in the 5 – 10% range, for which we might already be in the process of as the S&P 500 (SPX) is 3.39% below its intra-day and all time high set last week. It just seems to feel worse than that right now because of the larger decline in the NASDAQ 100 (NDX) of 6.70% from its high in March. A correction of greater than 10% is not likely unless there is an exogenous event (i.e. earthquake, political problem, war, etc.) or the FOMC unexpectedly raises its Fed Funds rate. The second part of the question is saying that you are on the sidelines unless and until we get a 15% or greater correction. That might keep you waiting forever to get into a market that could run away from you. Develop a portfolio of good stocks and stick with them while constantly doing your homework on those very same stocks. Most of all don't get caught up in short term market fluctuations as investing is for the long run. Just ask Wharton Professor, Jeremy Seigel who even now sees the market in the midst of a healthy rotation. In the interest of full disclosure,, I am a Wharton graduate. Lastly, predicting market tops and market bottoms is a fool’s errand, so I suggest that you don’t attempt to do so.
  3. What is your price target for Apple (AAPL)?
  4.  The short answer is $640 for the end of this year. The long answer is that this company is still growing and sells for less than the market multiple. In the third year of this quarter Apple will be rolling out new products that will generate another wave of product and stock buying.
  5. What will make you bearish on the market? (this question in one form or another came from several people )
  6.  I begin my view of the markets from a macro perspective, i.e. the economy. From there I drill down to the micro, individual companies, sectors or asset classes. As for economy, while it is growing in the US, it is growing at a modest pace. I expect that within the next year we could achieve escape velocity and begin to grow at a more normal pace. There are five major macro factors which must come together to indicate that we are headed into a recession or bear market. They are:
  1. An inversion of the yield curve. We are nowhere near that right now with the 2/10 spread (the difference between the 2-year and 10-year US Treasury is now 2.28%. My good friend and colleague Tony Dwyer looks at the 6 month / 10 year spread which is currently wide by 2.58% and is further from inverting.
  2. Net job losses for two consecutive months. While job growth is barely above the rate of population growth, nevertheless it is still positive by well over 100,000 non-farm jobs on average every month.
  3. Declining corporate profits. Profits are now growing at a modest pace but that should accelerate. The stock market is leveraged to small increases in corporate profit growth.
  4. Decline in credit market demand. While that is related to my first factor in this list, it is not necessarily the same concept. The cleanliness of corporate balance sheets is allowing them to issue debt at historic cheap rates. Pension demand for credit issuance remains unabated.
  5. Once the market multiple for the SPX exceeds extreme levels of about 20 to 21 where prior bear markets have begun. It now sands at around an average level of 16 to 17, depending on your calculation of earnings.

Thus, unless the above begins to materialize, or a major exogenous event occurs, the bull market in stocks will remain intact and declines will just be normal pullbacks / corrections in a bull market

Banks Report Earnings

As for today, both JP Morgan Chase (JPM) and Wells Fargo (WFC) reported earnings. JPM is trading about 3.5% lower in the pre-market after that bank reported lower than expected results. The causes seems to be lower trading profits, thanks to the Volker Rule and FOMC tapering; a decline in mortgage originations; and, continued payment of fines to the Federal government, the later which uses JPM as its piggy bank. WFC reported a record for quarterly net income bettering Wall Street expectations and is trading fractionally higher in the pre-market. Wells Fargo is the biggest mortgage originator in the nation. The bank reported mortgage loan originations of $36 billon which was down from $50 billion in the prior quarter. Mortgage applications also fell to $60 billion from $65 billion. The company’s mortgage pipeline does look brighter at $27 billion at the end of the most recent quarter compared to $25 billion at the end of 2013. Is it just possible that the winter weather had a role to play in the mortgage figures across both companies? I believe so. Expect to hear the same when other banks like Bank of America (BAC) report next week.

So, with the sell-off yesterday and the slump in JP Morgan Chase shares, pre-market futures are indicated to be off in the range of ½% to ¾%. There is more going on in my opinion. Next week is a big holiday week with Passover taking up Monday evening through Wednesday night and coincides with Holy Week ending in Holy Thursday and Good Friday. It is what I call a B-Team week where many schools are off and the A-Teamers take time off. The A-Team is likely to be front running the slow holiday week trimming positions ahead of the holiday week before leaving the B-Team in charge.

As for me, I will be taking the week off from writing to celebrate Passover but also because my daughter is scheduled for back surgery. I will restart publishing My Gut Feeling on Monday April 21. My best wishes for a Ziessen (sweet) Pesach and Happy Holiday to all.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BAC — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, April 10, 2014: Markets Befuddled by FOMC

For the most part, the markets on Wednesday were a photocopy of the markets on Tuesday. However, once the FOMC meeting minutes were released at 2PM, the buyers stepped up. The reason was that the FOMC meeting minutes were far more dovish from an interest rate perspective than we were led to believe by the commentary Janet Yellen provided, during her press conference three weeks ago, just after the meeting was actually held. In the fullness of time, we have come to realize that Yellen was inexperienced at the game. That is sure to improve over time. I recall Ben Bernanke having to learn the ropes as well early in his tenure as FOMC Chairman.

If we look at the videotape, and cut through all the bull poop, it is apparent that the recent tech and high growth sell-off likely had its roots in Yellen’s original comments. The green shoots of the last two days were sprinkled with high potency fertilizer today and the same stocks that were hated in the last week were loved once again on Wednesday.

More IPOs Priced

The Zoe’s Kitchen (ZOES) IPO was not priced Wednesday but should likely do so today. I would not pay more that $21 for ZOES in the post-IPO after market. Ally Financial (ALLY) did price its IPO at the bottom of the expected range.  Blackstone (BX) launched its IPO for La Quinta Holdings (LQ), a hotel chain. The stock traded below the IPO price but closed above. As long as the market can continue to absorb the IPOs coming off of Wall Street’s conveyor belt of deals, the market will be strong. Once the market begins to reject deal en masse, we could be in trouble. I do not expect that to occur in the foreseeable future.

Risk is Back On

So after a solid follow through yesterday, the market is starting to get back its mojo. With the FOMC on the side of the bulls – both credit and equity – we are poised to make another run at highs for the S&P 500 (SPX) and Dow Jones Industrials (INDU). The offense is back on the field and it looks like they want to control the ball once again.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BX — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                    

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, April 9, 2014: Alcoa’s Earnings Point to Economic Growth

Monday’s green shoots sprouted a little more on Tuesday. There was more breadth to the advance and I would note that the market held its positive tone after an early morning attempt to fade the market was repelled. The best news of the day was that tech and NASDAQ stocks outperformed other sectors and the relentless buying of safety value stocks seems to be abating. Today’s opening is indicated higher with techs and NASDAQ set to take a leadership role.

An Economic Expansion is on the Horizon

After the market closed yesterday, Alcoa (AA) unofficially began earnings season. The earnings season kicks off in earnest when the money center banks commence reporting on Friday. Not only did Alcoa report better than expected results, for seemingly the first time since my Bar Mitzvah, but the stock advanced after-hours and appears to be holding that bid in today pre-market. The important take away from Alcoa’s earnings report is that the company indicated that slack in the aluminum market has dissipated. This indicates that the automotive, aerospace and construction industries are all driving material demand. Hence, one can conclude, that there is an economic expansion on the horizon. I would not be a buyer of Alcoa off of this news but would focus more on the industrial companies who will benefit from end user demand.

Zoe's Kitchen IPO Set to Be Priced

Following up last week’s successful  initial public offering  from GrubHub (GRUB) comes Zoe’s Kitchen (ZOES) IPO which is supposed to price its shares after the market closes today. I read through the company’s S-1 filing with the SEC ( that is the kind of boring yet important stuff that investment advisors do ). The company’s financial results have been drained by debt service that the company incurred to expand its operations. The proceeds of the IPO will wipe out that debt, help the company to expand further across the country and improve its financial results and condition. I would be a buyer of ZOES at a reasonable price. The stock is expected to be priced at $13 – $15.

So for today, let’s take what the market gives us. A solid follow through to yesterday’s session is what we need to firmly establish that the equity markets are on the mend from the recent spate of flu that it endured.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long GRUB — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, April 8, 2014: Green Shoots for High Flyers

The markets opened lower, attempted to rally but that did not last long. The S&P 500 (SPX) has now experienced its worst 3-day decline since January and the Nasdaq its worst 3-day drop since 2011. Once again, tech and growth stocks took it on the chin. I know it sounds like a broken record but we are just in the midst of an adjustment process.

Evidence of Green Shoots

There was evidence of green shoots. The most overvalued stocks, which have sold off the most, biotechs and high flyers, such as Netflix (NFLX) and Facebook (FB) exhibited signs of bottoming. In fact, they all closed in the green. Unfortunately, the high flyers have taken the rest of the market along for the ride to the down side. The utility stocks cannot lead this market much longer, and they won’t.

So for now, we will keep the defense on the field but we won’t be trading away our offense for any future draft picks. We just have to let this market adjustment process run its course, which can be a frustrating process .In other words, just let this play out and stick to your guns.

Earnings Season to Begin Friday

Otherwise, there is nothing to really sink our teeth into these next two days. Earnings won’t begin in earnest till Friday and we will have some worthwhile economic data releases Thursday and Friday.

Congratulations to the Connecticut Huskies men’s basketball team on their NCAA championship. They were too much for the younger, less experienced Kentucky Wildcats. Tonight the Lady Huskies try to duplicate the effort.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time. 

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com

 


My Gut Feeling For Today, April 7, 2014: Growth Stocks Are on Sale

The strong start last week went for naught as the end of the week resulted in a disconcerting sell-off across all equity markets. Once again, the major damage was to the growth and technology sectors.

Growth Stocks are Bargains

All of a sudden, growth stocks have become value plays. Let me explain. There are several ways to look at stock valuation from a price perspective. One such valuation, and a primary one, is that of Price to Earnings multiple of PE. This tells us how much the market is willing to pay for every dollar of earnings for a stock. Some stocks have low PE ratios because they tend to slow growers and pay high dividends.  Other stocks have high PE ratios because they tend to be growing faster and pay little or no dividends.

Yet, PE ratio does not factor in earnings growth for a company. Hence we use a second price based stock valuation which takes into consideration both the PE ratio and earnings growth. This is referred to as the Price Earnings to Growth ratio or PEG. By using this we can: 1) normalize all companies based on earnings and growth and 2) determine which stocks are too pricey and which are cheap.

In general, a stock with a PEG ratio at or less than 1.0 is a bargain. Those with a PEG of 2.0 or greater are risky. Typically, you can expect a PEG somewhere in between with 1.5 being a reasonable PEG ratio. Using this tool, we can separate the highflying momentum stocks (most with PEG over two or in some cases negative earnings) from true growth stocks.

With the recent market disdain for stocks, many growth stocks have been pushed into sub 1.0 PEG levels, especially in NASDAQ. Take Google (GOOGL) for example. The company’s stock sells for PE 20; has a two year earnings growth rate of 21% per annum; which equates to a PEG below 1.0 (0.95 to be exact). For a growth stock, and GOOGL is one, this is a gift.

So while these sell-offs may sometimes be irrational and about as fun as standing naked in a hail storm, they will pass. I have seen plenty of such behavior in the markets in my thirty years in the business. Over long periods of time, growth stocks will lead your portfolio higher. Unless we are going into a recession, or the winter continues into August, there are great opportunities all around, many of which we own and others which we will pick up. However, you cannot put a price on patience and that is exactly what you need in these markets.

Disney's Captain America Sets Box Office Record

After Grub Hub (GRUB) went public, we picked up some stock for our Restaurant & Food Chain Portfolio. Disney’s (DIS) Captain America: The Winter Soldier set an April box office record for an opening weekend with $96.2 million in sales. That does not even count the popcorn, M&Ms and soda that were also sold. I expect that Disney shares will benefit from that flick.

In another sign that spring is here, my son and I went to Home Depot (HD) yesterday. It was like Macy’s (M) on Black Friday.

Friday had all the feeling of a panic sell-off. As for today, the opening should see some follow-through selling as retail investors got worried over the weekend and entered sell orders at the open. Taken together, we are setting up for a rebound which should get the market back on track for a run higher.

Kentucky over Connecticut

It will be Kentucky versus Connecticut in tonight’s NCAA Men’s Basketball Championship game. This is a hard game to pick. Both teams have beaten much stronger and higher ranked opponents to get to tonight’s final game. The Wildcats of Kentucky have five freshman starters whereas The Connecticut Huskies are more experienced and have one of the top if not the top guard in the nation, Shabazz Napier. The Vegas Odds are Kentucky minus 2 1/5 points. Gun to my head, Kentucky wins but does not cover the spread.

Please continue to email me your queries related to the markets or economy at scott.rothbort.lakeview@gmail.com and I will compile the questions and answers for publication later this week.



My Gut Feeling For Today, April 4, 2014: Here Comes Captain America

The markets rose to a new high on Wednesday only to be met with some consolidation on Thursday, ahead of today’s labor report for the month of March. That is going to be the big story today. Economists expect the US to generate 200,000 non-farm jobs in March. Look for upward revisions in past numbers. The real question is whether or not employers began to ramp up hiring as the winter weather began to abate in anticipation of spring and summer demand? It certainly makes logical sense but the way in which the labor data is collected makes prognosticating the results to be a crap shoot. Many people believe that the jobs report is just a fabrication.  All I know is that we will get some knee jerk reaction to the report. If it is good then stocks will trade higher, because for the stock market that is the path of least resistance. It will take a really horrible report to knock stocks down.

GrubHub IPO Priced

I will have my eye on GrubHub (GRUB) the online / mobile restaurant order and delivery  company which priced its initial public offering at $26. I think this is a stock worth holding in our Restaurant & Food Chain portfolio and could nibble on it after it opens for trading.

 Google Split Confuses Market

Google split itself into two classes of shares, Google Class A (GOOGL) and Google Class C (GOOG) yesterday. In the process, this caused much confusion in brokerage accounts and in the markets. So, if you owned 1 share of the old Google you now own 1 share each of GOOG and GOOGL. Unless you want to waste transaction costs, it is not worth consolidating all holdings into one class of shares. Instead, the trick is to buy Class A when you desire to add to and sell Class C when you desire to cut your exposure to Google.

While the markets have had a good week, tech and small cap stocks are still lagging. If you are looking to add exposure to the market I would do it there as eventually the laggards will become leaders.

 Disney Releasing Captain America Sequel

Disney’s (DIS) latest installment of its Marvel Captain America series will be released today across the country. I expect another blockbuster for Disney (DIS) and will have to watch the first Captain America again before going to see the sequel with my son.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DIS, GOOG and GOOGL — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, April 2, 2014: Looking for Dow Theory Confirmation

We got just what the doctor ordered and then some yesterday. April began with a strong start, enough to vault the S&P 500 (SPX) to an all-time high. Was it not just a week ago that we were preparing for another crash? Furthermore, the Dow Theory cognoscente are getting all lathered up as the Dow Jones Transports (DJTA) hit an all-time high and the Dow Jones Industrials (DJIA) is within a few points of making an all-time high of its own. If, according to Dow Theory, both of these indexes make and hold all-time highs, it would be the stock market equivalent of getting three triple bars at a slot machine.

Need Small and Mid Caps to Make New Highs

While I would welcome the Dow Theory signal coming true (why not?), on the other hand I would prefer to see the more growth oriented and “risk-on” S&P Midcap 400 (MID) and Russell 2000 (RUT) also make all-time highs. The Midcaps are three index points away while the Russell 2000 has a little bit more work to do, needing to rise 2.03% to accomplish that feat. I expect it will and continue to hold the ProShares Ultra 2000 (UWM) ETF as a portfolio overlay.

I listened to the General Motors (GM) CEO Mary Barra’s testimony on Capitol Hill. While the company went through bankruptcy reorganization, the company’s culture did not. General Motor's stock remains in the dog house and I would not touch it.

Getting Ready for Labor Reports

Today’s ADP (ADP) report will give us a glimpse into March's labor report which is scheduled to be released on Friday. Economists expect the ADP report to say that 195,000 jobs were created in February. Also on the agenda, are earnings from Monsanto (MON), the agricultural chemical and seed manufacturer.

Within the next few days we will begin to get some pre-earnings warnings from companies that are expecting to disappoint the market. That process should last about a week until earnings season kicks into high gear when the money center banks begin to report at the end of next week.

As for today, I am expecting mildly positive follow through from yesterday’s market move higher though it is likely that we will swing between gains and losses for most of the session.

Please continue to email me your queries related to the markets or economy at scott.rothbort.lakeview@gmail.com and I will compile the questions and answers for publication next week.

__________________________________________________________________________________

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long UWM — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, April 1, 2014: Fragile Psyche of the Market in Need of Repair

Not only did the markets manage to close the month and quarter with a positive session but it also managed to put in its fifth straight winning week. Despite the ups and downs of the quarter, the S&P 500 (SPX) and NASDAQ 100 (NDX) both managed to post advances for the quarter. However, it was by many measures a frustrating quarter with growth taking a back seat to income. The first quarter was so bizarre that utility stocks were market leaders. The cost of the excessive wintry weather and Vladimir Putin’s shenanigans won’t fully be realized until first quarter earnings are announced later this month. However, on the back of an envelope, I project it likely cost about ½% to GDP and prohibited an expansion to the market’s earnings multiple.

Pent Up Consumer Demand

Looking ahead to the second quarter, we have several factors to consider when mapping out what to expect. To begin with, from the consumer’s perspective, I am expecting pent up demand for goods and services, which was delayed due to the weather, to manifest itself in the second quarter. Economic growth will continue to be slow and sloppy but nevertheless positive. Housing demand will likely get a kick start with spring weather and I expect a good selling season for both new and existing homes.

From a stock market perspective we have to consider the calendar and cyclicality of stock market flows. We have to recall that this is a mid-term election year. On average, during mid-term election years, the second quarter is a negative quarter. It is also the worst quarter of the sixteen quarter election cycle. April, in general, is the third best month for the stock market, after November and December. During mid-term election years, April is positive, on average, but ever so slightly.

It is clear from Janet Yellen’s commentary that the Federal Reserve will continue to support its cheap money policy for the economy. As a result, tapering fears, after a few rounds of tapering will no longer have any impact on the markets. Take that brick off of the Wall of Worry.

Yet to be taken off the Wall of Worry is the situation in Ukraine. I expect that will be resolved sometime in the second quarter.

Yesterday was the last day to sign up for insurance under the Affordable Health Care Plan. With that aside, we get into the political phase which will be the single most important issue underlying the midterm elections.

First Trading Days of Month Have Been Downers

We have to go back to November of last year to have a positive first trading day of the month for the SPX. The three first trading days of each month this year resulted in a cumulative decline of 70.80 index points on the SPX, or about 3.83% of the 2013 closing level. Taken in isolation, those three days caused considerable emotional damage to the stock markets in the first quarter. If we can turn in a positive or just a quiet first session of the month, it will go a long way to help the fragile psyche of the markets and in particular that of individual investors as we emerge from the winter.

Please continue to email me your queries related to the markets or economy at scott.rothbort.lakeview@gmail.com and I will compile the questions and answers for publication next week.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                      

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, March 31, 2014: Putin and Obama Talking Solution

While last week was difficult for investors, it did end off on a positive note. The market closed higher, yet off the peak of the session. True to form, the markets did rise on the penultimate trading day of the month. After the markets closed, an apparent phone call took place between Presidents Putin and Obama. The message received from the markets is that perhaps there is some form of diplomatic solution that might be in the works with respect to the situation in Ukraine. Index futures responded positively last evening and into today’s pre-market. With the weather beginning to improve, the only wall of worry that we continue to scale appears to be that of Ukraine.

Struggling Indexes Seek to Close Quarter in Green

As we enter the final trading day of the first quarter and month of March, the markets are struggling to post a profit for the first quarter. As of Friday, for the quarter, the S&P 500 (SPX) is up 0.49%, the Dow Jones Industrials (DJIA) is off 1.53%, the NASDAQ 100 declined 0.57% and the Russell 2000 had slipped 1.02%.

While futures indicate a positive open, remember that early Monday advances tend to get faded and anything can happen on the last day of the month. As we look later into the week, the March jobs report will be on investors’ minds. That report is schedule to be released on Friday and will be previewed by the Automatic Data Processing (ADP) report on Wednesday.

Biotechs Get Boost From FDA

Biogen Idec (BIIB) is set to pop today as the company received FDA approval for Alprolix, a treatment for hemophilia. This might provide well needed support for the biotech sector and in particular, the related exchange traded fund, iShares NASDAQ Biotech (IBB).

Tomorrow I am going to sum up the quarter and give my thoughts about the second quarter. I would like to turn the tables and give my readers an opportunity to ask some questions. So please email me your queries related to the markets or economy at scott.rothbort.lakeview@gmail.com and I will compile the questions and answers for publication next week.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long IBB and UWM — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, March 28, 2014: Thank You Larry Kudlow

It appears that the markets are attempting to build some support for the next move higher. Yesterday, a lower market open was bought and then faded, which is a good but not perfect sign. By the closing bell losses were light. However, the NASDAQ and growth stocks remain market laggards. We will need these stocks to provide leadership before the next advance can take place. Until then frustrations levels will remain elevated.

The quarter ends on Monday. Normally, the penultimate trading day of a month tends to be positive. Futures indicate a positive open today. We have not had a positive open hold since last Friday. For the market to get back its mojo we will need to have a strong open hold through to the close.

Red Hat Reports Results

After the market closed yesterday, Red Hat (RHT) reported better than expected results. The stock rallied before the conference call took place. Then on the conference call, management issued guidance below analysts’ expectations. The stock erased gains and posted a small decline which is extending to this morning’s pre-market. This is just another case of playing the under promise – over deliver game.

Larry Kudlow Will Host His Last Kudlow Report Tonight

Tonight Larry Kudlow, will be hosting his last Kudlow Report television show on CNBC. I will be forever thankful to Larry Kudlow and Jim Cramer for putting me on their Kudlow & Cramer television show for which I was a guest many times. My first appearance on that show and any other television show was in 2003 with famed stock market analyst, Elaine Garzarelli, who is well known for predicting Black Monday (the stock market crash on October 19, 1987). I have to tell you, I had so many glitters that I called my cousin, famed actor Anthony Heald to get some tips as to how to conduct myself on television. It was an honor and pleasure to be on the show with those Wall Street legends.

Larry, Jim and I spent several shows sparring over the Martha Stewart trial, for which I was arguing to bet against Ms. Stewart and her namesake company, Martha Stewart Living Omnimedia (MSO). While Larry and Jim argued against my position, they were very open to my opinion and gave me the opportunity to communicate that to their viewers. In the fullness of time I was on the right side of the trade, which they acknowledged. Later on, I put together a Martha Stewart video case study with the help of CNBC for my courses at Seton hall University. While a Republican and perma-optimist (note I did not say perma-bull), Larry attracted and gave respect to economists, investors and politicians of all thoughts and persuasions. He has implanted firmly in the mind of investors two notions: “King Dollar” and “Profits are the Mothers Milk of Stocks” which are certain to stand the test of time. While the Kudlow Report will sunset, Larry will still be around to enlighten us with his knowledge. Thank you Lawrence Kudlow for all that you have done for me and investors around the world.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long RHT — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                      

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com  

Read Scott’s intra-day thoughts and comments on Scutify 


My Gut Feeling For Today, March 27, 2014: Candy Crushed

What started out as a positive yet boring session turned ugly and the markets closed on session lows. Once again, the greatest losses were in the small caps, mid-caps and growth sectors. However, there was no single reason for the market turning from gains to losses. Rather it was a series of unconnected events.

Obama and the West Are Seen as Weak By the Markets

President Obama, while in Belgium, delivered a nonsensical speech (most politicians seem compelled to do so) in which he said, amongst other things that “This is not another Cold War that we’re entering into … unlike the Soviet Union, Russia leads no bloc of nations, no global ideology. The United States and NATO do not seek any conflict with Russia. In fact, for more than 60 years we have come together in NATO not to claim other lands but to keep nations free.”

The market took this as if he said “we are prepared to begin an economic cold war with Russia and its economic bloc” and as another sign of weakness on the part of the US and its Western allies. It was the President's speech that pushed the market off of its morning and day’s highs in the early morning.

King Digital's IPO Was a Disaster

King Digital Entertainment (KING), maker of the Candy Crush Saga digital game, which priced its initial public offering (IPO) the evening before at $22.50 found its shares crushed to close nearly 16% lower at $19.00. This broken IPO took the entire mobile applications / social networking segment lower. Of course, the fact that Facebook (FB) continues to act like a drunken sailor during fleet week when it paid $2 billion for virtual reality goggle manufacturer Oculus Rift, did not help the sector one iota. Once these stocks got hit; the ecommerce, biotech and other high growth stocks, which were trading higher in the morning, after suffering heavy losses over the past week, lost their bids and got crushed as well. The only exceptions were Netflix (NFLX) which posted a modest gain and Regeneron Pharmaceuticals (REGN) which closed with a modest loss.

By the time the closing bell rang, the S&P 500 (SPX) closed at 1,852.56, just four points higher since the year began and 31 points off of the all-time high set last week. However, the real pain was felt in the NASDAQ 100 (NDX) which now sits at 3,582.88, down ¼% for the year and over 4% from its recent 52-week high set earlier in March. This is really nothing out of the ordinary for a bull market. It just feels worse than it actually is because the quarter is about to end and professionals in this business are measured by their performance and paid accordingly based on quarterly and annual snapshots.

Bank Stress Tests Will Dominate Market Today

What professional money managers also know is not to extend the pain or pleasure of the prior day to the next day. Looking ahead to today, the market is likely to be shaped by the release of the Federal Reserve’s stress test on banks. Essentially, these are statistical tests which are applied to banks’ capital structures under various economic and financial conditions.  As always, there are winners and losers to the stress test. The big loser was Citigroup (C) which failed the test. That bank’s shares were clobbered after hours and are likely to do so today. Goldman Sachs (GS) and Bank of America (BAC) passed the test but only after resubmitting their capital plans. In other words, those two banks cut back on their more aggressive share buyback and dividend increases. Furthermore, Bank of America agreed to pay $9.3 billion to settle mortgage bond claims. This for the most part, is the final chapter in claims against the bank, with respect to the financial crisis. Immediately after the stress test results were released, Bank of America, Goldman Sachs, JP Morgan Chase (JPM), KeyCorp (KEY) and Morgan Stanley (MS) all announced dividend hikes. Morgan Stanley shareholders were the big winners as they were also greeted with an increase in the company’s share repurchase program.

The bubblistas are coming out of the woodwork. They will be proven wrong in the long term but for the here and now they are gaining more room at the financial bully pulpit. So, expect the stock market to be unsettled for the next few days. We need to look ahead and not behind. By many measures, the stock market remains extremely cheap. It is the risk takers that will be rewarded. I am a risk taker.  As I intended, I engaged in more spring cleaning and moved assets into the healthcare sector. My next move is to allocate capital into media content.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BAC — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                     

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, March 26, 2014: It’s Time For Spring Cleaning

As I suspected, the events of Monday were isolated to Monday. Underwhelming housing data was offset by better than expected consumer confidence data, so we can call it an economic draw. Despite that, homebuilders stocks rose and retail stock declined, on average. Biotech stocks seemed to find some support, as did the NASDAQ in general.

Yesterday the IRS issued an interesting bulletin with guidance as to the treatment of Bitcoin transactions. Quoting from the IRS notice:

…. virtual currency is treated as property for U.S. federal tax purposes.  General tax principles that apply to property transactions apply to transactions using virtual currency.  Among other things, this means that:

  • Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
  • Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply.  Normally, payers must issue Form 1099.
  • The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
  • A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property. 

This is all fine and dandy, and makes economic sense. However, it opens up a whole new can of worms in terms of accounting, audit and enforcement. By the way, the other day some 200,000 of the missing Mt. Gox Bitcoins were mysteriously found. How can anyone trust cyber currency? This is becoming a modern day bucket shop.

Overnight, Asian markets showed some strength. Impact, if any from the Malaysian Air incident seems to have run its course. Other than Durable Goods Orders, a very volatile data series, today has very little to offer in terms of information flow domestically. For the most part, I think that it is time to do a little bit of spring cleaning and get portfolios prepared for the second quarter. I began to do so the other day and expect that other portfolio managers are in the process of doing so as well.

So how does one do some spring cleaning? Here are a few suggestions:

  1. Eliminate underperforming stocks that are dead money. Dead money stocks are those that have future potential but the future is further out than the next few months to a year. Recently I eliminated two dead money stocks: Ford Motor (F) and JetBlue (JBLU). The former was replaced by Red Hat (RHT) which reports tomorrow and the latter by Juniper Networks (JNPR)
  2. Trim down some outperformers. I did so in the last few weeks for Priceline (PCLN). This allowed me to reap some gains while holding onto the stock for the future.
  3. Refocus assets on sectors that should outperform in the next few months. I believe that will be financials, technology, healthcare and industrials.

Use what should be a boring Hump Day to weed and feed your portfolios. As always, feel free to contact me directly if you want to bounce some ideas my way or need a portfolio gardener.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long  JNPR, PCLN & RHT — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, March 25, 2014: A Good Old Fashioned Asset Allocation

I have been in this business long enough to know what really happened in the markets on Monday. It was not jitters over Russia. Nor was it fears of economic slowdowns or whatever other reason of the day the financial media may have pulled out of their lexicon. It was a good old fashioned program traded asset allocation. It did not happen at the open. The program desks waited for the Monday morning lift to get a good level to fade. Then the programs hit the tape.

Money Came Out of Tech, Biotechs and Internet Stocks

Money came out of tech, biotechs and internet related stocks and went into income oriented stocks and staples. All other movement was merely just collateral damage.

The programs looked to be a typical VWAP execution – volume weighted average price. It was spread out over several hours. The executions dried up by 2PM, selling pressure was exhausted and the markets closed well off of their lows. In the final analysis, it was a bad day for growth stocks and good day for above average dividend stocks.

A Change in the Portfolios

For the first time in a month, I made a change to the growth portfolios. This time around we swapped out positions of Jet Blue (JBLU) for Juniper Networks (JNPR) as I continue to add to internet and cloud tech plays.

Expect the extrapolators to be out in full force today. I think that what happened yesterday will not spill over to today. Although, new highs seem out of reach until April at the earliest.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long JNPR — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, March 24, 2014: Apple Gets Positive News

The markets opened higher and rose to new all-time highs on Friday, only to get repelled in the afternoon and close lower on the session. This was one of the likely outcomes that I expected going into Friday’s session. There were four causalities which we can take independent of one another or together to explain the Friday turnaround and pullback:

  1. The impact of weekly and quarterly options expiration
  2. The Friday fear trade as traders take capital off the table frightened of more political / military action in Ukraine / Crimea
  3. Normal market action which occurs when new highs are made and traders lean against those levels.
  4. Plain old profit taking after a bullish week.

On Friday hot sectors such as internet and biotech appeared to be under consolidation with profit taking at the forefront.

However, Monday is another day. There was no news out of Russia. Despite weaker than expected economic data out of China, Chinese and other Asian markets rose. Finally, News Corp (NWS) seems to have blessed Apple (AAPL) with some positive news as we get set for the trading week. First, on Saturday, an article in the company’s weekly Barron’s newspaper set forth a hypothesis for Apple rising 20% on the issuance of the company’s iPhone 6. Then today the Wall Street Journal, another News Corp publication, reported that Apple and Comcast’s CNBC Universal unit are in talks to partner together on a streaming television service.

While the quarter formally ends next Monday, this week is the last full week of business for the quarter. Investment managers are going to be cleaning up their portfolios and looking ahead to the second quarter. I expect a mildly positive day today and one for the week as well. There is a possibility that we could eclipse the recent high on the S&P 500 and even hold it as we commence the second quarter but I am more concerned about keeping the uptrend in place than reaching new highs this week. Don't forget the Monday fade which should come in the late morning or early afternoon after any early rise in the markets.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify

 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, March 21, 2014: Focus Investment Dollars on Technology, Financial Services and Healthcare

On Wednesday the markets sold off on FOMC Chair Janet Yellen’s remarks. On Thursday the broad market, as defined by the S&P 500 (SPX) and Dow Jones Industrials (DJI) recouped those losses. The mistake, which the bears seem destined to repeat, is extrapolating a one or few day sell-off into a major correction or bear market. It happened this week and last week and will certainly occur again.

Focus on Investment Related Weather Patterns

Late first quarter earnings reports continue to trickle in with the same theme bring repeated – the impact of winter weather. As I mentioned the other day, there will be a pattern which will play out over the next few months: disappointing 1st quarter results accompanied by 2nd quarter downward guidance topped off by better than expected 2nd quarter earnings. This will play out from now through the end of July.

In anticipation of that weather patterned earnings news flow, it may make sense to begin to scale back on exposure as the current quarter comes to an end. There is one important distinction that needs to be made. Cutting back on stocks that might have weather impacted 1st quarter earnings is one thing. However, there are many companies or sectors that do not have weather related operational issues for which you can add to. Technology, healthcare and financial services immediately come to mind. Thus, you can either play it safe and hold some cash or reallocate sales proceeds into other sectors.

Mid-term Election Year Patterns Are Also Worth Noting

Be cognizant of the fact that during mid-term election years, on average, 2nd quarters tend to produce negative returns and 3rd quarters tend to be flat. This must be incorporated into your tactical decision making for your portfolio over the next six months

Expect Markets to Push Higher Into Early April

In the short term, I still believe the market will make a run such that the S&P 500 pushes through the 1,900 level. This could take place in the next week or early April. What we will need is for the small and midcaps to grab investor attention as those indexes did not fully recoup Wednesday’s losses on Thursday. Today’s market open appears to be a positive one. Recently though, the markets have pulled back by the close of business on Friday in fear of what may take place in Crimea and Ukraine. If we could break that pattern, the markets will have a nice follow through to yesterday’s gains. If not, we will be back to teeter-totter mode. It is hard to say given the tit for tat sanctions that Presidents Obama and Putin keep issuing against one another’s nations.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, March 20, 2014: Hope Springs Eternal for the Economy

I forgot to mention on Monday that the two-day Federal Reserve Open Market Committee (FOMC) meeting, the first under Janet Yellen, would convene for two days and issue its monetary policy yesterday. Well that did happen. The markets initially took it in stride and then sold off during Yellen’s press conference. By the close nearly half of the day’s losses were recouped and stock market indexes were down fractionally. For the most part, the FOMC told us what we already knew, which is that its asset buying program would be further tapered and that short term interest rates would increase slightly beginning in 2015. Other than that, we got some fed speak and information that economists and Fed followers cherish. In the final analysis, we had a typical FOMC monetary decision day roller coaster.

Winter Weather About to End

One thing that was quite apparent was that the FOMC recognized the impact of the adverse winter weather. Today marks the first day of spring. Just as with Mighty Casey, hope springs eternal for the US economy that the winter doldrums will end. Unlike Mighty Casey, I do not expect the economy to strike out in the second quarter. I do expect that first quarter earnings will continue to disappoint due to the weather, leading to a reduction in guidance for the second quarter. Take FedEx (FDX) for example which did just that earlier this week. This will lead to better than expected earnings when second quarter results are reported in July. For the record, I have my eye on both FedEx and UPS (UPS), at the right price, which should materialize on the next market pullback.

Sporting Goods Continue to Impress Investors

As for today, Nike (NKE) and Conagra (CAG) will report quarterly results and the weekly unemployment claims figures will be released. Given what the sporting goods retailers such as Dicks Sporting Goods (DKS) have reported, I expect Nike will meet or beat expectations. Conagra will give us a glimpse into the impact on food and commodity prices from the winter weather.

Let’s just take yesterday’s FOMC reaction in stride. The credit markets are still very strong and participants will buy any paper thrown at them which will keep long term interest rates in check despite what the FOMC has planned on the short end. This will continue to feed the voracious appetite of corporations to use cash to buy back stock, invest in technology and minimize adding to payrolls.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DKS — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com  

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, March 17, 2014: Alibaba Set to Go Public

Crimea voted to secede from Ukraine and join Russia. So what? The bears expected that this would be the beginning of a major international crisis that would finally take the markets lower. As a result, they spent last week buying puts and going short. Well, the Crimean vote occurred yesterday, and the region which is for the most part ethnically Russian, did what most people expected that it would do. US President Obama said that the US would not recognize the vote and implement some economic sanctions. I ask, what would happen if Quebec voted to secede from Canada? Would the bears be licking their chops? Would Obama not recognize that vote and target French Canadian assets for sanction? In the fullness of time; when it comes to Crimea, who cares? As long as Ukraine can remain independent, which it will, and most likely align with Europe, which is highly probable, then the goings on with Putin and Crimea are less worrisome.

Alibaba Set to Go Public in US with IPO

It appears that Alibaba will be selling stock to the public in a US listed IPO. This will be good for Yahoo (YHOO), a stock that we have owned not for its current operations but for its “break-up” value. The value of Yahoo is the company’s unmonetized investments in Alibaba and Yahoo Japan holdings. I discussed this in greater detail in My Gut Feeling on January 29, 2014. Expect Yahoo to move higher on the Alibaba news not just today but into and through the IPO.

NCAA Tournament Brackets Revealed

Many people will be focused on the NCAA Men’s Basketball tournament brackets today. Even Berkshire Hathaway’s (BRK/A, BRK/B) Warrant Buffet is getting into the act by offering $1 billion dollars to anyone who correctly picks every single game. Out here in the suburbs of Las Vegas, I made two simple and small wagers for Louisville and Michigan State to take the championship.  I cannot believe that Louisville got a #4 seed. It deserves much better. I think it will take a while for its new conference, the American Athletic Conference, to get some respect. The most overrated team in the tournament remains Syracuse which will not go as far as it did last year.

This week there will be a slew of secondary but nevertheless important economic data points, such as: Industrial Production, Capacity Utilization, CPI, Housing Starts, New Home Sales, Philly Fed Index and of course, the weekly unemployment claims.

Stock Market Poised to Rise

Overnight there was very little in the way of negative reaction in US index futures to the Crimean vote. By the time we woke up, it was apparent that the shorts did not get their gift of a coordinated global sell-off. So, they had no choice after bidding up puts and volatility and selling futures last week other than to cover their negative bets. Hence the markets will open to the upside today. The extent, to which we rise today, is uncertain, as we always have to be on the lookout for a fade to an early Monday rise. However, we should expect a solid bullish advance. By the end of the month, do not rule out S&P 500 (SPX) eclipsing the 1,900 level.

I will be heading back East later today, something that I would prefer to avoid given the weather differential. As a result, I will resume My Gut Feeling on Wednesday.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long YHOO — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                      

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, March 13, 2014: A Sell-off Without Significance

The S&P 500 (SPX) declined 21 points and the Dow Jones Industrials (DJIA) declined 231 points yesterday. Of course the absolute magnitude of the declines dominated headlines and caused some gasps amongst individual investors. However, the relative declines of 1.17% for the SPX and 1.41% for the DJ Industrials were not all that worrisome. Let me put it this way, 200 points is the new 100 points. In other words, with higher index levels come greater daily point swings.

Economic Data Remains Positive

These declines occurred despite positive economic data – weekly unemployment claims and retail sales which were reported early in the day. In the long run, economic fact will trump emotion. In the short run, emotion can rule the day.

The excuse given for the decline was the situation in Crimea and Ukraine. However, the low volume sell-off which was focused on many of the prior year’s big winners appeared to this market participant, to be more of profit taking, and a buyers strike than the beginning of a major pull back. That is not to say that the situation with Russia won’t wreak more havoc on the global markets. I just think that the impact will be short lived and transitory in nature.

Sell-off Was Due to Derivative Expiration

I would like to submit my hypothesis, for your consideration, that the Thursday sell-off was related to today’s quarterly derivative expiration. Typically the markets will have a poor day on Tuesday, Wednesday or Thursday preceding options expiration which can be exacerbated on the quarterly expiration days..

The markets are likely to remain jittery ahead of the weekend. Use the weakness to begin new positions or add to existing positions.

__________________________________________________________________________________

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website.                                                                                 

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, March 10, 2014: A Game of Chess in Ukraine

Perhaps, you may be wondering what happened to My Gut Feeling over the course of the last several trading days. Well, as it turns out, after leaving my offices on Wednesday February 26, I slipped on a patch of ice on the building steps, fell and took a blow to the side of my head. At this point you can take a few seconds to come up with a joke or snarky remark about my head, brain, etc. Needless to say, after a visit to the emergency room, which resulted in a CT scan that revealed no damage, but did provide evidence of the presence of a brain, I was diagnosed with a mild concussion.

Doctors at the hospital as well as Dr. D, a leading neurologist and client told me to take it easy for several days. Dr. D was a bit more forceful and told me to shut it down; meaning abstinence from the computer, major stimulus and physical activity. So, for several days I kept in touch with the markets via Bloomberg TV and radio or by telephone with colleagues and brokers. However, as my wife explains to people, “Scott’s brain is usually processing at 120 miles per hour while the rest of the world is at 60. Now he is at 80 miles per hour.” After taking the advice of doctors, especially those of Dr. D. I was able to heal and by now I am back up to 100 mph and operating the computer, on a reasonable basis. I am not pushing myself to put in my typical 12 – 16 hour workday, as I do tire early. I also got clearance to fly and am resting up in Henderson, NV, outside of Las Vegas.

Investment Strategy: Risk Management not Overactive Panic

Interestingly enough, last Monday, the markets got spooked by the buildup of Russian troops in Crimea. The S&P 500 (SPX) dropped by 1.35% in the early part of the day, yet cut that decline to only 0.74% by the close. However, to me, this was just another rerun in TV Land of the Market Panic Show. As I explained on the day after the Boston Marathon terrorist attack last year, it was time to turn to risk management mode. Upon further analysis (recall that I was processing above the speed limit with my eyes closed) of the Putin actions and the reaction of other world leaders; no matter how toothless they might have been, made it clear to me that the situation in Ukraine was going to be a game of chess rather than a game of Battleship. So, the proper investment action to take was one of guarded alert, i.e. get ready to act if the Ukrainian situation boils over into a full-fledged conflict.  However, it was not time to overreact and take immediate knee-jerk action. My experience in dealing with these exogenous events was correct; we remained fully invested and by Friday’s close, the SPX added 1% for the week and closed at an all-time high.

European Markets Will Suffer Most From Ukraine

I would hypothesize that Europe will feel the brunt of any economic consequences of the situation in Ukraine and exposure to Europe needs to be kept on a short leash. Currently, we hold positions in the Wisdom Tree Europe Small Cap Dividend ETF (DFE).

This weekend we had a stream of other events which took some of the media attention off of Putin and Ukraine. First, a Malaysia Airlines flight mysteriously disappeared near Vietnam in the Gulf of Thailand. Circumstantial evidence, because that is all that is available right now, is that this was a terrorist event. Also over the weekend, China reported weaker than expected trade data. Of course, the good news is that there were no new winter storms in the last few days in the north and northeast. I hate to disappoint you - one is on the way. I will enjoy it from the desert in Nevada where I cannot slip on ice and reinjure myself. .

Sold Ford Motors Bought Red Hat

Since I last penned My Gut Feeling, we eliminated all positions in Ford Motors (F) and used most of the cash proceeds to begin positions in Red Hat (RHT).  I cannot promise that I will be up to the task of publishing My Gut Feeling every day in the next week (it takes typically over two hours from start to finish to produce and send out) but I will try my best.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DFE and RHT — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, February 25, 2014: Bitcoin On Life Support

The stock market really surged from the get-go yesterday with the S&P 500 (SPX) making an all-time high on an intraday basis and then backing off to close slightly below its all-time closing high. I would not get all hot and bothered over the profit taking that took place. As for today we are set to open a bit lower but for the most part I am expecting an up and down session.

Mt. Gox Shuts Down

Mt. Gox, the Bitcoin exchange has closed down. This comes a few weeks after the arrest of Charlie Shrem and several nations outlawing the virtual crypto currency. I have seen nothing but problems for Bitcoin since its popularity skyrocketed last year. By this time next year, we will likely have forgotten that Bitcoin even existed.

Case-Shiller Home Price Index to be Reported

The Case-Shiller home price index will be released this morning. I am expecting further year-over-year gains but the monthly data will be soft. That softness will likely be attributed to the weather across the nation. However, that same weather will likely pick up sales in the coming months as cold weather families, especially baby boomers seek to leave the north and northeast as they desire to live in the warm weather states which were most impacted by the housing bust, i.e. Florida, Arizona and Nevada.

Tomorrow is the annual Capital Markets Colloquium at Seton Hall University. I hope you can make it. I will take the next two days off from writing as I concentrate on that event.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                      

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com

 


My Gut Feeling For Today, February 24, 2014: A Deal Materializes in the Semiconductor Industry

The Winter Olympics have closed, without any major disturbances at Sochi other than a traditional Russian fixing of the women’s figure skating competition. Although away from Sochi, the conflict in Ukraine flared up and then subsided. The events in Kiev put a dent into markets early in the week but by the time the bell rang on Friday, the markets were only down fractionally. Also, President’s week vacations are over and the A-Teamer are back at their trading turrets.

A Deal in the Semiconductor Industry

We begin the day with another merger and acquisition which has become habitual behavior recently. That is a positive development for the markets. Today, chipmaker RF Micro (RFMD) agreed to buy its peer, TriQuint Semiconductor (TQNT) for $1.6 billion. Both stocks are rising in pre-market activity. For those of you who have been part of the Scutify investment community, my colleague Robert Marcin brought TriQuint to investor’s attention three months ago. For those of you who do not participate in Scutify, I suggest that you sign up now and download the application to your smartphone. It is free. So join the over 50,000 traders and investors who have signed up so far.

This week we will close out the month of February which has been highlighted by: bitter and brutal winter weather: mergers and acquisitions: the Olympics: and, a strong market snap back. The S&P 500 (SPX) stands within one percent of its all-time high, as do many other major indexes. I expect the SPX to eclipse that old high sometime this week or in the early part of next week.

You Are Invited to the Capital Markets Colloquium

This week is a busy one for me. The annual Jim and Judy O'Brien Capital Markets Colloquium will be held on Wednesday. The event is free to the public and you can register on the Seton Hall website. We have an exciting agenda and group of speakers for the day. I have to brag, as my daughter Carly put together the graphics for the website and posters.

Baidu is Upgraded by Analayst

One of our more recent purchases, Baidu (BIDU) caught an upgrade today. Baidu is part of our global field play on search along with Google (GOOG) and Yandex (YNDX). As for the overall markets today, we appear to be headed higher at the open as the A-Team puts cash to work. As always, one must be skeptical of an exuberant early advance on Monday morning. However, given the magnitude of the early move as suggested by pre-market futures, it appears that the opening bid is restrained.  I expect that the markets will trade within its normal range and by the end of the day will close up or down fractionally.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BIDU, YNDX and GOOG — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify


My Gut Feeling For Today, February 20, 2014: Facebook Makes a Pricey Acquisition

After a trading higher in the morning, the markets got spooked in the afternoon by the political and social turmoil in Ukraine. B-Teamers, who are only trained to believe that the next bubble is around the corner and only have permission to sell, followed their Pavlovian instincts and sold stocks all afternoon and right into the close. Recall that my #7 expectation in  My Gut Feeling For 2014, was that “The Sochi Winter Olympics will be a public relations nightmare for Russia. The event will be plagued by old style Russian cheating and new style Chechen political unrest. A terrorist attack during the Olympics, either at Sochi or elsewhere in Russia will precipitate a global market pullback of 5 – 7%.” As it turns out I had my geography wrong as the Russian problem is coming from a different direction, Ukraine.

Facebook Acquisition Likely to Be a Blunder

Facebook (FB) made a large acquisition yesterday. The company paid $19 billion for WhatsApp, a text messaging service. This makes the $1 billion acquisition of Instagram seem immaterial. However, what is Facebook getting for $19 billion? Lots of users and no revenue stream, that’s what. However, in the social networking / application bubble world, that is what is important.  I predict this will go down as one of history’s biggest acquisitions blunders, on the magnitude of Hewlett-Packard (HPQ) purchase of Autonomy for $11 billion or Bank of America’s (BAC) purchase of Countrywide, the cost of which is still mounting. Of course, the Time Warner (TWX) – AOL (AOL) deal of 2000 is still the poster child for bad mergers and acquisitions.

I went 4 for 4 in yesterday’s Olympic Men’s hockey quarterfinals, including the Finland upset over Russia. Today the American women play Canada for the gold in hockey. This will be a tightly contested game and could even go to overtime. However, I predict that the nation from north of the border will successfully defend its Olympic title. As for tomorrow, the men’s hockey semifinal round will pit the USA versus Canada as well. In this one the Yanks will be victorious. The USA goalie is just too hot and you always want to go with a hot goalie. Some of the goals Quick has allowed were meaningless late game goals. The other game has Sweden versus Finland. The Finns are coming off their Russian coup. Yet, I will once again go with the Swede’s (and NY Rangers) goalie, Hendrik Lundqvist to beat the Finns. In the end, the USA men will take home the gold.

Let the Situation in Ukraine Play Out

Don’t be a B-Teamer and let the situation in the Ukraine play itself out just as did the Arab Spring. As for the markets, expect a lower open and then some firming up as world leaders try to calm down the situation in Ukraine. By Monday the A-Teamers will be back and it will be business as usual. See you then.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BAC — although positions can change at any time. 

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, February 19, 2014: Ice Ice Baby – Diamonds and Hockey

As expected, volumes remain light as another snow storm yesterday kept the A-Teamers on the slopes and the B-Teamers at their trading desks deciding what kind of food to order in for lunch. Pizza or Chinese? In the meantime, the markets, much to my surprise have advanced rather than flat line or decline slightly during the holiday / vacation week. No complaints here as we remain fully invested. As of yesterday’s close, the S&P 500 (SPX) has rallied back quite smartly from its New Year’s correction and now stands within 10 index points of its all-time high. When the A-Teamers return next week, I expect that to be breached, at least on an intra-day basis.

Traders' Eyes Will Be Focused on the Hockey Ice

The B-Teamers will have four exciting semifinal men’s Olympic hockey medal rounds games to enjoy today. When the USA team faces off at noon today versus the Czech Republic on Comcast’s (CMCSA) USA network, expect all eyes to be on the TV and off the markets. They might take a pause for the release of the January FOMC meeting minutes but after that it will be back to hockey. My picks for today are Sweden over Slovenia, Finland over Russia in an upset, Canada will obliterate Latvia and the USA will be triumphant over the Czech Republic.

Investment Bankers Remain Active

In the meanwhile, investment bankers have had to cancel their vacations. Besides the Comcast deal to buy Time Warner Cable (TWC) announced at the end of last week two more deals have sprung up. First was the $25 billion acquisition of Forest Labs (FRX) by Actavis (ACT) yesterday and today’s delayed Valentine’s Day gift whereby Signet Jewelers (SIG), owners of Kay Jewelers and Jared the Galleria of Jewelry will purchase the mall based jeweler, Zale Corporation (ZLC) for $21 per share or $1.4 billion. Expect some pin action for Blue Nile (NILE) as speculators try to guess the next takeover. By the way, since the 1980s hey days of mergers & acquisitions that has not been a winning strategy.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, February 13, 2014: Comcast Scores With Olympics and Time Warner Cable Acquisition

After a solid multi-day rally the markets are literally and figuratively running into a Nor’easter. This will not only be the perfect time for a market pause but it will also help to extend a three day weekend into a five day weekend. I would also add that next week in the Wall Street region is a big school vacation week. As such, many of the A-Teamers will be off next week. So, in the final analysis, we could be in for an extended stock market vacation. In other words, between now and Monday February 24, we should expect light volume and sluggish trading activity. The bears will get some opportunities to jack up short term volatility.

Whole Foods Reports Disappointing Results

Last evening Whole Foods (WFM) reported disappointing results for a second consecutive quarter. Recently I bought a small trading position for our Food & Restaurant Chain Portfolios. The stock looks lower by about four points today, wiping out most of our trading gains. I would sell on any bounce. I think that Hain Celestial (HAIN) should be sold or shorted off of the news. I plan on putting out some small shorts later today.

Yesterday’s women’s Olympic team sports – UK vs. Canada in women’s curling and US vs. Canada in women’s hockey were great matches. I am watching a delayed tape of the US – Slovakia men’s hockey game this morning as I write this commentary. I have a feeling that the Olympics will get some good ratings given the storm which we are getting socked with now. That is all good for Comcast’s (CMCSA) NBC Universal unit. Also good for Comcast is their acquisition of Time Warner Cable (TWC) for a reported $45 billion.

Get Ready to Invest in  Walt Disney

I have been hemming and hawing about buying Walt Disney (DIS) once again for a few weeks. If we get this winter vacation pullback in the markets, I might get a better entry point. Twenty-First Century Fox (TWX) also should not be overlooked.

Stay safe and warm. I will be back on Tuesday.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long WFM — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, February 11, 2014: Markets Are Preparing for Janet Yellen Testimony

Some early soggy action allowed buyers to step up and put a green finish to the markets for the day. However, it was an overall boring session. Boring, as it turns out, especially for a Monday after a nice bounce back, should be taken as a positive. As a result, traders could switch off CNBC, Bloomberg or Fox and tune into Comcast’s (CMCSA) NBC Sports to catch the first round of Olympic Womens’ Curling. Frankly, I am looking forward to the men’s Russia – Norway match today, though not so much from a sporting point of view but for the fashion.

Janet Yellen to Testify on Capitol Hill

FOMC Chair Janet Yellen is scheduled to give testimony on Capitol Hill today, her first since taking over at the FOMC from Ben Bernanke. While the transcript of her official statement will be released before the committee meeting takes place, the real action will come during the Q&A session.

McDonald’s (MCD) was in the news yesterday as the company opened its first restaurant in Vietnam and also reported soft January sales figures.  Recall that recently I sold out of my decade long investment position in McDonald’s, but still hold tiny positions in a smaller Low Volatility / High Dividend strategy. McDonald’s shares dropped over a point in Monday trading.

Problems Continue for Bitcoin

Bitcoin continues to run into problems. The pseudo currency is getting picked off one country at a time.  It is only a matter of time until Bitcoin gets outlawed in the United States. Just take a look at what happened to Charlie Shem recently and you can see the future of Bitcoin in this country.

I expect that the S&P 500 (SPX) will recapture the 1,800 plateau and hold above it by the day’s close. The NASDAQ is coming alive and I bought some of the Power Shares QQQ (QQQ) which is a proxy for the NASDAQ 100 (NDX) index.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long QQQ — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, February 10, 2014: Getting Fully Invested at the Market Bottom

After bottoming with a decline of 6.1%, on an intra-day basis, the S&P 500 (SPX) not only put in its first winning week of the year but is in the plus column for February. The CBOE Volatility Index (VIX), what I refer to as the “sucker” index crashed nearly 29% from its recent spike, indicating that speculators and traders were betting on an extended correction but investors were not heading for the hills. Investors won traders lost.

Asset Allocation Coming Back to Stocks

Friday’s labor report was met with a round of applause from market participants. I do not think that it was because of job creation but because the data suggested that the Federal Reserve Open Market Committee (or FOMC) might think twice before taking any more action to reduce its quantitative easing (or QE) program.

In January 2014, for fear of a market correction, assets reversed its 2013 allocation out of bonds into stocks. That might have come to a conclusion and the allocation back into stocks may be underway once again.

While earnings season will continue this week with a multitude of companies releasing their results, for the most part the headline tech and industrial companies have already reported. This week’s earnings calendar will feature mostly restaurants, beverage and food companies.

Taking Advantage of the Market Bottom with Harley-Davidson

Perceiving that a market bottom was forming last week, I moved our managed accounts at Lake View Asset Management, LLC and my personal accounts into a fully invested state, which is where we stood by the end of the week. The stock which we got the most aggressive with during the pullback was Harley-Davidson (HOG) which we accumulated just below $62 and closed at a few pennies below $65 on Friday. I would add that Harley-Davidson will go ex-dividend this week for $0.275 per share.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long HOG — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, February 7, 2014: Growth Rates Contracting for Social Networking Stocks

As I mentioned yesterday, the market was exhibiting signs of bottoming. So the markets delivered a decidedly positive session, never backing down and ended on the day’s high. It is very important for a true bottom to be in place that we get a day of strong follow through. If anything, today will be a test for the markets as the Bureau of Labor Statistics jobs report for the month of January is set to be released at 8:30 AM.

Non Farm Payrolls Expected to Increase

Economists expect that US non-farm payrolls will increase by 180,000 with the unemployment rate holding steady at 6.7%. December’s non-farm payrolls increase of 74,000 was well below estimates when originally released but there is a good chance that figure may be revised higher. The markets will not take another disappointing payroll report in stride. Should that happen, yesterday’s strong advance would be a one-day wonder. If, on the other hand, January non-farm hiring is near or in excess of estimates, then we will get that must needed follow through. Unfortunately, the wintry weather may throw a monkey wrench into the payroll report. I think it is a fool’s errand to game the jobs number, so let’s save our energy to react after the data release.

Coca-Cola to Partner Up With Green Mountain

The big news on Thursday was Coca-Cola’s (KO) purchase of a 10% stake in Green Mountain Coffee Roasters for $1.25 billion. This news sent shares of heavily shorted Green Mountain Coffee Roasters surging by 26%. Shares of Soda Stream (SODA) which have been beaten up as of late jumped 7% as traders speculated that Pepsi (PEP) would join forces with Soda Stream.

Social Networking Stocks Are Overvalued

LinkedIn (LNKD) followed in Twitter’s (TWTR) footsteps by delivering disappointing earnings results and guidance. Shares of LinkedIn were sharply lower after hours, although what happens in today’s session is unclear. It is clear to me that the social networking sector's subscriber growth rates may be waning. Valuations for the sector are clearly too high and have to contract.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long PEP and SODA— although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify


My Gut Feeling For Today, February 6, 2014: Signs of a Market Bottom are Forming

A rally on Tuesday, as expected followed Monday’s snowstorm. A market sell-off Wednesday, after the second snowstorm of the week in the NYC Metropolitan region, began early after the Automated Data Processing (ADP) payroll report fell 10,000 short of expectations but was met with a positive reaction to the ISM Services report. By the closing bell, the markets closed close to even.

Social Media Company News

After the market closed, a slew of social media / mobile application related stocks reported earnings. Twitter’s (TWTR) first earnings report as a public company proved to be disappointing as the company produced a larger loss than expected, user growth slowed and revenues fell short of expectations. The fledgling public company got the Bronx Cheer and lost about 18% after the report was issued. Pandora (P), the internet music service saw its shares slump 10% after releasing its own disappointing earnings report. The only winner of the bunch was Yelp (YELP) which reported a in-line bottom line on better revenues. At the same time Yelp raised guidance putting a bid into the stock resulting in a 7% after hours rise.

Legendary Investors Remain Bullish

A positive session on Tuesday and turnaround on Wednesday taken together with positive market commentary by legendary money managers Leon Cooperman of Omega and Lawrence Fink of Blackrock (BLK) on Bloomberg television indicate to me that perhaps the market is finding support at current levels. With traders back to work after the snow day and no news other than the weekly unemployment claims report, savvy shoppers may be ready to put some money back to work. However, there will be some degree of trepidation ahead of Friday’s Bureau of Labor Statistics jobs report for January.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long YELP — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com

 

 My Gut Feeling For Today, February 4, 2014: Snow, Auto and Manufacturing All Drag Market Lower

It was a perfect storm on Monday for the markets. A confluence of events: snowstorm in the NYC metropolitan region, weak auto sales and disappointing ISM (manufacturing data) led to a panic selloff on Wall Street’s stock markets and run to safety in the gold and bond markets. The fact that it was a Monday, typically the worst day of the week for stocks did not help. Then again, we should normally see a positive bias on the first day of the month. For the second consecutive month, the first trading day was a disaster.

Markets Off Just Over 2%

All told,the equity markets were off just over 2%. Be careful not to look at headline numbers such as Dow Jones Industrials (DJIA) being off 300 points or S&P 500 (SPX) declining 40 points. These are nominal results. We need to focus on the relative percentages as those are more meaningful. For the record, the DJIA declined 2.08% and the SPX dropped 2.28%. You might think that is an aberration, but that is not the case. On average since 1950 the SPX declined by at least 2%, a little more often than five times per year. The fact that the index declined by at least 2% only three times in 2012, two times in 2013 and so far twice in 2014 just goes to show you the strength that the market has exhibited over the last few years, and I believe will continue to manifest in the future.

How Bull and Bear Market Correct

In bull markets, we rise gradually and then correct suddenly. In bear markets we decline gradually and then bounce suddenly. The former statement is now operative. As I have said, you need to embrace corrections and not fear or panic because of them.

The perfect scenario for an end to the correction would be a lower opening today followed by a late morning or early afternoon reversal. Given the pre-market futures indications, we are not getting a weak open. However, let’s not get too cute. A mildly positive open, which is set to occur followed by an attempt to sell off with a positive close would also do the trick.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com

Read Scott’s intra-day thoughts and comments on Scutify

You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, February 3, 2014: Getting On With Life After The Super Bowl

On Thursday the markets experienced a light volume snap-back. Friday the markets had an opening gap lower which was quickly met with buying. All told, the S&P 500 (SPX) is just about right back to where it was at last Monday’s close. I used the recent weakness to put more cash to work. I am expecting more market gyrations to occur as the correction continues. Overall, January was a disappointing month but I would not extrapolate that month to the rest of 2014.

Yesterday, Super Bowl Sunday was a massive media event and day. It began with Groundhog Day festivities in Punxsutawney. Punxsutawney Phil predicts six more weeks of winter. (We are getting another winter storm today). Then news of the drug induced death of actor Philip Seymour Hoffman hit the world. Of course Hollywood is just mourning the “tragic death” of a “talented star.” My take is that he was just a heroin junkie who happened to be an actor. Let’s not adulate him but use his death as a teaching tool for society. Unfortunately, we still adulate John Belushi, Janis Joplin and Jimi Hendrix because of their talent but still have not learned from their death and in most circumstances have swept its cause under the carpet.

Then we got the big event, Super Bowl XLVIII, live from MetLife (MET) Stadium. Perhaps I should say the Super Bore. The weather cooperated but that only helped the 70,000 or so people in East Rutherford. The other billion or so viewers were not so lucky. The game was over by the first quarter and was the most lopsided victory since the 49ers clubbed the Broncos in Super Bowl XXIV, twenty four years ago. The commercials were very disappointing. The game was worse. The highlight of the evening was Bruno Mars who was fantastic and would have been perfect had not the Red Hot Chili Peppers appeared. Don’t get me wrong, I like some of their songs but the mix of Mars and RHCP was ill conceived. Most people around here want to know why, for a Super Bowl in  NJ, with related activities held across the entire NY Metro area, did not have Bon Jovi, Bruce Springsteen or Bill Joel involved in the half-time show?

Raise your hand if you made it through the Super Bowl without using Twitter (TWTR) or Facebook (FB). Count my hand as raised. On Wednesday we will find out how Twitter fared in its first quarter as a public company.

Also this week, another sports spectacle, the Winter Olympics from Sochi, Russia will commence.

Today, auto manufacturers will report January sales. I expect there to be plenty of weather related impact on those figures. Overnight, index futures market indicated a green open only to have a wet blanket thrown over it by Chinese economic data. Normally, I would expect some beginning of the month cash to be put to work today. While that might be the case, it is likely that managers are a bit more patient with their buying as they try to finesse the correction.

__________________________________________________________________________________

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time. 

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                      

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, January 30, 2014: FOMC Tapers Yet Again

The Federal Reserve decided to scale back or taper its assets purchases by another $10 billion per month. I had expected the possibility of a pause but apparently, the December economic data was good enough to convince them that less stimulus was necessary.

As expected, the market opened weak, rebounded a bit and then went on a volatile roller coaster ride after the FOMC announcement. When the dust settled, the S&P 500 (SPX) closed off by just over one percent but off of its lows. That broad based index has now continued it correction and has retreated 4.14%. When that index breached the four percent decline level, I put a little cash to work. Should we back off another two percent I will do the same. Then once again I will spend some cash another two percent below that level. By the time the market is off ten percent, the most I would expect, I will be back to full investment levels, having averaged in on the way down.

On tap for earnings is Google (GOOG), which surged after yesterday’s market closed on the news that the company was dumping the Motorola Mobility business that it purchased three years ago for $12.5 billion. Lenovo will apparently pay $2.9 billion for the business from Google. Google is expected to earn $12.26 per share on revenues of $16.75 billion when it reports results after the market closes today. As usual, expect a large move in either direction after the earnings announcement.

I am heading to Philadelphia after the market closes. It is our daughter's 21st birthday and my wife and I, both University of Pennsylvania graduates, Class of 1982, plan on celebrating by buying her first legal drink at Smokey Joe’s, the Pennstitution known as Smokes. We frequented the watering hole during our days at Penn. It will be a Facebook moment. Speaking of Facebook (FB), that stock surged after the company reported better than expected earnings yesterday.

We will get home late Thursday night or early Friday morning, so I will pass on penning My Gut Feeling for Friday and will be back when we begin trading for February on Monday.

It was another great night for hockey at Yankee Stadium last evening with the Rangers defeating the Islanders 2-1 under the stars. As for Super Bowl Sunday; take the Broncos and lay the 2 ½ points and take under 47. Final score: Broncos 24 Seahawks 17  

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long GOOG — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, January 29, 2014: Yahoo Needs to Monetize Alibaba

The markets continued to try to gain back its land legs with modest advances on Tuesday. After the markets closed in the US, Turkey announced a doubling of its interest rates, sending the Turkish Lira higher and putting a bid into US equity index futures. However, the advance in futures dissipated overnight and turned to red by the pre-market hours. More on that later.

Yesterday, I had a very busy day which seemed to pick up steam as the day progressed. After market hours, I watched the Yahoo (YHOO) quarterly earnings broadcast. The company reported better than expected results on the bottom line but came in about as expected on the top line. Revenues ex-TAC (traffic acquisition costs) declined 1% for the full year. Display ad revenues declined 9% for the full year. I would have expected some discussion about Yahoo’s holdings in Alibaba. Instead, management droned on for close to an hour on Yahoo metrics most of which was spent discussing Tumblr. You might wonder what Tumblr is, so I will tell you. It is Yahoo’s blog aggregator. CEO Marissa Mayer spent all too much time telling investors about the recent traffic that Tumblr’s tech and food sites have attained. I could care less and I am sure that other investors and analysts share my sentiment. Yet nothing about Alibaba, other than a line item in the earnings release for earnings in equity interests (which includes both Yahoo’s 24% stake in Alibaba and its 35% in Yahoo Japan) and a page in its investor presentation. There is concern that the growth rate in Alibaba is slowing (it only grew revenue by 51% and gross profit by 58% in 2013). However, the key to investing in Yahoo is the ability for Alibaba to obtain as high a market cap as possible when that company goes public, as I expect it will in 2014. Currently Yahoo has a total market capitalization of about $38 billion. If Alibaba sells for as little as a $50 billion market cap, then Yahoo’s stake in the company would be worth $12 billion. Most analysts opine that Alibaba is worth much more than that, but let’s assume a conservative valuation. Yahoo Japan has a market cap of $33 billion, putting Yahoo’s stake at $11.6 billion, according to my calculations. All told, in the company’s presentation, YHOO is assuming the market values of those companies at $19.4 billion.  I am valuing it closer to $25 billion. So, when you back out the minority interest holdings, Yahoo itself is quite cheap. The problem is that Mayer needs to focus on that monetization rather than diddle over Tumblr. My investment strategy is to hold Yahoo as the sum of the parts is greater than its current price.

So after a wasted hour listening to the Yahoo crowd, I spent two productive hours teaching a class on financial derivatives in the evening, only to return home to microwave some dinner and waste another hour and a half of my life listening to the State of the Union Address. Luckily, I got to cap off the day with a nice glass of single malt with my buddy Dan as we discussed the Super Bowl (he is from Denver) and the pacer that we just bought.

Today is going to be an interesting day. As I mentioned above, futures have done an about face in the last few hours and are looking lower. In part I think it is due to a lack of specific growth oriented proposals in the President’s speech. In part, it is earnings related profit taking. For example, Boeing (BA) reported excellent earnings but is off nearly 4% in the pre-market on soft guidance. It is another case of under promise and over deliver if you ask me. Lastly, and most important, are some jitters ahead of today’s Federal Open Market Committee (FOMC) press release and news conference. I expect to have some interestinng discussion on the FOMC today on Scutify. Ben Bernanke will lead his last FOMC meeting and expectations are that the monetary authority will further diminish its asset purchase program by another $10 billion per month. I am not so sure. Given what is happening in the emerging markets, the FOMC, which also has advance information of fourth quarter GDP and January payrolls, might defer any further change in policy until its March meeting. Thus, let’s expect some early weakness, followed perhaps by some firming up right before the FOMC announcement to be topped off by post-announcement volatility.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BA and YHOO — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify

You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, January 28, 2014: Apple Results Will Impact Markets

When you read the box score for a sports game you really don’t get a feel for what took place on the field. All that you obtain is the bottom line, the final score. While the bottom line, i.e. the closing prices, is important in the world of investing, the ebb and flow of activity during the trading day cannot be ignored.

So, the box score for yesterday reports that the S&P 500 (SPX) declined 0.49%, the Dow Jones Industrials (DJI) slipped 0.26% and the NASDAQ Composite (IXIC) dipped 1.08%. However, you had to see how the day’s action transpired to put it into its proper financial context. The S&P 500 opened slightly higher, about 5 points, most likely from some short covering from professionals after Friday’s precipitous decline. Once the market opened then the public orders hit. You see, after a huge decline on Fridays, individual investors worry over the weekend. The result is that they call their brokers or log into their eBrokers and place sell orders, when they get to work or the market opens, in fear of a downside follow through to Friday. So, the market moved into negative territory, on the back of these sell orders resulting in a 1% decline for the S&P 500 for the day. The markets troughed at their low point for the day not long after the European bourses closed. At that point, bargain hunters, once again the professionals, stepped up at critical technical support levels to buy stock, erasing the day’s loss and pushing the SPX into positive territory by about 2 points. In the last hour, the market backed off again resulting in that 0.49% decline.

What you need to understand is that all that I just described is quite normal. Monday is normally a down day. When Monday follows an ugly Friday sell-off, as I explained, retail investors will freak out and act irrationally. The first attempt at stabilizing the market after a pullback is usually thwarted, as it was yesterday. So, we now have to undergo a more systemic bottoming, stabilization and reversal process. That could take several days or weeks to occur.

There was a major internal inconsistency in the equity markets on Monday. While the SPX declined, so did implied volatility. To make a difficult concept easy, the price (volatility) that traders are willing to pay to insure their portfolios declined. These prices should increase in declining markets and decrease in rising markets.  The index which is associated with implied volatility is the CBOE Volatility index (VIX). I will emphasize however that the VIX is very misleading and hence I call it the “suckers’ index.”

It is also worth noting that the price of Gold also declined on Monday. That is not what you would expect if traders were seeking the "safety" play. Also take note that we have reentered our short position in Gold via the inverse leveraged ProShares Ultra Short Gold ETF (GLL).

Confusing the issue on Tuesday will be the reaction to Apple’s (AAPL) record earnings results. It can get frustrating when Apple reports results. While the company reported better than expected earnings and revenues, disappointing iPhone unit sales and guidance spooked traders after hours and pushed the stock down about 8%. This is atypical for an Apple earnings report. The company will always under promise for the future and over deliver when reporting those later results. Then traders sell off Apple stock after hours. The company needs another gee whiz product to attract investors back to the stock. Otherwise we are left with traders banging the stock around with reckless abandon. If the stock is down by 8% on Tuesday, it will just create an opportunity for Carl Icahn to put another billion dollars to work at lower prices.

So the game plan remains unchanged. We will be better observers than participants as the stock market deals with the flu that it caught last week. Continue to raise a little cash for positions that are no longer fundamentally favorable and wait patiently to put it to work when the clouds lift.

As for today, we will have a bifurcated market. The NASDAQ is certain to get kicked in the groin by Apple while the DJIAand SPX could rise.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL  and  GLL — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                              

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today, January 27, 2014: Materials Company Stocks Are To Be Avoided

Friday was not pretty. It was the markets' version of reverse peristalsis. It happens every occasionally. This time around, the causal stimulus was emerging markets anxiety. As I mentioned on Friday morning, it was a time for caution, but not panic. Unless you were 100% in cash before the day began, Mr. Market took its pound of flesh from you. It did seem that there were plenty of weak hands, likely the typical momentum or over leveraged traders who hit the panic button. I increased my cash levels to about 7.5% for our growth portfolios.

In My Gut Feeling For 2014, I said that “The Sochi Winter Olympics will be a public relations nightmare for Russia. The event will be plagued by old style Russian cheating and new style Chechen political unrest. A terrorist attack during the Olympics, either at Sochi or elsewhere in Russia will precipitate a global market pullback of 5 – 7%.” Well, there have been events leading up to the Sochi Olympics (which begins in less than two weeks) that have surfaced. Particularly, unrest in the Ukraine and Chechen terrorist concerns, have, during a period of emerging markets uncertainty all come together to help spark the market pullback.

So what do we do next? The first thing to do is not to head for the hills. After a near 30% surge in 2013, at some point, any rational investor should expect a pullback. As we now stand, the S&P 500 (SPX) is off about 3 ¼% from its all-time high and just over 3% since the end of last year.

The proper course of action is to look at one’s portfolio and ask this question: what has fundamentally changed in the last three weeks that would require letting go of a position? I have already talked about cutting back on exposure to consumer discretionary stocks. The emerging markets are large exporters of materials. China is a large consumer of materials. With material prices down due to currency devaluation and demand from China reduced, materials companies are not the place to be. Hence, I liquidated full positions in Freeport McMoRan Gold and Cooper (FCX) on Friday. If you own a company that drives most of its growth from the emerging markets, then it is time to let that one go. Try to focus on companies that are more oriented toward domestic or established economies.

No matter how ugly things may be in Argentina or Turkey or Indonesia or China, there are some things that everyone will still demand – that is mobile telecommunications. As a gentleman that I once knew back in the 1970s, used to say, “When the revolution comes, it will be broadcast on cable.” Now he is likely saying that “when the revolution comes, it will spread by smartphones.”

Speaking of smartphones, Apple (AAPL) will be reporting its December quarter earnings after the market closes today. Apple is expected to earn $14.09 per share on revenues of $57.46 billion. In the year ago quarter, Apple earned $13.81 per share on revenues of 54.51 billion.

I expect the equity market to stabilize in the next few days as bargain hunters step up with some cash. However, a turn in the market will likely take more time. We are running on emotion right now and that should never be a factor in decision making.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                      

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com

 

My Gut Feeling For Today, January 24, 2014: Emerging Market Worries Begin to Fester

The markets bent but did not break yesterday. The Standard & Poor’s 500 (SPX) at its worst declined over 24 points or 1.34%, only to close off 16.4 points or 0.89%. Initially the raison d’etre for the selloff was attributed to earnings and economic data. However, problems in the emerging markets are beginning to bubble up. As a result, we saw a turnaround in futures overnight from slight gains during The Tonight Show to declines during The Today Show. The markets are indicating to decline about 2/3% at the market open.

Anyone who has been involved in the financial markets for at least three decades, as have yours truly, still has scars in their memory from the Latin American Debt and Currency crisis which was at its worst in 1982 -83 and the Emerging Markets Currency and “Asian Contagion” Crisis of 1997-98. Argentina just devalued its peso. The Turkish lira is plunging in the wake of political chaos in that nation. The South African rand is declining. Venezuela devalued its currency earlier in the week. China’s factory order report as well as other economic data in that nation points to a slowing down. The result is that global markets fear another emerging market crisis which will spread across global stock, bond and currency markets.

This is the type of exogenous event that is hard to predict but rather easy to react to. It does not have any root in our domestic economy, hence it is difficult to quantify in the short term, yet it could have secondary domestic implications. The immediate result is a flight to safety, the US Dollar; a bid in gold; and, declining stock markets. That bad news is that we should be prepared for the emerging markets news to spark the long overdue correction in the US stock market. This will be a process and not a one-day one-time event, i.e. sudden market crash.  The good news is that we have learned how to combat and react to foreign currency and debt crisis over the course of the last three decades, so there are now built-in monetary and financial markets safeguards and mechanisms which can be used to confront foreign currency and debt problems. This time around, the massive reserves held by China, can be put to work. This was not the case twenty or thirty years ago when China was a sleepy pre-emerging market economy

As it turns out, yesterday, after reading McDonald’s (MCD) earnings report and conference call transcript, we sold out a decade long holding in that restaurant chain. Some newer and small positions for our Low Volatility / High Dividend portfolio were maintained. However those were a small fraction of our holdings as of this time yesterday. To cut to the chase, I have lost faith in McDonald’s management and the company’s ability to look forward. For growth oriented portfolios, it is no longer worth holding onto a company growing at 3% and paying a 3.4% dividend. Hence the stock was jettisoned from our Growth and Food/Restaurant portfolios but maintained in the dividend focused portfolio. As it turns out, McDonald’s growth is coming from emerging markets and that engine is now sputtering.

So, in the final analysis, we don’t want to panic but we do want to act prudently and perhaps, for at least a few weeks put the defensive team on the field. Let’s me be very clear. The SPX is only off just over 1% from its al-time high. We should embrace pullbacks and not fear them. My cash levels have been growing and now stand at about: 3% for the growth portfolios; 6% in the food/restaurant portfolios and 7% for the low volatility/high dividend accounts. If, this emerging markets news continues to impact US markets and a correction ensues, I will raise those cash balances with an eye at putting that cash back to work should the broad market decline, as I expect it might 5 – 10%. So, if you have cash on the sidelines and feel that you missed out on the recent stock market run, you will get another opportunity in the next few weeks. Keep in mind that second chances don’t come all that often. On the other hand, do not rule out the possibility that the pullback is shallow and brief – say, no more than 3 – 5% and just 2 – 3 weeks and you miss a bottom. Hence, you always want to stand ready to act vigilant in the case of a pullback or opportunistic in the case of a rebound.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long MCD — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                        


My Gut Feeling For Today, January 23, 2014: Microsoft’s Windows 8 Disaster

What I considered to be the 6th day of the elongated holiday weekend was about as exciting as watching snow melt, which I can assure you was not occurring around here. The Standard & Poor’s 500 (SPX) traded in a six point range or about 1/3%. Historically, the average daily range is close to 1.5%  As I promised, I cut back on exposure to discretionary retail yesterday. Five Below (FIVE) which appears to be in the paws of the bears was removed from our portfolios.

The M&Ms report earnings today – McDonald’s (MCD) in the morning and Microsoft (MSFT) after the market close. Expectations are low for MCD as the company continues to struggle. After holding the stock, quite successfully for a decade, I have MCD on my marked for sale list, as I wrote in an article for Marketwatch last month. If management continues to march to its old tune, which will be quite evident in today’s report, then, sentiment and nostalgia aside, I will use the stock as a source of cash.

Microsoft is not a stock I own but if you do, you should mark it for sale as well. The company has no management succession plan and there are not many takers for the CEO role. Windows 8 is such a disaster that in the last few days Hewlett-Packard (HPQ) announced that the computer manufacturer is bringing back Windows 7. This would be like Chevrolet dealers asking General Motors (GM) to bring back the 1964 Impala instead of the 2014 model. Come to think of it, I would not mind a good old 1964 Chevy Impala compared to the 2014 version. Recently, Seton Hall reimaged my computer to Windows 8. I reacted like any other self-respecting trader would do and said to get the $%&#! Windows 8 off my computer.  As self-respecting technology people do, they told us traders, “don’t worry, you will get used to it.” Well after about a month the university, without my urging put Windows 7 back on the computers. Enough said for Microsoft.

After the market closed yesterday; Buffalo Wild Wings (BWLD) spiked up close to 9 points in after-hours trading. There was no news to drive the stock higher. Then a little while later, that trade disappeared. It must have been an errant trade that was subsequently cancelled.

Weekly claims and existing home data will be released in the morning. However, I do not think that anything will spook or spark the market. Overnight manufacturing data from China which was on the soft side may create some softness at the open. However, I expect that the markets will continue on the treadmill it has been stuck on since Christmas for a little while longer.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BWLD and MCD — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                      

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com  

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today January 22, 2014

The three day Dr. Martin Luther King Jr. weekend, which because of a lack of any interesting earnings reports last Friday was for Wall Streeters, a four day weekend. Then thanks to a major snow storm in the Northeast on Tuesday, the holiday extended to a fifth day yesterday. With public transportation limited, many schools closed today, and more snow likely, it is now a six-day affair. At least we can get in some snowball practice.

Earnings season is in full swing. There are three interesting trends which are coming into focus. Earnings misses are being treated on an isolated basis, impacting only the reporting company and not spreading to the industry or overall market. The second trend is that market declines are shallow and there is a persistent bid waiting to put money to work. The last one is that consumer discretionary stocks are in the dog house. These were sectors that I expected to underperform in 2014. So far this year, the S&P Retail Select Industry Index is off 6.05% and the Nations Restaurant News Index has declined 3.75%. Compare those results to the broad based S&P 500 (SPX) which is off a mere 0.25% so far in 2014.  Despite cutting back in retail and restaurant stocks, to underweight positions, it appears that deeper cuts might be necessary before the sectors become interesting again.

Several years ago I performed an analysis of the impact of snow storms on the stock market. Today, I present an update of that analysis. The question asked is: How does the S&P 500 perform the day after a major storm hits NY City? Using the storm definition from Weather 2000 Forecast Research the results are presented below.

 

Year

Dates

Storm Days of the Week

SPX Storm Close

SPX Close Day After Storm

SPX Storm Change

Notes

 

 

 

 

 

 

 

 

 

2011

Jan 26 - 27

Wed / Thur

            1,299.54

            1,276.34

-1.79%

 

 

2010

Dec 26 - 27

Sun / Mon

            1,257.54

            1,258.51

0.08%

 

 

2010

Feb 25 - 26

Thu / Fri

1,104.49

            1,115.71

1.02%

 

 

2006

Feb 11 -12

Sat / Sun

            1,266.99

            1,262.86

-0.33%

Weekend Storm

2003

Feb 16-17

Sun / Mon

                834.89

                851.17

1.95%

Presidents' Day Storm

1996

Jan 7-8

Sun / Mon

                616.71

                618.46

0.28%

 

 

1983

Feb 11-12

Fri/Sat

                147.63

                148.92

0.87%

 

 

1978

Feb 5-7

Sun/Mon/Tue

                 90.33

                  90.83

0.55%

 

 

1969

Feb 9-10

Sun/Mon

                103.53

                103.65

0.12%

Lincoln's Birthday Storm

1967

Feb 6-7

Mon/Tue

                  86.95

                  87.72

0.89%

 

 

1961

 

Feb 3-4

 

Fri/Sat

                  62.22

                  61.76

-0.74%

 

 

1960

Dec 11-12

Sun/Mon

                  56.85

                  56.88

0.05%

 

 

 

 

 

 

 

 

 

 

Snow Storm Information from Weather 2000 http://www.weather2000.com/NY_Snowstorms.html

 

 

 

 

 

 

 

 

S&P Data and analysis compiled by LakeView Asset Management, LLC

 

 

 

Based on the data presented below, buying at the end of a NYC snow storm is a winning trade. Hence, you will want to buy the S&P 500 at the end of business today and sell it at the end of business tomorrow, assuming that the storm lasts two days, Jan 21 – 22, 2014. I would put that trade on using the SPDR S&P 500 Trust (SPY).

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long SPY — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the websit 

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today January 16, 2014

Believe it or not, the poor start to 2014 is a thing of the past. The S&P 500 (SPX) closed above its December 31, 2013 closing price and set an all-time high in the process. Just two days ago, we were supposedly destined to a massive correction. The best laid plans of bears were thwarted again. The Dow Jones Industrials (DJI) still has some catching up to do. With the exception of the media and individual investors, that index has importance only in nostalgia.

Bank of America (BAC) reported better than expected earnings, as I expected and rallied over 2%. Today’s Fantastic Four of financial company earnings – Citigroup (C ), American Express (AXP), Blackrock (BLK) and Goldman Sachs (GS) are likely to put the cherry on top of that sector’s fourth quarter results.

We should see, especially with the Goldman Sachs report, how relevant the Volker Rule is in practice. In my opinion, we will find out that the Volker Rule which was intended to root out over speculation and investment industry conflicts will not achieve its intended goals. Rather, the financial industry will figure out how to benefit from the rule and investors will pay the price with declining liquidity, widening spreads and increased costs.

For those of you with nostalgia for the 1990s, Intel (INTC) will also report its results. Furthermore, United Health’s (UNH) results might give us some commercial data on how Obamacare enrollments are shaping up. In addition, the weekly unemployment claims data will also hit the market before the market opens.

The key to investing is to start positions small and let them prove your investment thesis. If you are proven correct, you add to positions. If not, your losses are small and those positions can be used to generate cash for the next idea. That investment strategy will help to maximize profits and minimize risk., With that philosophy in mind, over the course of the last two days, I cut a small position in Gamestop (GME) which was in the red and commenced a new position. My latest addition provides exposure to Europe using the Wisdom Tree Europe Small Cap ETF (DFE) and the Invesco European Growth Fund (AEDCX).

Bloomberg's Betty Liu has just published a new book, Work Smarts.  In Work Smarts, Betty helps readers learn to get to the top by distilling the wisdom of some of the most prominent CEOs in the country. I look forward to getting my copy. As it turns out, like yours truly, Betty lives in Millburn, NJ and graduated from the University of Pennsylvania, so she comes from good stock (pun intended).

Today, I am expecting a positive market buoyed by strong financial results.  Tonight I have plans to catch The Wolf of Wall Street replete with F-bombs for 179 minutes. We will have to get the refill sized popcorn. So far, the movie has been a winner for Viacom’s (VIA) Paramount Pictures.

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 Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BAC, DFE and AEDCX — although positions can change at any time. 

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website 

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify

 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today January 15, 2014

Monday's session was a classic one-day blunder. It was a bear trap that caught the ursine crowd not looking and snapped shut on them. That is not to say that a correction won’t or can’t occur. It is just not happening right now.

Google (GOOG) announced that it has come to an agreement to purchase Nest Labs. Nest manufactures internet accessed programmable home thermostat systems. While furnishing and setting up our new home in Nevada the past two weeks, we looked at Nest thermostats at Home Depot (HD) and Best Buy (BBY) for $249.00 each. Then while at Costco (COST), we picked up two Honeywell (HON) Wi-Fi thermostats for $100 each. Those units lacked battery backup. As it turns out, we put in a whole new alarm system with integrated Wi-Fi battery backed-up programmable thermostats, for $120 each (installed), making the Honeywell units superfluous and marked for return.

The point here is why would GOOG buy Nest? The Nest product is too expensive and not necessarily optimal. The answer is Apple (AAPL). The Nest team members are refugees from AAPL, GOOG’s mobile nemesis. Along with Nest comes another boatload of patents and talented engineers. This is precisely why you have to own both AAPL and GOOG.

Earnings from JP Morgan Chase (JPM) were fraught with all sorts of non-recurring items. Once you backed them out, JPM reported better than expected operating results. Wells Fargo (WFC) also reported better than expected results, which were straightforward compared to that of JPM. Bank of America (BAC) follows up with its earnings report today, which should for the most part mimic that of JPM and WFC.

Despite better than expected retail sales, on a macro basis, retailers on a selected micro basis continue to hint at weaker holiday sales and forward guidance. So what are we to believe? Neither and both. I believe that all is not dreary in consumer discretionary, as the consumer still has purchasing power. We will need to wait till the spring to get better entry points, once the winter weather has done its darn best to crimp sales in the near term. Hence, we now are underweight retail at LakeView Asset Management, LLC.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, BAC and GOOG — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website 

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com  

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakevi


My Gut Feeling For Today January 14, 2014

While yesterday was an official travel day for me, I was able to stay on top of the market action. For the most part, the markets were nonplussed for the first half of the session. Then, after Atlanta Fed President Dennis Lockhart said that he supports further reduction in quantitative asset purchases (i.e. tapering), the markets took a tumble. Some believe that the reaction was also a delayed response to Friday’s disappointing jobs number. To be honest, a 1.26% decline in the S&P 500 (SPX) which traded in a 1.52% range is nothing to get worried over. The 2014 New Year’s pullback stands at 1.62%, again nothing to lose sleep over.

A Goldman Sachs’ (GS) analyst predicted a 10% market correction assigning to that prediction a 67% probability. It would be naïve to think that the markets would not incur some sort of correction of 5 – 10% at some point this year. I believe that is likely to occur. That being said, it is a fool’s errand to pinpoint when that would occur. Embrace such possibilities but do not bet on them. It does not hurt to raise some cash. Recall that in My Gut Feeling For 2014, I was expecting a back-ended year.

Today the markets will focus on earnings form JP Morgan Chase (JPM) and Well Fargo (WFC) rather than apocalyptic commentary from analysts or economists.  

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website 

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today January 9, 2014

The market yesterday, as I predicted, was indeed quiet and moved between gains and losses over the course of the session. The biggest news today was that of a traffic jam scandal in the State of New Jersey. Even here in Nevada the incident was making the headlines. Today New Jersey Gov. Chris Christie will hold a press conference. That press conference will take center stage in what is likely to be another boring market session.

Despite a strong housing market, and my wife and I spending a ton of money at Bed, Bath and Beyond (BBBY), in the past two weeks, the home furnishings company was the first major negative earnings report and guidance cut of  earnings season. Expect that stock to be flushed to beyond today.

Unfortunately I was unable to get entry into the Consumer Electronics Show here in Las Vegas. I will have to plan better next year as this year I was too focused on getting our home together here. However, I did get to spend some time over drinks with Troy Wolverton of the San Jose Mercury News. We have known each other for many years and had a chance to catch up personally and on technology matters. Troy will quote me from time to time in his articles.

From what I understand, speaking to attendees and listening to the local press, the Consumer Electronics Show has featured many wearable technology products which will likely hit the market in the next year or two,

Tomorrow is the monthly labor report for December. Ahead of that report, the market should be quiet again today as all eyes and ears are on Chris Christie.

__________________________________________________________________________________

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website 

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify

 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today January 8, 2014

As I suspected, the markets opened higher and held onto most of those early gains by the close of trading on Tuesday. While there is a smattering of earnings this week, including one today for one of our LakeView Asset Management holdings – Constellation Brands (STZ) – for the most part, earnings season does not get moving until next week. Until then, the markets will likely meander or trade on light volume.

There were a few observations that I had with regard to specialty food stores in Beverley Hills where I had a quick visit (I plan to return to the Los Angeles area for a more intensive trip later in the year) the past two days. There appears to be more cake and cupcake stores per capita or per square mile than we have on the East Coast. This is in contradiction to the relative waist sizes of people in Beverley Hills versus that of the New York metropolitan area.

Interestingly enough, last night I drove past a Chipotle Mexican Grill (CMG) in Barstow, CA on my way back to Nevada. The restaurant was empty. However, a nearby Del Taco, Mexican themed restaurant had a waiting line to order. Perhaps it is a function of the Barstow economy. Maybe it is indicative of some of the shine coming off the jalapeño for CMG. Perhaps it is a bit of each. I expect CMG to be a disappointing stock in 2014 and likely generate very low to negative returns.  I missed what is claimed to be the world’s largest McDonald’s (MCD) in Barstow but later found out that it is only one of the world’s largest units in the chain.

Hungry yet? You might as well plan a four course lunch today because I am expecting the market to be quiet today and likely flip / flop between gains and losses.

__________________________________________________________________________________

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long MCD and STZ — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website 

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com  

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling For Today January 7, 2014

You might be thinking that the investment news so far this year is that the major indexes have fallen in the first three trading sessions. There is the theory that some belated or deferred selling took place on the first trading day of the year, which has some merit. There is also the fact that with the holidays occurring on two consecutive Wednesdays, the A-teamers (i.e. the people in charge of making investment decisions) extended their vacations until yesterday. Even yesterday, the market was rather flattish. I believe that the real news so far was twofold. First, is the record cold and heavy snow that has disrupted most of the northern and north eastern states. This has kept people at home and many stores and businesses at partial staff or closed. Jet Blue (BLUE) grounded its flights at all three New York metropolitan area airports for a day. The other bit of news is that there was no news to act upon. Earnings season for the most part will commence next week.

I am still out West, headquartering in Henderson, NV until I return next week to frigid New Jersey. I made a quick side trip to Beverley Hills for a few meetings and meals as well as spend time with old friends. I am planning, later this week, to attend the annual Consumer Electronics Show in Las Vegas, which is a technology wonderland. Should I manage to do so, I will detail my observations to everyone in my daily commentary.

After covering my shorts positions in gold before the year-end, gold rallied. I reinstated that short with a purchase of the inverse ETF, ProShares Ultra Short Gold (GLL).

As for today’s market, we appear to be headed for a positive opening. I believe that we will hold in positive territory by the close of trading today. As for the “as January goes so goes the year for the market” saying: 1) it does have some historical statistical support and 2) I expect the markets to gain ground at the end of the month. Hence, don’t worry about all of 2014 just yet. For those of you that did not get a chance to read yesterday’s commentary, I presented My Gut Feeling for 2014.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long GLL and JBLU — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                       

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com  

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com


My Gut Feeling for 2014

We are in the midst of a secular bull market. This is the most hated bull market that I can recall during my career which began on Wall Street at Morgan Stanley (MS) in 1984. Unfortunately, most of today’s market participants; especially those under the age of thirty-five have never experienced a secular bull market. To understand the current bull market, you would have had to been in the business or were actively investing in the 1980s secular bull market from 1982 - 1989 or the 1990s technology led bull market from 1995 – 1999. Most of the modern day market participants tend to be day traders who focus on technical analysis and only see the world through the eyes of the post-tech bubble bear market and post-financial crisis bear market.

There were no significant corrections in 2013. Pullbacks were shallow and fleeting. Social networking stocks finally took off like a rocket ship while bonds were grounded and will likely be so for many years to come. The US consumer continues to spend money and also repair their balance sheets. If you tried to get cute in 2013 and move to cash or hedge off your portfolio, you paid for it dearly. Outperforming the market was not so easy because the tide was lifting all boats.

2014 will not be as easy as 2013 but it also will not be pleasant for the bears and hedge funds, both of which have suffered from performance issues during this bull market. As is the case for all years; 2014 will deliver its highs and lows, surprises, intrigue and will humble investors and traders, whether professional or do-it-yourself. Adding to this year’s fun will be an important midterm election. For the record, during midterm election years, the S&P 500 (SPX) delivers, on average, slightly negative returns for the first three quarters followed by a superlative fourth quarter. In fact, the fourth quarter of the midterm election year, on average is the best of the sixteen election cycle quarters for the SPX. Thus, if history holds true to form, we should have a back ended year for investors.

As always, I am not going to try to be outrageous but rather will be practical and analytic as I present, My Gut Feeling for 2014:

  1. The SPX ended 2013 at 1,848.36, which using Standard & Poor’s earnings estimates of 107.25, implies an index price/earnings multiple of 17.25. Bottom up estimates for 2014 earnings as complied by Standard & Poor’s for its SPX index are expected to increase by about 13.3% to just around 121.51. Given stronger than expected Gross Domestic Product (GDP) in the second half of 2013, once the dust settles, SPX earnings for last year should come in at 107.50. In 2014, my expectations are for 8% nominal earnings growth with another 3% of anti-dilutive earnings growth due to buybacks. Hence, my SPX earnings estimate is about 119.33. The SPX earnings multiple should continue to accelerate to 18 in 2014 and 19 in 2015. Hence, I am setting a year-end target for the S&P 500 at 2,148, about a 16% year-over-year increase. When the SPX crosses 2,000 it will cause a media sensation.
  2. The bond market got its first taste of an expanding economy and reduction in the Federal Reserve Open Market Committee quantitative easing asset purchase program. The 10-year US Treasury yield surged from 1.76% at the end of 2012 to 3.03% at the end of last year. I foresee further backup in 2014 to 3.75% which is enough to chase more investors out of bonds.
  3. United States corporations are leveraged to growth in US Gross Domestic Product (GDP) as a result of cost controls, low wage pull inflation and strong balance sheets. Furthermore, the US economy is secondarily leveraged to what I expect to be improving economies in Europe and China. Latin America, other than Mexico, especially Brazil will remain in the economic doghouse. Increasing crude oil and gasoline inventories will keep domestic energy prices low, helping to spur consumer activity and economic growth. My expectations are for real US GDP to grow from an average of 3.0% in 2013 to an average of average of 4.375% in 2014. Unlike 2013, real GDP growth will be smoother, primarily as a result of a less contentious budgetary process in Washington D.C.  On a quarterly basis, I expect GDP in the US to grow by: 4.0% in 1q; 4.0% in 2q; 4.5% in 3q; and 5.0% in 4q.
  4. 100 point moves in the Dow Jones Industrials (DJIA) and 10 point moves in the SPX will become more commonplace. That will not be as a result of increased market volatility. Rather, it is just the mathematical reality of higher market index levels. However the financial media won’t get it as they see the world through an absolute rather than relative perspective. From a relative perspective, 100 Dow Jones points in 2014 is akin to about 60 points ten years ago.
  5. Gold, which declined in 2012 for the first year, so it seems, since my Bar Mitzvah, will not fare much better in 2014. However, the glittery metal which closed at around $1,205 after an approximate 28% crash in 2013 will experience a bear market rally in 2014, most likely in the first half of the year. However, once the year is over, gold will resume its decline.
  6. After several years of excellent stock market returns, in 2014 several underperforming CEOs will get the axe. Some compassionate boards will allow those CEOs to retire or step aside for family reasons. Possible candidates are Cisco’s (CSCO) John Chambers, McDonald’s (MCD) Don Thompson and Caterpillar’s (CAT) Douglas Oberhelman. Those three corporate leaders don’t stand alone as there are plenty other CEO candidates for the unemployment line. CSCO rose about 9% in 2012 and 14% in 2014. MCD declined 12% in 2012 and rose about 10% in 2013. CAT was barely changed in 2012 and 2013. Compare all that to the SPX which rose by 13.41% in 2012 and 29.60% in 2013.
  7. The Sochi Winter Olympics will be a public relations nightmare for Russia. The event will be plagued by old style Russian cheating and new style Chechen political unrest. A terrorist attack during the Olympics, either at Sochi or elsewhere in Russia will precipitate a global market pullback of 5 – 7%.
  8. Republicans pick up seats in both the Senate and House of Representatives but fail to hold a Senate majority. Nancy Pelosi is forced aside as minority leader. With Pelosi out of the picture and Steny Hoyer being seen as too old, the Democrats select Xavier Becerra as their new house leader in order to get younger and place a Hispanic in a senior position ahead of the 2016 Presidential Election which could have some Latino Republicans make a serious run at the White House.
  9. Microsoft (MSFT) cannot find a compelling or willing candidate to replace CEO Steve Ballmer. Already Ford’s (F) Alan Mulally has said not to bother asking. Bill Gates realizes that his efforts in Africa are just a waste of time and money as Barron’s recently pointed out. Gates attempts a second act as CEO for Microsoft, hoping to do for that software company what the late Steve Jobs did for Apple (AAPL). In the long run, Gates will fail where Jobs succeeded.
  10.  Google (GOOG) will take several corporate actions, this time in an investor friendly way. The company will declare a dividend equal to 2% on a yield basis. Furthermore, a $10 billion buyback funded by debt will be authorized. Finally, the stock will split 5 or 10 for 1 in a pre-arranged move to gain acceptance in the Dow Jones Industrial Average Index, allowing Dow Jones to offset the weakness in its second largest constituent, International Business Machines (IBM). The victim of GOOG’s inclusion in the DJIA will be the aforementioned CSCO.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, F and GOOG — although positions can change at any time.

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