Mid-Day Market Report
How Warren Buffett Uses Discount Rates To Value Stocks
Warren Buffett has never detailed the process he uses to value the businesses he acquires for Berkshire Hathaway. However, over the years, he has provided some limited insight into his methods. Q3 2020 hedge fund letters, conferences and more Based on these comments, it is widely assumed that Buffett uses a discount cash flow model Read More
- US: Dow: 12652.66 (-0.64%), S&P 500: 1314.05 (-0.33%), NASDAQ: 2809.89 (0.16%)
- Europe: CAC: 3318.76 (-1.34%), DAX: 6511.98 (-0.43%), FTSE: 5733.45 (-1.08%).
- Asia:China: 2319.12 (0.00%),Hong Kong: 20501.67 (0.30%),India: 5204.70 (0.90%),Japan: 8841.22 (-0.09%)
- Metals: Gold: 1731.80 (0.30%), Silver: 33.70 (-0.14%), Copper: 3.88 (-0.67%)
- Energy: Crude Oil: 99.45 (-0.25%), Natural Gas: 2.73 (3.01%)
- Commodities: Corn: 6.39 (0.71%), Soya Bean: 12.16 (-0.53%), Wheat: 6.48 (-0.80%)
- Currency: EUR/USD: 1.3189 (0.6086%), GBP/USD: 1.5710 (0.1302%), USD/JPY: 76.6723 (-1.0023%)
- 10 year US Treasury: 1.926% (-0.005)
Market News Update
Wall-Street under pressure: The blue chips were under pressure on Friday as traders reacted to disappointing earnings from energy giant Chevron and weaker-than-expected U.S. economic data. As of 12:00 p.m. ET, the Dow Jones Industrial Average fell 79.2 points, or 0.62%, to 12656, the S&P 500 dipped 4 points, or 0.3%, to 1314 and the NASDAQ Composite rose 4.6 points, or 0.16%, to 2810. http://money.cnn.com/2012/01/27/markets/markets_newyork/index.htm?iid=HP_LN
US economy grows less than forecast: Restrained spending by consumers held growth in the U.S. economy to a 2.8% annual pace in the fourth quarter, slower than economists forecast while still the fastest pace in more than a year. Gross domestic product, the value of all goods and services produced, climbed at a 2.8 percent annual pace following a 1.8 percent gain in the prior quarter, Commerce Department figures showed today in Washington.
Consumer sentiment highest in nearly a year: Americans were more optimistic about potential improvements in the job market in January, pushing consumer confidence to its highest level in nearly a year, a survey released on Friday showed. The Thomson Reuters/University ofMichigan’s final reading on the overall index on consumer sentiment rose to 75.0 from 69.9 the month before. It was the highest level since February 2011.
Company News Update
- Honeywell International (HON) swung to a fourth-quarter loss on sharply higher pension costs that offset across-the-board segment sales growth, sending its shares lower Friday. The maker of aerospace, building control and safety products predicts an even more challenging macro environment in 2012 due to the euro zone debt crisis that has softened demand there.
- Ford Motors (F) posted a lower-than-expected fourth-quarter profit on disappointing results outsideNorth America and rising commodity costs. Excluding one-time items, Ford’s operating profit fell to $1.1 billion, or 20 cents per share, from nearly $1.3 billion, or 30 cents per share, a year earlier. The auto-maker slumped 2.7 percent
- Chevron (CVX) was the worst performing stock on the Dow. Shares sank more than 3% after the company posted its biggest drop in quarterly earnings in two years and widely missed Wall Street’s estimates.
- Procter & Gamble (PG) posted a fiscal second-quarter core profit of $1.10 per share on sales of $22.14 billion. Wall Street forecast the consumer products company to earn $1.08 on $22.19 billion. The company’s full-year view came in short of expectations. It was also a big decliner on the blue chip index.
- An 8% plunge in shares of DeVry (DV) led the S&P 500’s slide. The for-profit educator’s earnings plunged 90% and undergraduate enrollment continued to decline.
- T. Rowe Price Group Inc. (TROW), the asset manager that has posted a profit every quarter since going public in 1986, dropped 1.9 percent as earnings fell. Net income decreased 1.7 percent to $188.4 million, or 73 cents a share, from $191.6 million, or 72 cents, a year earlier, the Baltimore- based company said today in a statement. Earnings per share increased as the number of outstanding shares fell 2.7 percent.
- Juniper Networks (JNPR) Inc., the No. 2 maker of networking equipment, tumbled 4.6 percent on a disappointing forecast. The company forecast first-quarter sales and profit that missed estimates, a sign that Internet providers are limiting spending amid sluggish economic growth.
- Eastman Chemical Co. (EMN) rallied 6.2 percent to $50.03 after agreeing to buy Solutia Inc. (SOA) for about $4.7 billion, including debt, to drive expansion into higher-margin specialty plastics and chemicals. Solutia surged 40 percent to $27.30.
- Transocean (RIG) shares rose after a federal judge cleared the company of some damages related to the Deepwater Horizon spill, because it was shielded by a contract with well-owner BP. BP (BP) shares slumped.
Hedge Fund News Update
- Bridgewater Associates, which manages nearly $120 billion, posted returns of 23 percent in 2011 – a year when the average hedge fund portfolio lost 5 per cent.
Against the backdrop of fear over European debt and stagnant global growth, the hedge fund, led by one of Wall Street’s more enigmatic titans, Ray Dalio, sidestepped the mess. The fund did it with bets on US Treasurys, German bonds and the Japanese yen.
- Senior hedge fund professional Steven Solmonson has joined $13.4 billion securities firm Spectrum Asset Management, Inc. Solmonson joins Spectrum following his long-standing tenure as President of Park Place Capital Ltd., having merged the Park Place team into hedge fund Rab Capital last year.
- BNP Paribas is rolling-out a major investment program to expand its hedge fund and fund of hedge fund administration services, for both UCITs and offshore funds. Placing transparency, market exposure, liquidity and control at the heart of its hedge fund administration platform, the bank’s program tailors its service to more closely match the key requirements of both start-up and established funds.
- Some of the world’s top hedge fund managers have shown up at the annual World Economic Forum in Davos, Swizerland this week. Various news reports named George Soros, Steven Cohen, Daniel Loeb and Ray Dalio as some of the attendees for the conference that started Wednesday and ends on Sunday.
- BNY Mellon has enhanced its loan administration functionality to offer hedge funds and fund of hedge fund clients an automated solution with increased transparency. The new service integrates the firm’s alternative investment services and corporate trust business and will provide an end-to-end administrative solution from pre-settlement to post-settlement services.
- The Financial Services Authority (FSA) has handed out a further £195,000 in fines in the wake of the failures at hedge fund Greenlight Capital. The FSA has fined Alexander Ten-Holter, Greenlight trader and former compliance officer, £130,000 for failing to question and make reasonable enquiries before selling the fund’s stake in Punch Taverns.
- Funds of funds’ image has suffered since late-2008, as many who had underlying funds offering different liquidity terms, found themselves unable to return money to investors while overall performance was diving. The Madoff scandal was also a blow, particularly for many who are based in Geneva, a center for the fund of funds industry.