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Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 46 years of investment... More
My company:
Strategic Stock Investments
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Investing for Survival
  • The Morning Call---Yellen Crawfishes Again

    The Market

    Technical

    The indices (DJIA 17416, S&P 2021) snapped back sharply yesterday, remaining within uptrends across all timeframes: short term (16493-19269, 1914-2895), intermediate term (16507-21662, 1742-2456) and long term (5369-18860, 783-2083). The Dow recovered nicely back above its mid-December support low (17288).

    Volume fell; breadth improved. The VIX dropped 8%, finishing within a short term trading range, an intermediate term downtrend and above its 50 day moving average.

    What the Dow Transports are telling us (short):

    http://www.marketwatch.com/story/what-the-oldest-stock-market-index-is-telling-us-2015-01-28?link=MW_popular

    The long Treasury declined, closing for the second day back above the lower boundary of that very short term uptrend which it broke Tuesday. I am waiting another day before re-setting that trend call. TLT remained above the upper boundaries of its short and intermediate term uptrends and its 50 day moving average. The bond guys continue to tell us that deflation or some negative geopolitical event are in the offing.

    GLD really got whacked, ending below the lower boundary of its very short term uptrend; a close there today will confirm the break. It remains above the upper boundary its short term uptrend, within an intermediate term trading range and above its 50 day moving average. Clearly, GLD's consolidation has turned a lot more volatile than TLT's, which is not all that surprising. Its volatility is the reason our Portfolios initial position was small---allowing the room to average down, which our Portfolios will do, assuming GLD holds the 50 day moving average and the short term uptrend.

    Bottom line: yesterday's bounce in prices is not unexpected given the shellacking stocks took in the prior two days. It was clearly a positive that the Dow rebounded off its mid-December low. The question will be how it and the S&P handle resistance.

    At this point, GLD's chart remains solid enough that my thoughts are to Add to this holding, assuming it doesn't self-destruct as it did late last year.

    The latest from Stock Traders' Almanac (short):

    http://blog.stocktradersalmanac.com/post/Santa-Failed-to-Call-and-January-May-Be-a-Downer-but-Econ--Earning-are-Solid

    Fundamental

    Headlines

    Two economic stats were released yesterday: weekly jobless claims were much lower than anticipated while pending home sales were discouraging. This mixed performance fits with the week's marginally upbeat data flow and our forecast.

    It was a generally positive day for earnings announcements from market leaders of major industries. That helps to change the trend from down to erratic---which relatively is a plus. But it doesn't dispel my concern that it is a sign that global economic weakness is starting to impact our economy.

    Another plus on the day was an apparent re-thinking of the narrative on Wednesday's FOMC message from 'the Fed is worried about international concerns' (read recession) to 'the Fed assures us that it will be patient (read no rate increases in sight) in spite of its upgraded analysis of the economy'. Of course, this flip flop was helped along by some dovish comments by Yellen to congressional leaders. (Ever notice how the Fed always assuages the speculators when they 'misinterpret' Fed language?)

    Yesterday's narrative was yet another chapter in the never ending effort to tip toe through the tulips. And while it may have generated some positive vides in the pin action, it doesn't alter the fact that the Fed is in an increasingly untenable position (justifying 'money for nothing' when the economy has repeated surpassed its employment objectives) and is undoubtedly scared as shit that a move to right the economy (raise interest rates) will destroy the Markets---juiced up as they are by speculators, hedge funds and carry traders using free money to create asset bubbles.

    David Stockman on the futility of QE (medium and today's must read):

    http://www.zerohedge.com/news/2015-01-29/wreck-monetary-hesperus

    The futility of EU QE (medium):

    http://www.zerohedge.com/news/2015-01-29/fed-has-boxed-itself-corner

    Across the pond, Germany reported December CPI down 0.5%---providing yet another piece of evidence of global economic weakness.

    ***overnight, Eurozone January CPI fell 0.6%. Does this mean more EU QE?

    http://www.zerohedge.com/news/2015-01-30/eurozone-deflation-ties-post-lehman-record-worse-expected

    In addition, Russia joined the easy money parade, cutting key interest rates.

    In addition, the pissing contest between Greece and the EU ramped up another notch as (1) Greek leaders are questioning additional economic sanctions being planned for Russia and the (2) Russian finance minister volunteered that his country would be open to providing economic assistance to Greece---rumors of Russia's demise may be true but they are not likely to go down without a fight.

    Greece seeks financial aid from Russia (short):

    http://www.zerohedge.com/news/2015-01-29/putin-pivots-back-russia-confirms-willingness-provide-financial-aid-greece

    ***overnight, the EU 'unanimously' agreed to extend Russian sanctions but did add to them. It apparently didn't tell the Greeks that it was unanimous.

    http://www.zerohedge.com/news/2015-01-29/new-greek-finance-minister-has-some-questions-worlds-journalists

    An open letter from Syriza to the Germans (medium and an absolute must read):

    http://www.zerohedge.com/news/2015-01-29/alexis-tsipras-open-letter-germany-what-you-were-never-told-about-greece

    Bottom line: yesterday's rebound notwithstanding, (1) the Fed confessing that it is worried about the global economy in the face of massive central bank easing remains the principal takeaway from the FOMC statement, (2) the recent 'less bad' trend in the earnings of US corporate giants doesn't change the fact that 2015 profit estimates are now at zero growth and (3) the apparent conviction that the Greek government will get muscled into another trade off that keeps it in the Eurozone and avoids haircuts for the EU banks doesn't mean that it will be so.

    Of course, none of the above means that the QE fever is dead or dying or that investors won't choose to remain oblivious to the growing economic risks. However, I am not smart enough to play this current game of stock market roulette.

    I can't emphasize strongly enough that I believe that the key investment strategy today is to take advantage of the current high prices to sell any stock that has been a disappointment or no longer fits your investment criteria and to trim the holding of any stock that has doubled or more in price.

    Bear in mind, this is not a recommendation to run for the hills. Our Portfolios are still 55-60% invested and their cash position is a function of individual stocks either hitting their Sell Half Prices or their underlying company failing to meet the requisite minimum financial criteria needed for inclusion in our Universe.

    Thoughts on Investing from Jeremy Grantham

    Eight lessons from investing.

    1) Inside advice, legal in those days, from friends in the company is a LEARNED: particularly dangerous basis for decisions; you know little how limited their knowledge really is and you are overexposed to sustained enthusiasm;

    2) Always diversify, particularly for your pension fund;

    3) Fraud, near-fraud, or colossal incompetence can always strike;

    4) Don't buy stocks yourself if you're an amateur: invest with a relatively rare expert or in a low-cost index;

    5) Investing when young will start your brain turning on things financial;

    6) Painful errors teach you more than success does;

    7) Luck helps; and finally,

    8) Have a convenient mother to be the fall guy.

    News on Stocks in Our Portfolios

    AbbVie beats by $0.03, beats on revenue

    · AbbVie (NYSE:ABBV): Q4 EPS of $0.89 beats by $0.03.

    · Revenue of $5.45B (+6.7% Y/Y) beats by $90M.

    Altria misses by $0.01

    Altria (NYSE:MO): Q4 EPS of $0.66 misses by $0.01.

    C.R. Bard Q4 Non-GAAP EPS up 41%

    · C.R. Bard (NYSE:BCR) Q4 results ($M): Net Sales: 867.2 (+9.6%); Vascular: 244.6 (+19.5%); Urology: 217.8 (+7.6%); Oncology: 237.5 (+7.8%); Surgical Specialties: 145.0 (+3.1%); Other: 22.3 (-3.9%).

    · Net Income: 134.2 (-79.9%); EPS: 1.72 (-79.2%); Non-GAAP EPS: 2.29 (+40.5%).

    Economics

    This Week's Data

    December pending home sales fell 3.7% versus expectations of a 0.9% increase.

    http://www.calculatedriskblog.com/2015/01/nar-pending-home-sales-index-decreased.html

    Revised fourth quarter GDP came in up 2.6% (annualized rate) versus estimates of up 3.2% and the initial report of 5.0%.

    http://www.calculatedriskblog.com/2015/01/bea-real-gdp-increased-at-26-annualized.html

    Other

    Politics

    Domestic

    International

    A pessimist's outlook on Greece (medium):

    http://www.minyanville.com/sectors/global-markets/articles/peter-atwater-greece-syriza-greek-elections/1/28/2015/id/55950

    Disclosure: The author is long GLD, ABBV, MO, BCR.

    Jan 30 9:06 AM | Link | Comment!
  • The Morning Call--The Fed Sneaks In A Surprise

    The Market

    Technical

    The indices (DJIA 17191, S&P 2002) took in the chops again yesterday but remained within uptrends across all timeframes: short term (16464-19236, 1911-2892), intermediate term (16493-21648, 1737-2451) and long term (5369-18860, 783-2083). The Dow finished below its most recent support level (17288), although the S&P is still above its comparable level.

    Volume fell; breadth was lousy, again. The VIX climbed 18% finishing within a short term trading range, an intermediate term downtrend and above its 50 day moving average.

    The latest from TraderFeed (short and a must read):

    http://traderfeed.blogspot.com/2015/01/three-perspectives-on-market-breadth.html

    The long Treasury jumped, closing above the lower boundary of its very short term uptrend which it broke Tuesday. I am going to retreat on that confirmed break and await another day or two before re-setting a trend call. It remained within its uptrends across all the remaining timeframes and above its 50 day moving average. This pin action keeps TLT's chart quite strong.

    GLD fell, ending right on the lower boundary of its very short term uptrend, above the upper boundary its short term uptrend, within an intermediate term trading range and above its 50 day moving average. It also keeps GLD in consolidation. Let's see if it follows TLT recent pattern.

    Bottom line: clearly the Yahoo and Apple news weren't enough to keep the sellers at bay. The good news is that the Averages remained within all uptrends. The bad news is that the Dow broke its recent the mid December support lows (17288). In addition, the above comments from TraderFeed on Market breadth suggests that more weakness may lie ahead. So the focus is on the S&P mid-December low and the lower boundaries of the Averages' uptrends.

    Fundamental

    Headlines

    Only one secondary datapoint yesterday---mortgage and purchase applications fell. Not great but so far this week's stats have been upbeat.

    On the earnings front, after a terrible Tuesday, I think most investors hoped that the after-hours report from Apple would presage a better day on Wednesday; and we did get a great announcement from Boeing which help start the day on an upbeat note. However, after the close, Qualcomm reported and lowered its guidance; investors made their displeasure known. In any case, this keeps the trend of disappointing profit reports/guidance from major players in significant industries alive and well.

    To be fair, looking at total earnings announcements to date, 70% have beat expectations, 10% have been right on and 19% have been below estimates. However, (1) a number of the negative surprises that we have received have been from guidance not the actual profit report and (2) the misses that we are getting have all been from large players. In other words, companies that represent a disproportionally large part of total corporate earnings. To quantify that a bit, in December, 2015 S&P earnings guidance was for growth in the mid-single digits. Now it is zero.

    The big news of the day was the release of the statement of the January FOMC meeting which contained one surprise to the Market. For the first time, the Fed included the weak international economy as one of its concerns---better late than never I guess. This seem to be the proximate cause for the sudden precipitous decline in stock prices and a jump in the long Treasury bond price.

    How long it takes for investors to tie poor US corporate profits with something more than a strong dollar, to wit, poor international demand, is only a guess. I have been pounding on this theme for months. Not that it will even prove correct ultimately. But, investors have had their collective heads in the sand on the issue for too long. For it to take a Fed statement to bring this development as a potential risk to the forefront of their consciousness only supports the notion that these guys have been in serious denial. To be clear, I am still not convinced that the weak international economy is finally starting to lap our shores; but it has been a risk and perhaps yesterday is a sign that it is now getting priced into stocks.

    Overseas, reports are out that China will lower its 2015 growth forecast---not helpful to those unconcerned about slowing international growth. In addition, Singapore initiated its own QE policy. This only reinforces my worry that when everyone is trying to 'beggar they neighbor', no one does; it just makes matters worse.

    http://www.zerohedge.com/news/2015-01-29/2015-currency-wars-year-date-summary-13-rate-cuts-5-rate-hikes

    ***overnight, German CPI fell 0.5%.

    Bottom line: the risks of slowing US corporate profit growth and weakening international economies impacting our economy are at last impinging on investor's alternate reality. If these problems remain on the front page, then my thesis that stocks are overvalued will likely get a solid test. In the meantime that means the risks of more downside have probably increased---whether or not my thesis is proven correct.

    I can't emphasize strongly enough that I believe that the key investment strategy today is to take advantage of the current high prices to sell any stock that has been a disappointment or no longer fits your investment criteria and to trim the holding of any stock that has doubled or more in price.

    Bear in mind, this is not a recommendation to run for the hills. Our Portfolios are still 55-60% invested and their cash position is a function of individual stocks either hitting their Sell Half Prices or their underlying company failing to meet the requisite minimum financial criteria needed for inclusion in our Universe.

    Investing for Survival

    The problem with leverage (short):

    http://awealthofcommonsense.com/maybe-shouldnt/

    Company Highlight

    Qualcomm Inc. develops, markets and licenses cutting edge integrated circuits used primarily in wireless applications, provides data and positioning services for transportation applications, develops content management technologies and provides a platform for wireless application development. QCOM has grown profits at a 23% annual rate over the last 10 years; and has raised its dividend per share from an initial $.19 in 2004 to $1.54 in 2014. It has done this while earning a 15-20% return on equity. The company future appears equally promising as a result of:

    (1) it is a major beneficiary of the growth in 3G/4G wireless technology,

    (2) it is the established technological leader in global wireless baseband chipset market with 200+ royalty bearing licenses,

    (3) new product development [next generation processors and Wi-Fi chipsets],

    (4) acquisitions [Black Sand Technology plus 1400 patents from Hewlett Packard.

    Negatives:

    (1) the current global economic malaise could impact demand,

    (2) it is in a highly competitive industry,

    (3) it is facing anti-trust problems in China, regulatory investigations in the US and Europe and several patent infringement suits.

    The company is rated A++ by Value Line, has no debt but a huge cash position and its stock yields 2.3%.

    Statistical Summary

    Stock Dividend Payout # Increases

    Yield Growth Rate Ratio Since 2005

    QCOM 2.3% 13% 31% 10

    Ind Ave 2.2 7** 37 NA

    Debt/ EPS Down Net Value Line

    Equity ROE Since 2005 Margin Rating

    QCOM 0% 23% 1 34% A++

    Ind Ave 25 14 NA 11 NA

    **most companies in QCOM industry do not pay a dividend

    Chart

    Note: QCOM stock made good progress off its November 2008 low, quickly surpassing the downtrend off its August 2008 high (straight red line) and the November 2008 trading high (green line). Long term it is in a trading range (blue lines). Intermediate term, it is in an uptrend (purple lines). Short term it is in a downtrend (brown line). The wiggly red line is the 50 day moving average. The Dividend Growth Portfolio owns an 80% position and the Aggressive Growth Portfolio owns a 100% position in QCOM. The upper boundary of its Buy Value Range is $30. The lower boundary of its Sell Half Range is $123.

    (click to enlarge)

    http://finance.yahoo.com/q?s=QCOM

    1/15

    News on Stocks in Our Portfolios

    Sherwin Williams misses by $0.01, misses on revenue

    · Sherwin Williams (NYSE:SHW): Q4 EPS of $1.37 misses by $0.01.

    · Revenue of $2.57B (+4.5% Y/Y) misses by $30M.

    Occidental Petroleum beats by $0.04, revenue in-line

    · Occidental Petroleum (NYSE:OXY): Q4 EPS of $0.72 beats by $0.04.

    · Revenue of $4.31B (-15.3% Y/Y) in-line.

    Colgate-Palmolive beats by $0.02, misses on revenue

    · Colgate-Palmolive (NYSE:CL): Q4 EPS of $0.76 beats by $0.02.

    · Revenue of $4.22B (-3.2% Y/Y) misses by $10M.

    ConocoPhillips beats by $0.01

    · ConocoPhillips (NYSE:COP): Q4 EPS of $0.60 beats by $0.01.

    Qualcomm beats estimates, but FY15 view light

    · Qualcomm (NASDAQ:QCOM): FQ1 EPS of $1.34 beats by $0.09.

    · Revenue of $7.1B (+7.3% Y/Y) beats by $160M.

    · Expects FQ2 revenue of $6.5B-$7.1B and EPS of $1.28-$1.40 vs. a consensus of $6.74B and $1.28.

    · Expects FY15 revenue of $26B-$28B and EPS of $4.75-$5.05 vs. a consensus of $27.81B and $5.21.

    · 270M FQ1 MSM chip shipments, at the high end of guidance of 250M-270M. 220M-240M expected in FQ2.

    Economics

    This Week's Data

    Weekly jobless claims fell 43,000 versus expectations of down 7,000.

    A closer look at the employment data (medium and today's must read):

    http://streettalklive.com/index.php/blog.html?id=2586

    The FOMC finished its January meeting yesterday afternoon: (1) the policy language wasn't adjusted at all---so the Fed will 'remain patient' as it looks toward rate modification, however, (2) it did raise its qualitative assessment of virtually every sector (wages, consumer spending, fixed investment, inflation) of the economy except housing and (3) added its concern about the international economy.

    Other

    QE is not the solution (medium):

    http://www.zerohedge.com/news/2015-01-28/qe-not-solution-its-marker-all-wrong

    The 1% updated (short):

    http://gregmankiw.blogspot.com/2015/01/the-one-percent-updated.html

    China, the next Japan? (short):

    http://www.coyoteblog.com/coyote_blog/2015/01/in-china-its-1928.html

    Politics

    Domestic

    International War Against Radical Islam

    Former DOD chief of intel blasts Obama policy (medium):

    http://www.weeklystandard.com/author/stephen-f.-hayes

    Disclosure: The author is long QCOM, GLD, SHW, OXY, CL, COP.

    Jan 29 8:52 AM | Link | Comment!
  • The Morning Call & Subscriber Alert

    The Market

    Technical

    So much for falling volatility. The indices (DJIA 17387, S&P 2029) moved down big yesterday but remained within uptrends across all timeframes: short term (16464-19236, 1911-2892), intermediate term (16493-21648, 1737-2451) and long term (5369-18860, 783-2083).

    Volume jumped; breadth was lousy. The VIX climbed 11% finishing within a short term trading range, an intermediate term downtrend and back above its 50 day moving average.

    The long Treasury rose but not enough to re-capture the lower boundary of its very short term uptrend. Hence, the break of that trend is confirmed. It remained within its uptrends across all the remaining timeframes and above its 50 day moving average. While the violation of the very short term uptrend is a downer for the bond bulls, (1) that trend was very steep and ultimately not sustainable and (2) so far the 'consolidation' has been meager at best. So the TLT chart remains quite strong.

    GLD was up, ending within a very short term uptrend, above the upper boundary its short term uptrend, within an intermediate term trading range and above its 50 day moving average. The bounce suggests that like TLT the current consolidation will be relatively mild. At the open today, our Portfolios will Buy a 2% position in GLD.

    Bottom line: the good news in an otherwise poor day was that the Averages remained within all uptrends as well as above the mid December lows (17288, 1920). The bad news is that they have made two lower highs in the last month. With the post close euphoria levitating on the upbeat Yahoo and Apple news, today's pin action should be interesting.

    GLD's sell off didn't last long, so our Portfolios will nibble today. 'Nibble' is the operative word; they are not establishing a full position.

    Stock performance in February of pre-election year (short):

    http://blog.stocktradersalmanac.com/post/Down-January-Pressures-February-SPY-QQQ-DIA

    Fundamental

    Headlines

    Lots of US economic news yesterday; virtually all of it positive: the November Case Shiller home price index, the January flash services PMI, December new home sales, January consumer confidence and the January Richmond Fed manufacturing index were all ahead of expectations. However, all was not rosy; December durable goods orders really sucked. In sum though, the numbers were good and the strong new home sales were an offset to the durable goods orders.

    The principal focus of the day though was more poor earnings reports from leading companies in major industries---and clearly, investors weren't happy. I have been commenting on this developing negative trend since earnings season started but cautioned that it was too early to assume that profits for the entire season would be disappointing. Yesterday's pin action suggests that it may not be too early anymore.

    That said, after hours Yahoo announced that it was spinning off Alibaba and Apple reported great earnings. After pissing and moaning all day, the media turned on a dime, largely dismissing the 290+ point decline in the Dow and its potential causes, instead focusing on these two positive datapoints. Of course, they may correct in doing so. Today's tape will certainly provide some guidance on that point. However, irrespective of that, the momentum to date in profit reports has been on deteriorating earnings; and if that continues, the long term implications for both corporate profits and the economy in general will likely overwhelm any temporary respites provided by the occasional upbeat revenue and income statement.

    Overseas there was one stat reported: Chinese industrial earnings dropped 8% year over year. Not good but again largely ignored as investors and the media continue to struggle with the implications of the Greek elections. My bottom line is that I have no clue how this story ends but expect confusion to reign before it does. Here are some clarifying articles:

    This is a good explanation of the size of Greece's debt problem and possible solutions (medium):

    http://www.minyanville.com/trading-and-investing/fixed-income/articles/grexit-bonds-fixed-income-ecb-euro/1/27/2015/id/55947?refresh=1

    Greeks brace for a showdown (medium):

    http://www.telegraph.co.uk/finance/economics/11370960/Greek-coalition-braces-for-debt-showdown-as-Germany-rattles-sabre.html

    A brief look at the winning anti-austerity party's (Syriza) coalition partner (medium):

    http://www.theguardian.com/world/2015/jan/26/greece-elections-who-are-independent-greeks

    ***overnight, Syriza's first policy moves (medium):

    http://www.reuters.com/article/2015/01/28/us-greece-politics-idUSKBN0L10VP20150128

    ***overnight, China is expected to lower its 2015 growth target to 7% and Singapore joins the QE free for all.

    http://www.zerohedge.com/news/2015-01-27/singapore-enters-currency-wars-weakens-sgd-most-3-years

    Bottom line: yesterday's poor earnings reports and the ensuing sell off notwithstanding, stocks are still priced to reflect an outlook that incorporates an extremely positive assumption to every possible economic variable---to the point that even if that perfect scenario occurred, they would still be overpriced. Until one of the numerous risks facing the US manifests itself with sufficient force for investors to seriously question their faith that the global central banks' polices are not only correct and will provide an infinite Market put, stocks are likely to retain their current risk premium. When that faith is broken, which I believe will, I don't want to be caught wondering what I should Sell. Because it will be too late.

    I can't emphasize strongly enough that I believe that the key investment strategy today is to take advantage of the current high prices to sell any stock that has been a disappointment or no longer fits your investment criteria and to trim the holding of any stock that has doubled or more in price.

    Bear in mind, this is not a recommendation to run for the hills. Our Portfolios are still 55-60% invested and their cash position is a function of individual stocks either hitting their Sell Half Prices or their underlying company failing to meet the requisite minimum financial criteria needed for inclusion in our Universe.

    The latest from John Hussman (medium):

    http://www.hussmanfunds.com/wmc/wmc150126.htm

    The latest from Odey Asset Management (medium):

    http://www.zerohedge.com/news/2015-01-27/equities-will-be-devastated-crispin-odey-warns-looming-recession-will-be-remembered-

    Subscriber Alert

    In our annual review of Rockwell Collins (NYSE:COL), the company failed to meet the minimum quality standards for inclusion in the Aggressive Growth Universe. Therefore, at the Market open, the Aggressive Growth Portfolio will Sell COL and the stock is being Removed from the Aggressive Growth Universe.

    Investing for Survival

    IL's Annual Global Retirement Index 2014: The Categories and Scores

    Accurately scoring the world's top retirement locations is a complex process. So, we've broken down each of our categories to give you a "behind the curtain" look at how we put the Index together.

    Real Estate: Countries where real estate prices are low and the purchase of real estate is relatively easy received good scores. For 2014, we have also taken the average purchase price and rental price per square meter into consideration. And we've added a "value factor," based on reports from our contributing editors and from real estate contacts around the world on how much bang for your buck you get when buying real estate in each country.

    Special Benefits: This category considers government provisions that make moving to and living in each country easier and more affordable for foreign retirees. Taken into account are discounts on health care, public transport, airfares, entertainment, utilities, whether you can import goods duty free, property rights for foreign residents, and property tax rates.

    Cost of Living: This score is based on the first-hand information collected by our editors and contributors. We look at the daily costs a couple encounter in a destination, utilities, groceries, transport…we ask how much a good meal costs, and if the price of a movie ticket or a day trip out of the city is low…

    Ease of Integration: In order to score countries in this category, we looked at things like the degree to which English is spoken, the friendliness of the locals, the size of the existing expat community and the availability of home comforts.

    Entertainment and Amenities: Here, we looked at the range of activities open to expats. We rated the quality and availability of restaurants, movie theaters, outdoor activities and local music and art. We also ask our in-country contacts to rate the variety of activities on a scale to see how much excitement you can find in a destination.

    Health Care: Considered in this category are the cost of health care and the quality. How much a typical visit to a general practitioner tells you a lot, as does cost and the coverage particulars of health insurance. Also considered are the number of people per doctor, the number of hospital beds per 1,000 people, the percentage of the population with access to safe water, the infant mortality rate, life expectancy, and public health expenditure as a percentage of a country's GDP.

    Retirement Infrastructure: We look at the quality of the roads, the availability of good public transport, the number of cell phones, and Internet penetration, and how easy it is to get to and from the U.S. and Canada by plane.

    Climate: Countries with temperate weather throughout the year, moderate rainfall and little risk of natural disaster come out on top in this category. This year, we also took the comfort factor into consideration for the first time. We use data representing each country as a whole instead of favoring one region over another.

    The Final Scores

    News on Stocks in Our Portfolios

    Boeing beats by $0.20, beats on revenue

    o Boeing (NYSE:BA): Q4 EPS of $2.31 beats by $0.20.

    o Revenue of $24.47B (+2.9% Y/Y) beats by $540M.

    |7:31 AM

    ·

    T. Rowe Price beats by $0.04, misses on revenue

    o T. Rowe Price (NASDAQ:TROW): Q4 EPS of $1.18 beats by $0.04.

    o Revenue of $1B (+7.6% Y/Y) misses by $20M.

    ·

    General Dynamics' profit rises, beats expectations

    o Earnings from continuing operations of $737M, or $2.19 per diluted share, vs. $624M, or $1.76 per diluted share in the same quarter a year ago.

    o Operating margins were 12.8% for Q4, 130 bps higher than fourth-quarter 2013 margins.

    o Free cash flow from operations of $3.2B for the year.

    o Total backlog at the end of the quarter was up 58% Y/Y to $72.4B.

    Praxair EPS in-line, misses on revenue

    · Praxair (NYSE:PX): Q4 EPS of $1.57 in-line.

    · Revenue of $2.99B (-0.7% Y/Y) misses by $70M.

    Canadian National Railway beats by C$0.06, beats on revenue

      • Canadian National Railway (NYSE:CNI): Q4 EPS of C$1.03 beats by C$0.06.
      • Revenue of C$3.21B (+17.2% Y/Y) beats by C$90M.

    AT&T sees "continued" revenue growth and expanding margins

    · AT&T (NYSE:T) expects a 2015 of "continued consolidated revenue growth" and adjusted EPS growth "in the low single-digit range" while improving free cash flow and dividend coverage.

    · The company noted revenue gains of 4.5% after adjusting for Connecticut wireline property sale, highlighted by total wireless revenues that grew 7.7% to $19.9B. Wireline revenues gained 0.4% to $14.6B.

    · Wireless service revenues were down again, -3.7% to $15.1B, on "continued customer growth of Mobile Share Value plans." Wireless operating income -18.1% to $3.2B; Phone-only postpaid ARPU dropped 10.7% Y/Y.

    · For the full year, revenues of $132.4B were up 2.8% from 2013 (3.1% when excluding Connecticut wireline divestments) and EPS was up fractionally to $2.51 from $2.50. Full-year cash from operations was $31.3B; capex of $21.4B.

    Apple beats estimates, guides in-line

    · Apple (NASDAQ:AAPL): FQ1 EPS of $3.06 beats by $0.46.

    · Revenue of $74.6B (+29.5% Y/Y) beats by $6.91B.

    · 74.5M iPhones (above expectations), 21.4M iPads (near expectations), 5.5M Macs (near expectations).

    · Expects FQ2 revenue of $52B-$55B vs. a $53.79B consensus.

    Economics

    This Week's Data

    The November Case Shiller home price index came in at +0.7% versus consensus of +0.6%.

    http://www.calculatedriskblog.com/2015/01/case-shiller-national-house-price-index.html

    The January flash services PMI was reported at 54.0 versus expectations of 53.8.

    December new home sales rose 11.6% versus estimates of up 3.1%.

    http://www.calculatedriskblog.com/2015/01/new-home-sales-at-481000-annual-rate-in.html

    January consumer confidence came in at 102.9 versus forecasts of 96.0.

    The January Richmond Fed manufacturing index was reported at 6.0 versus an anticipated 5.5.

    Weekly mortgage applications fell 3.2% while purchase applications were off 0.1%.

    Other

    The impact of congress' 2013 decision not to re-authorize the extension of unemployment benefits (short):

    http://gregmankiw.blogspot.com/2015/01/the-2014-employment-boom.html

    Fear and dread of deflation (medium and a must read):

    http://www.zerohedge.com/news/2015-01-27/fear-and-dread-deflation-keynesian-big-lie-work

    Politics

    Domestic

    International War Against Radical Islam

    Obama's Iran nonsense (short):

    http://www.powerlineblog.com/archives/2015/01/iran-nonsense.php

    Ponder this (short):

    http://www.coyoteblog.com/coyote_blog/2015/01/christians-vs-muslims.html

    Disclosure: The author is long GLD, GD, TROW, PX, BA, CNI, T, AAPL.

    Jan 28 9:06 AM | Link | Comment!
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