Friday, August 30, 2013


In the wake of what the US claims is a confirmed chemical weapons attack by the Syrian government on their own citizens, a US military strike appears to be imminent. 

The Wall Street Journal reports that the Obama administration laid the groundwork for unilateral military action in Syria, a shift officials said reflected the U.K.'s abrupt decision not to participate and concerns that President Bashar al-Assad was using the delayed Western response to disperse his military assets.

The push for a quick international strike to punish Syria for what the U.S. said was a chemical-weapons attack appeared in disarray on Thursday, after British lawmakers defeated a government motion in support of military action.

But President Barack Obama is prepared to act without Britain, officials said, noting that unlike U.S. involvement in the 2011 military operation in Libya, the options under consideration in Syria are smaller-scale and wouldn't require a coalition to be effective.

"Here, what's being contemplated is of such a limited and narrow nature that it's not as if there's a similar imperative for bringing in different capabilities from different countries," a senior administration official said. "We believe it's important that there be diplomatic support from key allies, and we think we're getting that."
After a week of U.S. saber rattling that raised expectations about an imminent attack on Syria by a U.S.-led coalition, the White House had yet to release details about the intelligence, but said its findings conclusively showed the Assad regime used chemical weapons on a large scale against civilians last week.

U.S. intelligence agencies believe the main poison used was likely sarin, and estimate the death toll at 500 to 1,000 people, according to a senior U.S. official.

Syrian government officials have denied the Assad regime used chemical weapons, and accused their opponents of staging the attacks to provoke international action. Mr. Assad on Thursday said that "Syria will defend itself against any aggression," Syrian state media reported.

As of Thursday evening, neither Mr. Obama nor his aides had made a public case to support their claims about Mr. Assad's role in the attack. The White House has said it would make some findings public by the end of this week.

Friday morning in the Philippines, Defense Secretary Chuck Hagel said despite Britain's rejection of support, the U.S. would continue to work to build an international coalition. "Our approach is to continue to find an international coalition that will act together," Mr. Hagel said.

White House officials on Thursday signaled a desire to act quickly in Syria, on the U.S.'s own timetable and unilaterally, if necessary. A meeting of the permanent members of the U.N. Security Council in New York on Thursday ended with no sign of progress on an agreement. 

U.S. officials have said the intelligence is clear-cut and that they don't need to await the U.N. investigators' findings before deciding how to proceed.

U.S. officials on Thursday defended the strength of the intelligence linking the Assad regime to the alleged Aug. 21 chemical attacks, but the Obama administration held off on releasing the unclassified intelligence.
One senior U.S. official cited "multiple pieces of evidence of regime involvement," adding: "Nobody's thinking that this is a rogue operation" by the Syrian unit that controls the regime's arsenal of poison gas.

Everyone knows that world conflict can cause volatility in the market, and especially with a global economy that is still weak and recovering but how are some markets reacting to the imminent threat?

Lockheed Martin (LMT). Lockheed Martin's main weapons system is the F-35 joint strike fighter, expected to become one of the world's largest military aircraft programs. Stock prices hit their 52 week high last week but since slipped back and is currently trading around $122.50 but trending back up.
52wk high: 126.729
52wk low: 85.88
EPS: 8.92
PE: 13.70
Div Rate: 4.60
Yield: 3.76
Market Cap: 39.28b
Volume: 221.92k

Boeing (BA). Boeing supplies the U.S. military and other international forces with the likes of the AH-64D Apache combat helicopter, drones, missiles like the A160T Hummingbird, and the F/A-18E/F Super Hornet strike fighter. Stock is currently trading about $5 off the 52 week high and trending down.
52wk high: 109.49
52wk low: 69.03
EPS: 5.47
PE: 18.90
Div Rate: 1.94
Yield: 1.8489
Market Cap: 78.91b
Volume: 500.47k

Northrop Grumman (NOC).   Northrop Grumann's areas of focus include drones and cyber security in support of its homeland security solutions. They also develop CBRNE (Chemical, Biological, Radiological, Nuclear and Explosives) detection systems in place around the U.S. to identify potential threats. Stock is trading about $4 off their 52 week high and is trending down.
52wk high: 96.4201
52wk low: 62.80
EPS: 8.04
PE: 11.60
Div Rate: 2.44
Yield: 2.622
Market Cap: 21.38b
Volume: 154.74k

General Dynamics (GD). General Dynamics produces military vehicles such as the legendary Abrams M1 Main Battle Tank, as well as ships, munitions, and military-grade communication systems. Stock hit the 52 week high near the beginning of August but is currently trading about $4 below that and trending down.
52wk high: 87.85
52wk low: 61.70
EPS: -0.85
Div Rate: 2.24
Yield: 2.6801
Market Cap: 29.17b
Volume: 148.96k

Raytheon (RTN). Raytheon's sectors of expertise are missiles and electronics. Their stock also hit the 52 week high last week and is now about $2 below that and trending down.
52wk high: 77.93
52wk low: 52.24
EPS: 5.91
PE: 12.80
Div Rate: 2.20
Yield: 2.907
Market Cap: 24.37b
Volume: 180.65k

Being the chief export of the Middle East it’s no wonder that oil and petroleum prices would reflect the uneasiness of a potential aggravation in the regional conflict.

Both West Texas Intermediate and Brent Crude have been trading well above the $105 mark for most of the quarter but both experienced significant spikes last week following the announcement of the chemical attack. Currently they are at $108.80 and $115.16, respectively, and trending down but if the US does follow through with a military strike it’s likely they will experience another sharp increase.

While it looks like the market is taking it’s time to adjust and react to the current situation but it would be advisable to keep an eye on these areas over the next few weeks as the situation develops more.

Friday, August 23, 2013


On Thursday August 22, 2013 the Nasdaq stock exchange went down, leaving a flood of investors unable to execute trades.  As a result the SEC has renewed a push to implement new accountability rules.  Below is the original article as reported by Reuters

Thirty minutes into the crippling outage that hobbled the Nasdaq stock market on Thursday afternoon, stopping all trading in $5.9 trillion worth of U.S. equities, exchange officials had the problem fixed.
It was another two-and-a-half hours, however, before they were ready to flip the switch and turn the all-electronic market back on.
Most of the 191 minutes that the exchange was dark was spent in sometimes frantic conversation with scores of banks, brokers, investment companies and rival exchanges who wanted Nasdaq's assurance that a restoration of trading would be orderly and would not lead to panic.
"We had to make sure all the exchanges were connected to us successfully and if the firms on the outside could get in," said one Nasdaq official who spoke on condition of anonymity.
Meanwhile, banks' trading desks were cautioning Nasdaq, operated by Nasdaq OMX Group Inc, not to rush to reopen, fearing that a restart full of technical errors would only sap more confidence from rattled markets, according to three sources at brokerages and banks who declined to be identified.
In the end, the reopening of trading did go relatively well.
Transactions first restarted at 3 p.m. EDT (1900 GMT) in a single microcap stock, Atlantic American Corp, a test case picked for its front-of-the-alphabet ticker. Twenty-five minutes later, the rest of the market opened, and, according to a Nasdaq statement, "The trading day finished in normal course."
Shares of Nasdaq itself, which initially fell by more than 5 percent when trading resumed, recovered some of their lost ground to close the day 3.4 percent lower. The widely tracked Nasdaq Composite Index gained nearly 1.1 percent.
While the worst case scenarios may have been averted, the outage still stands as among the most serious in a series of recent technological failures to hit the U.S. securities business, including a software issue at the Chicago Board Options Exchange this spring that delayed the start of trading there for half a day.
It was also the latest black eye for Nasdaq, which in May agreed to pay $10 million, the largest penalty ever against a stock exchange, to settle SEC civil charges over its mishandling of Facebook's initial public offering in 2012.
Late Thursday Nasdaq identified the problem as a "connectivity issue between an exchange participant and the SIP," or Securities Information Processor - essentially the system that receives all traffic on quotes and orders for stocks on the exchange.
This problem "led to degradation in the ability of the SIP to disseminate consolidated quotes and trades," Nasdaq said in a statement. "The cause of the issue has been identified and addressed."
Whether it has been addressed to the satisfaction of regulators is another question. U.S. Securities and Exchange Commission Chair Mary Jo White called for a meeting of Wall Street leaders to help insure the "continuous and orderly" functioning of securities markets.
The incident "should reinforce our collective commitment to addressing technological vulnerabilities of exchanges and other market participants," she said.
Thursday's outage could well give White fodder to press ahead with new rules, proposed in March, that would hold exchanges, clearing agencies and certain "dark pool" trading venues more accountable for taking steps to prevent potential systems disruptions.
The rules, if adopted, would replace the current regulatory model in which exchanges rely on voluntary guidance known as "Automation Review Policies" to address security and stability issues with their systems.
The SEC rushed to roll out its proposal as a direct response to several high-profile software problems last year, including Nasdaq's debacle with the Facebook IPO and a near-collapse at Knight Capital, a major Nasdaq market maker, as well as the two-day shutdown of the U.S. equity market due to Superstorm Sandy.
Exchanges, including Nasdaq and rival NYSE Euronext, parent of the New York Stock Exchange, pushed back, citing a number of concerns, including costs and an "unduly broad" requirement to disseminate information to member firms about certain incidents. "This requirement would likely have a chilling effect on communications," they wrote.
The SEC agreed to extend the comment period on the rule, effectively delaying it, but late Thursday after this latest incident, White said she will push to get it completed.
The problems surfaced at 12:14:03 p.m. (1614 GMT), when all traffic through Nasdaq stopped abruptly.
During the shutdown, trading of shares not listed on Nasdaq continued, but transactions could not be executed on the Nasdaq platform. Options trading was also halted. All rival exchanges agreed to halt trading of any Nasdaq-listed issue.
In Nasdaq's Transaction Services division, it was quickly emergency mode as soon as the outage struck, the Nasdaq official said.
The team focused primarily on whether the exchange should reopen trading as the clock ticked toward the regular 4 p.m. close. They raised the "doomsday" scenario of reopening and not being able to execute a flood of orders.
"We asked all the what-if questions," the official said.
As frustrated as Nasdaq customers were by the outage, they were more concerned that the exchange have all its ducks in a row before attempting to restart.
"The general feedback given to Nasdaq was, 'Don't rush back to fix it. It will be 10 times worse to come back online in a rush than to take time and get it right,'" said one source.
At Nasdaq, coordination was tight between the exchange's technology staff, rival exchanges that had halted their trading of Nasdaq stocks, brokerage firm members and the firms' major customers.
"It's not an excuse, but anyone who understands the complexities of the trading and matching systems and the difficulties of having multiple exchanges operating and trading the same stocks can understand how difficult this was," the Nasdaq official said. "It worked. It looks like the customers and the public did not get hurt."
Not all will agree with that assessment, but it could be some time before the size of losses, if any, can be determined. And Nasdaq faces a reputational risk that could damage its listings business.
"If you're advising companies to really go public, are you advising them to go public on Nasdaq?" said one source.

Friday, August 16, 2013


Back in January I discussed the slip in Apple share price.  Even though the price had experienced a sharp decline from a record high of $705.07 down below $500 I still felt the company had plenty of potential. 
As a follow-up to that post, here is the latest assessment of Apple by Ian Wyatt, Chief Investment Strategist for Wyatt Investment Research.

After billionaire investor Carl Icahn announced a stake in Apple (AAPL), shares jumped nearly 5%. The 77-year old activist investor announced his position on Twitter two days ago: "We currently have a large position in Apple. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come."

The Wall Street Journal reported that he's been building his $1.5 billion stake in Apple over the last month. What's his outlook? Icahn says, "Even without earnings growth, we think it ought to be worth $625." He's recommending that CEO Tim Cook increase the record $60 billion share buyback program. Doing so would decrease the number of Apple shares, and raise the EPS.

This is just the latest news that helped lift Apple shares by more than 100 points. The stock is now up around 27% since its July lows of $393, marking a big comeback for the tech giant. I've been bullish on Apple shares. In "The Truth About Apple," I told readers:

Like all big tech companies, Apple has matured. The idea that innovation at Apple died with Jobs doesn't sit well with me. While Apple will continue to innovate and create new products, it doesn't really matter. Because Apple's stock price reflects a stale business that will never grow again.
In that June 18 article, I advised readers to buy Apple stock. Here's exactly what I said:
Value and income investors alike should love the stock, thanks to the shareholder-friendly initiatives and the cheap stock price.

At $432, now is the perfect time to buy Apple shares. The stock is cheap, with a P/E just north of 10. The company's growth is superior to most companies of its size. And the balance sheet is pristine, with more cash than many countries.

Apple may not have the high dividend yield that most income investors seek. But you should be attracted to the growing dividend, huge share buyback program and the cheap stock.

I've personally owned Apple shares since 2010. The decline of Apple shares from $700 to less than $400 was painful. But like many Apple shareholders, I kept every one of my shares. In fact, I even violated a crucial investing rule: Don't try to catch a falling knife. Even as Apple shares plunged, I bought a little more stock in January at $508 and February at $459. Averaging down can be a mistake, but it occasionally creates big profits.

Just eight days after telling readers to buy Apple shares, I made a big move. I doubled-down on Apple in late June, and bought a sizable position at $398. Those shares are now up 25% in less than two months. Why did I buy Apple at that time? The reason is simple. I looked at Apple and saw value. The stock was trading at just 10x earnings. That's cheap for any company. And when you get a chance to buy a great company at a bargain price, you snap it up.

Plus, I'm an Apple customer who loves the products. My iPhone, MacBook, iPad, and iTunes are all intertwined in the Apple ecosystem. Like millions around the world, I'm a customer for life. That's why, when I saw Apple briefly dip below $400, I pulled the trigger. At the time, there was rampant pessimism. And that can be a sign of a bottom.

Apple shares are now up considerably. But the stock is still cheap. On an enterprise value basis -- which removes the value of the company's cash -- shares trade at a multiple of just 9x this year's earnings estimates. That's a 45% discount to the S&P 500.

My view on Apple hasn’t changed: "Apple is truly a unique opportunity to buy a world-class company at a very reasonable price. With the stock market near all-time highs, Apple certainly appears attractive. Especially when you consider the potential for substantial gains if the company unveils another device that changes the world..."

If you're looking for value in this rising stock market, look no further. You've found a great bargain in Apple shares. That's why Carl Icahn is buying Apple shares. I hope you've done the same.
The original article by Ian Wyatt can be found at