Stocks were headed slightly higher on Friday after employers added new jobs numbers that surpassed expectation. The Labor Department reported that there were an addition of 175,000 new jobs added in February even with the harsh winter weather that swept across the country. This followed an addition of 129,000 jobs in January. Paul Dales, an economist with Capital Economics, said, “If the economy managed to generate 175,000 new jobs in a month when the weather was so severe, once the weather returns to seasonal norms… employment growth is likely to accelerate further.” The positive data was surprising due to the fact that many factories were closed because of the bad weather. Even though February’s new job additions were a welcome surprise, they were still below the 12 month average of 189,000. There was an addition of 15,000 new jobs in the construction sector, which usually takes a big hit when winter weather hits. There was also an addition of 6,000 new jobs in manufacturing and a 13,000 addition in the government. December’s job additions were upwardly revised from the original 75,000 to 84,000 and January’s was upwardly revised from 113,000 to 129,000. The unemployment rate inched up from last month’s five-year low of 6.6% to 6.7%.
Shares of Safeway Inc. were trading down over 3% after the company announced that they would be acquired by Cerberus Capital Management. The deal will total about $9.4 million. Safeway is one of the largest U.S. chain grocery stores. The deal will run Cerberus about $40 per share, which is at a 1.3% premium over the closing price on Thursday. Cerberus also owns the popular Albertsons franchise. The merge will create the most dominant chain on the West Coast and total 2,400 grocery stores and house 250,000 employees. Robert Edwards, Safeway CEO who will become CEO of the new firm, said, “This is a clear and compelling rationale for this merger. This merger will improve our competitive position.” He also said that the synergies trickle down to operation savings and lower consumer prices.
Facebook, Inc (FB) was trading slightly lower after the company reported that they would be expanding their server farm in Sweden. This was their first opening outside of the United States for the company. The plant is located in Lulea, northern Sweden, and they will be adding on a new data center. Facebook (FB) said that they will be implementing new technology that will nearly double the speed of construction. The plant was originally created in an effort to improve the company’s performance in Europe. An actual construction date has not been released.
That’s all for the day. Have a great weekend!
All the best,
Jack Aubrey, Oakshire Financial…
Just a couple of items, friends, before we get carried away and all hell breaks loose.
The first issue is Tesla (NASDAQ: TSLA), the company that built a magic car that flies you to the moon and back and pays you cash money for your trouble.
We believe this company has a future – don’t get us wrong. We don’t know how much of a future, but let’s agree that for at least a couple of years Tesla should produce, market and sell more cars than it does today.
That said, we’re not so sure that the company’s stock has a great future – over the near term, at least.
How dare you question TSLA!?
Swine! Rebel! Heretic! Doubter!
Before we get to the cold hard facts, please hold your tomatoes and take a look at the company’s chart.
It may look like the Mona Lisa to Tesla bulls, but…
There’s not a lot to be said after a touch of the RSI overbought 80 line (black circle, at bottom). Technically, such an occurrence bodes ill for a stock and calls for a pause in the buying, at least. At worst, it means a selloff could be near.
And yes, we can see that TSLA shares have twice hit the RSI 80 line over the last twelve months, and that the stock continued to climb to its current all-time highs, so a buy-and-hold strategy may, indeed, have worked out best for Tesla bulls. No argument there.
But please also be aware that while the first breach of RSI 80 in May of 2013 resulted in no material damage to the stock, the second produced a two month, 40% decline (October/November, 2013). And that’s what we call 50-50, historically-based odds.
Or, to bring it right down to earth – what this latest overbought reading will bring is anybody’s guess.
Our feeling on the matter is that the big money sees the nearly 800% gain over the last five quarters and will now begin to take cash off the Tesla table – particularly after the RSI overbought read and a recent unrealistic jump of 35% in just seven trading sessions.
And what about those cold, hard TSLA facts you mentioned?
- With its latest rise, TSLA now possesses a market capitalization of $31.1 billion, while
- General Motors possesses a market cap of $58 billion, and
- Ford Motor Company sports a $60 billion market cap.
Do those numbers bother you?
They wouldn’t be such a big deal if sales numbers were in the same ballpark, but they’re not.
Tesla’s full year, 2013 sales totalled $2 billion, while GM’s topped $155 billion and Ford’s exceeded $139 billion.
Oh, we know, Tesla’s share price is discounting future earnings and all the enterprise and revolution value built into the shares, because, as we’ve said before, Tesla will shortly discover a cure for death itself, adding tremendous additional bloatage to its already pneumatic earnings multiple.…
Markets were relatively flat on Wednesday after the private sector announced new job numbers that were below expectations during the month of February. The ADP National Employment Report showed that private employers hired a total of 139,000 new employees and they downwardly revised the previous months data. January’s data was lowered to 127,000 new jobs from the originally reported 175,000. Economists were expecting the new report to show a gain of 160,000. The labor report from the government, which is a much more in-depth, is due out this coming Friday. Economists are expecting new job numbers to ring in around 150,000 for non-farm payroll and 154,000 in the private sector. Scott Brown, chief economist at Raymond James, said, “As you head to Friday’s payroll report, you are looking at another month of weather effect. It still suggests things are improving but it’s hard to gauge the exact strength of the job market. Things should look less distorted in March and April. Spring is the make or break time for (the) economy.”
Shares of General Electric (GE) were trading slightly higher after the company announced that their CEO, Jeff Immelt, would be spending his entire bonus for 2013 on shares of the company’s stock. The bonus, totaling $2.6 million, accounted for roughly 104,900 GE shares (currently running $25.19 per share). This news comes shortly after he purchased 40,000 shares of the company in January. To date this year, Immelt has spent $3.6 million on shares of General Electric. In the latest filing with the Securities and Exchange Commission, he now holds 1.96 million shares in GE. Immelt said, “I am investing right alongside of you. I have invested my entire bonus in GE stock. Like the rest of our leaders, I believe in GE.”
Exxon Mobil (XOM) shares were trading lower after the company announced they were expecting nearly flat natural gas production for 2014. They are also expecting spending to drop 6% to roughly $39.8 billion. Throughout this year the company is predicting that they will produce about 4 million barrels of oil per day, which is very little movement from last year. They are, however, expecting growth between 2015 and 2017. Production is expected to increase between 2% and 3%. Throughout this year Exxon is expecting to launch 10 new major projects into production. The majority of these projects will involve more profitable crude oil. Mark Albers, Exxon’s senior vice president, said, “This is going to be a big year.”
That’s all for the day.
All the best,
Jack Aubrey, Oakshire Financial…