Joseph Gomez, Sr. Investment Advisor
The Nasdaq made a multi-year high this week. The index is now up 11.54% for the year, which is nearly double the 6.94% YTD return for the S&P 500. The key to this rally has been the strength we’ve seen in the Financial and Technology sectors, which make up roughly 35% of the market when combined. The S&P 500 is two standard deviations above its 50-day moving average, which is in extreme overbought territory. We continue to be bullish on the long-term prospects of this market, but when things get this overbought, we temper our enthusiasm on the short-term. Expect a small pullback at some point over the next week, but be ready to put money to work on weakness. Remember that the “trend is your friend”, and right now the trend is higher. Our Chief Investment Officer, Doug Terry, provides a detailed look at our latest tactical changes. Click here to read it.
The two biggest stories this week were the very positive Non-Farm Payrolls number and Facebook’s IPO filing at the SEC. I’m sure Joe Calhoun will go into further details on the payroll numbers so I will, instead, focus on the Facebook IPO which was filed at the SEC this week. The Wall Street Journal released an annotated version of the S-1 filing. You can see it by clicking here. From a start-up in a Harvard dorm room to 800 million users worldwide and $4 billion in revenues is nothing short of astonishing. It has created a powerfully disruptive technology and it is worth a closer look for investment purposes. There are many revenue opportunities ahead for Facebook. Among them are social media, search engine, advertising, e-commerce, movies and entertainment, gaming, and as a mobile operating platform. We will be following the developments of the offering as well as the valuation and other key metrics.
Another story that didn’t get much press coverage this week was the release of personal holdings by the President of the Dallas Federal Reserve, Richard Fisher. Mr. Fisher owns at least $1.25 million in gold and platinum via the ETF, GLD (see below). Wait, I thought Bernanke echoed Keynes, who called gold a “barbarous relic”? This is interesting none the less.
Below are some key charts, an earnings calendar, economic calendar and key interest rates. This week we get a good look at consumer activity with the release of earnings from Disney (DIS), Ralph Lauren (RL) and Visa (V). We also get to hear how some of the recent IPOs such as, Groupon (GRPN), LinkedIn (LNKD) and OpenTable (OPEN) are doing. The restaurant and specialty eateries group has been unstoppable. This week, we hear from Yum! (YUM) and Panera (PNRA).
Have a pleasant and productive week.
Important earnings expected next week
| Ticker | Company | Sector | Industry | Dividend Yield | Earnings Date |
| KO | The Coca-Cola Company | Consumer Goods | Beverages – Soft Drinks | 2.76% | 2/7/12 8:30 |
| PM | Philip Morris International, Inc. | Consumer Goods | Cigarettes | 4.02% | 2/9/12 |
| CSCO | Cisco Systems, Inc. | Technology | Networking & Communication Devices | 1.19% | 2/8/12 16:30 |
| PEP | Pepsico, Inc. | Consumer Goods | Beverages – Soft Drinks | 3.09% | 2/9/12 8:30 |
| V | Visa, Inc. | Services | Business Services | 0.82% | 2/8/12 16:30 |
| DIS | Walt Disney Co. | Services | Entertainment – Diversified | 1.50% | 2/7/12 16:30 |
| CVS | CVS Caremark Corporation | Services | Drug Stores | 1.49% | 2/8/12 8:30 |
| YUM | Yum! Brands, Inc. | Services | Restaurants | 1.79% | 2/6/12 16:30 |
| GRPN | Groupon, Inc. | Technology | Internet Information Providers | 2/8/12 | |
| RL | Ralph Lauren Corporation | Consumer Goods | Textile – Apparel Clothing | 0.51% | 2/8/12 8:30 |
| WFM | Whole Foods Market, Inc. | Services | Grocery Stores | 0.73% | 2/8/12 16:30 |
| NUAN | Nuance Communications, Inc. | Technology | Application Software | 2/9/12 16:30 | |
| SIRI | SIRIUS XM Radio Inc. | Services | Broadcasting – Radio | 2/9/12 | |
| LNKD | LinkedIn Corporation | Technology | Internet Information Providers | 2/9/12 16:30 | |
| EXPE | Expedia Inc. | Services | Lodging | 1.64% | 2/9/12 16:00 |
| OPEN | OpenTable, Inc. | Services | Business Services | 2/7/12 16:30 |
Key Rates from Bloomberg.com
| CURRENT | 1 MO PRIOR | 3 MO PRIOR | 6 MO PRIOR | 1 YR PRIOR | |
|---|---|---|---|---|---|
| Fed Funds Rate | 0.11 | 0.07 | 0.08 | 0.13 | 0.18 |
| Fed Reserve Target Rate | 0.25 | 0.25 | 0.25 | 0.25 | 0.25 |
| Prime Rate | 3.25 | 3.25 | 3.25 | 3.25 | 3.25 |
| US Unemployment Rate | 8.30 | 8.50 | 8.90 | 9.10 | 9.10 |
| 1-Month Libor | 0.26 | 0.30 | 0.25 | 0.21 | 0.26 |
| 3-Month Libor | 0.53 | 0.58 | 0.44 | 0.27 | 0.31 |
Mortgage* (National Average)
| CURRENT | 1 MO PRIOR | 3 MO PRIOR | 6 MO PRIOR | 1 YR PRIOR | |
|---|---|---|---|---|---|
| 30-Year Fixed | 3.88 | 3.94 | 4.08 | 4.35 | 4.89 |
| 15-Year Fixed | 3.21 | 3.28 | 3.38 | 3.51 | 4.15 |
| 5/1-Year ARM | 2.88 | 2.88 | 3.02 | 2.89 | 3.48 |
| 1-Year ARM | 2.71 | 2.78 | 2.94 | 2.94 | 3.09 |
| 30-Year Fixed Jumbo | 4.65 | 4.67 | 4.73 | 4.93 | 5.40 |
| 15-Year Fixed Jumbo | 3.96 | 3.92 | 4.04 | 4.32 | 4.69 |
| 5/1-Year ARM Jumbo | 3.31 | 3.21 | 3.13 | 3.34 | 3.80 |
Economic calendar by Econoday.com
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![[Star]](https://bloomberg.econoday.com/images/bloomberg-us/star.gif)
Clients, principals and/or employees of Alhambra Investment Partners may have long or short positions of any above-mentioned securities. For information on Alhambra Investment Partners’ money management services and global portfolio approach to capital preservation, Joseph Gomez can be reached at jag@4kb.d43.myftpupload.com.
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