Consumers Went on a Shopping Spree in August

AP WASHINGTON -- American consumers spent more in August, a positive sign for the U.S. economy which appears to have shifted into a higher gear. The Commerce Department said Monday consumer spending rose 0.5 percent last month after being unchanged in July. The growth in August was just above the median forecast in a Reuters poll of a 0.4 percent gain. "[The data are] a further signal that the positive momentum in domestic activity is being sustained," said Millan Mulraine, an economist at TD Securities in New York. Even after adjusting for inflation, spending was 0.5 percent higher, the biggest gain since March. Growth in personal income ticked higher to a 0.3 percent gain, in line with forecasts. Some of the strength in spending came from a decrease in the saving rate, which eased back from a 1½ year high in July. The data reinforce the view that the U.S. economy will finish this year firing on nearly all cylinders, and the dollar pared an earlier decline following the report's publication. Most investors are betting the U.S. Federal Reserve could raise interest rates next year to keep inflation in check, though Monday's data gave little sign of growing price pressures. The Fed's preferred gauge of inflation was up 1.5 percent in August from a year earlier, down slightly from the reading in July, the Commerce Department data showed. A measure of underlying price pressures which strips out food and energy held at 1.5 percent. That reading had dipped to 1.2 percent earlier this year. Some policymakers at the U.S. central bank remain concerned that inflation remains stuck well below their 2 percent target. Chicago Fed President Charles Evans said on CNBC television Monday that the Fed should patiently seek to push inflation up to its target so it doesn't have to "backtrack" after raising rates. Data released Friday showed the U.S. economy grew at its fastest pace in 2½ years in the second quarter with all sectors contributing to the jump in output. Relatively strong consumer spending during the period was taken as a sign the economy's recovery from the 2007-09 recession is becoming more durable.

Affected: 56 million cards. Duration of compromise: Five months. Tactic: Malware was installed to skim payment card data; unclear how hackers found an entry into the company's network.

Markets Gain; BlackBerry Posts Narrower Loss

Related BZSUM #PreMarket Primer: Friday, September 26: US Coalition Picks Up A New Supporter Dow Down 240 Points; OMNOVA Solutions Shares Dip After Q3 Results

Following the market opening Friday, the Dow traded up 0.44 percent to 17,020.80 while the NASDAQ surged 0.42 percent to 4,485.47. The S&P also rose, gaining 0.35 percent to 1,972.93.

Leading and Lagging Sectors

In trading on Friday, cyclical consumer goods & services shares gained 0.61 percent. Top gainers in the sector included Nike (NYSE: NKE), up 10 percent, and Research Frontiers (NASDAQ: REFR), up 5.6 percent.

Utilities shares fell 0.35 percent on Friday. Top losers in the sector included Huaneng Power International (NYSE: HNP), down 1.9 percent, and PPL Corp (NYSE: PPL), off 1.2 percent.

Top Headline

BlackBerry (NASDAQ: BBRY) reported a narrower-than-expected second-quarter loss.

The Waterloo, Canada-based company posted a quarterly net loss of $207 million, or $0.39 per share, versus a year-ago loss of $965 million, or $1.84 per share. Excluding non-recurring items, it posted an adjusted loss of $0.02 per share.

Its revenue declined to $916 million from $1.57 billion. However, analysts were expecting a loss of $0.16 per share on revenue of $942.93 million.

Equities Trading UP

Janus Capital Group (NYSE: JNS) shares shot up 34.56 percent to $14.95 following news that Bill Gross will be joining the company. PIMCO also confirmed the departure of Bill Gross.

Shares of Nike (NYSE: NKE) got a boost, shooting up 10.56 percent to $88.18 after the company reported stronger-than-expected fiscal first-quarter results. Analysts at Janney Capital upgraded Nike from Neutral to Buy.

Micron Technology (NASDAQ: MU) shares were also up, gaining 6.78 percent to $33.85 after the company posted better-than-expected fiscal fourth-quarter results and issued a strong revenue forecast for the fiscal first quarter.

Equities Trading DOWN

Shares of Finish Line (NASDAQ: FINL) were down 11.25 percent to $26.10 after the company reported downbeat second-quarter results.

Powell Industries (NASDAQ: POWL) shares tumbled 8.79 percent to $45.35 after the company lowered its FY14 outlook.

Philip Morris International (NYSE: PM) was down, falling 1.12 percent to $82.76. Analysts at Bank of America downgraded Philip Morris International from Buy to Neutral and lowered the target price to $87.

Commodities

In commodity news, oil traded up 0.31 percent to $92.82, while gold traded down 0.37 percent to $1,217.40.

Silver traded up 0.33 percent Friday to $17.50, while copper rose 0.12 percent to $3.03.

Eurozone

European shares were mostly higher today. The eurozone’s STOXX 600 gained 0.06 percent, the Spanish Ibex Index rose 0.15 percent, while Italy’s FTSE MIB Index surged 0.76 percent. Meanwhile, the German DAX dropped 0.35 percent and the French CAC 40 rose 0.44 percent while UK shares fell 0.02 percent.

Economics

The US economy expanded at an annual pace of 4.6% in the second quarter, versus a prior reading of 4.2% growth.

The Reuters/University of Michigan's consumer sentiment index came in flat at 84.60 in September, versus economists’ expectations for a reading of 84.80.

Posted-In: Earnings News Guidance Eurozone Futures Commodities Global Markets

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Buffett's Market Indicator Flashes Red, Prepare To Sell

With each passing month, it's becoming evident that the current bull market has slowed from a gallop to a trot.

The S&P 500, which rose 29% in 2013, will likely trail such a gain this year, as it is up only 7% in 2014 as of September 15. And by one key measure, the bulls advance may cease altogether, potentially resulting in a market reversal.

Make no mistake, the market has been in rally mode for more than five years in large part due to the Fed's easing hand, which is fueling ultra-low interest rates and ample liquidity for stock buying. Yet it's always wise to keep an eye on traditional market metrics, in case the market starts to become fully disconnected from the fundamentals.

[Related -PBoC joins other major central banks with unconventional monetary policy action]

Each investor can focus on their own sense of fair value. For example:

-- Some investors like to compare the dividend yield on the S&P 500 to federal fund rates. The current dividend yield stands at around 2%, higher than short-term interest rates. Still an eventual upward move in short rates will pressure this valuation gauge.

-- Other investors like to see how stocks are trading in relation to their private market value (i.e. what they would likely fetch in a buyout). Private equity historically acquires mature business at 4-to-6 times trailing cash flow, and growth businesses at a somewhat higher multiple. Fully 83% of the companies in the S&P 500 are trading for more than eight times trailing cash flow.

[Related -A Buyback Boost?]

-- Other investors like to focus on EPS growth. Per share profits have been enhanced in recent years by massive share buybacks -- a trend that may not last. If buyback activity cools, underlying net profit growth will come into greater focus. Many companies in the S&P 500 are seeing profit growth slow to less than 10% as the low-hanging fruit of streamlining efforts disappear.

Warren Buffett has an easier way to gauge the valuation of stocks. He thinks that the combined value of all stocks -- as measured by the Wilshire 5000 Total Market Index -- should be worth less than the Gross Domestic Product (GDP) of the U.S. economy. And this ratio has typically generated a sell signal whenever it gets out of whack. It happened in 2000 and again in 2007, and though the market marched higher after crossing that threshold, the 12-to-18 month outcome was fairly bleak.

Unfortunately, we're back into the danger zone. The stock market's total value surpassed GDP in March 2013, and is already beyond the point it stood in early 2008, just before the last major market pullback. As this chart from financial blogger Doug Short shows, the market is now more than 15% overvalued, at least according to Buffett's gauge. This gauge actually rose above 135% in 2000, and the dot-com melt up turned out to be a painful experience for most investors.

To be sure, "this time is different" is a mantra that you'll hear on Wall Street trading desks. These traders suggest that corporate profit margins have never been higher and companies now deserve higher valuations.

Here's the problem with that logic: Profit margins often peak in the early stages of an economic recovery as companies skimp on spending. Indeed work forces remain lean and capital spending has been depressed, but as an economy starts to strengthen, many companies amp up their rate of spending and profit margins return back to Earth.

Still, investors can remain bullish as long as per share profit growth remains robust. Will that be the case? It's hard to know how the U.S. economy will be faring in 2016 and beyond as China, Europe and our own economic cycle remain as major question marks. But we can at least gauge EPS trends before then. According to Factset Research, the projected earnings growth rate is 7.3% for the S&P 500, rising to 11.5% in 2015. Double-digit profit growth will likely only happen if the U.S. economy grows at a 3% pace next year.

S&P 500 Profit Growth & P/E

America's largest pension ditches hedge funds

CalPERS, the mega pension fund for government employees and retirees in California, is getting out of hedge funds. NEW YORK (CNNMoney) America's largest pension fund is saying goodbye to hedge funds.

The decision by the California Public Employees' Retirement System (CalPERS) to exit all hedge funds within the next year is making waves on Wall Street, where hedge fund assets are at record levels even as their returns have suffered.

That's because CalPERS, which manages roughly $300 billion on behalf of 1.6 million government employees and retirees, holds considerable clout in the investment community. When you're that big, people listen, and CalPERS has a history of activism. It's known to take large stakes in publicly traded companies and then aggressively push for corporate change.

In a press release, CalPERS indicated that it's choosing to dump its approximately $4 billion in hedge fund investments because they've become too complex and costly to manage. CalPERS said it paid $135 million in hedge fund fees in the fiscal year that ended June 30th alone.

Hedge funds don't come cheap. While fees vary, most of these so-called alternative funds go by the "2 and 20" rule, whereby they take fees equal to 2% of assets under management as well as 20% of any profits they make. In regular business terms, that's a fee for service plus a performance fee.

Meanwhile, hedge fund performance has lagged. CalPERS said its hedge funds returned just 7.1% in the latest fiscal year. According to the Barclay Hedge Fund Index, hedge funds overall returned only 11% in 2013, while the S&P 500 gained 30%. They're up 4.5% so far this year, compared to the S&P 500's 8% advance.

The lagging performance isn't entirely surprising since hedge funds are designed to do well during times of market downturns and volatility. After a five year rally, many strategists are predicting some sort of drop. So it's possible that CalPERS is exiting the hedge fund world at a time when it should be doubling down.

"Generating uncorrelated returns that aren't directional to the market is very powerful," said David Druley, a managing director at Cambridge associates who advises pensions on hedge fund investments.

Druley surmised that there are around 10,000 hedge funds to choose from, but only a few hundred are really worth their weight.

While he thinks CalPERS' maneuver will cause som! e other pension funds to reevaluate their holdings, he believes hedge funds will continue to receive positive inflows of pension money.

The Teacher Retirement System of Texas, for example, has added to its hedge fund exposure in recent years, and in 2012 took a direct ownership stake in mega hedge fund Bridgewater Associates.

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Don Steinbrugge of hedge fund consulting firm Agecroft Partners says public pension funds have about 8% of their assets in hedge funds.

CalPERS management is being short sighted when it comes to hedge funds, Steinbrugge argues. He believes their potential to generate big returns regardless of what the market does means that the right hedge are worth the cost.

He noted that stock valuations are getting lofty and persistently low interest rates have led to paltry performance for bonds. That doesn't leave a lot of good investment options on the table, especially ones that could protect against a downturn.

"Instead of being innovative, they're morphing more into a bureaucratic organization that wants to focus primarily on reducing fees," he said.

Billionaires are hoarding more cash

NEW YORK (CNNMoney) The pile of cash that billionaires dive into each night just got bigger.

Each uber wealthy person boosted their cash holdings by an average of $60 million over the past year, according to the 2014 Billionaire Census published by Wealth-X and UBS (UBS).

Billionaires don't typically park money in cash unless they're nervous about the market or preparing for a major investment.

And lately the stock market has been shattering all-time records and it's been relatively smooth on the economic front.

Maybe Lehman Brothers is to blame. Memories of the scary Wall Street crash six years ago continue to haunt many investors.

"We can't underestimate the impact of the global financial crisis in making many investors far more risk averse," said Kristina Hooper, U.S. investment strategist at Allianz Global Investors.

Cash = Nimble investing or rainy day fund: Money in the bank earns virtually nothing. But rock-bottom interest rates hasn't deterred risk-averse investors from hoarding cash.

The Wealth-X and UBS report shows that on average, $600 million, or 19%, of billionaires' assets is sitting in cash.

To put that into perspective, that's enough cash to buy the NBA's Milwaukee Bucks and still have enough left over to purchase 500,000 Apple (AAPL, Tech30) shares.

But cash gives investors the ability to be nimble when making investments and also something to dive into on a rainy day.

"This increased liquidity signals that many billionaires are keeping their money on the sidelines and waiting for the optimal moment to make further investments," the report said.

Sign of a market top? Stock market doomsayers are constantly looking for hints of a meltdown.

Should the fact that billionaires are hoarding more cash spook everyday investors? Hooper doesn't think so.

"This trend speaks to the general skepticism about this bull market as opposed to any sign the market has topped," she said.

It's not just billionaires: Cash is actually the preferred asset class among most U.S. investors.

A 2013 survey of retail investors and wealthy individuals by the State Street Center for Applied Research shows a whopping 37% of their assets a! re sitting in cash. That compares with just 35% in stocks and 17% in bonds.

While the fear of investing may be natural given the 2008 meltdown, the preference for cash could cause problems when people approach retirement.

After all, cash doesn't earn anything, unless it's invested.

"We've seen this with so many investors who remain in cash or lack a commitment to stocks. It could be really problematic in terms of meeting long-term goals," said Hooper.

PBoC joins other major central banks with unconventional monetary policy action

Softer than expected economic growth in China (see discussion) has finally spurred the PBoC into action. However, rather than undertaking asset purchases that would inject reserves into the overall banking system, the PBoC forced liquidity directly into state-owned banks.

NY Times: - With industrial production growing at the slowest pace since the worst of the global financial crisis and foreign direct investment in a tailspin, China appears to have taken the unusual step of using monetary stimulus in an attempt to forestall further economic weakness.

[Related -Buffett's Market Indicator Flashes Red, Prepare To Sell]

China's central bank has lent 100 billion renminbi, or $16.2 billion, to each of the country's five main, state-controlled banks, bankers and economists said Wednesday, although the central bank and the five banks involved stayed silent. The seemingly stealthy decision to inject a total of $81 billion into the banking system this week came as the Chinese economy, like many economies in Europe, has slowed over the summer, although still expanding at a pace that would be the envy of most countries around the world.

This is probably the least effective QE-style action, as state-owned lenders are unlikely to efficiently deliver capital into the private sector. But the fact that the PBoC has taken this action tells us this could be the start of a longer monetary stimulus effort. The markets are not expecting a near-term economic improvement and instead pricing in a prolonged battle to accelerate growth. China's SHIBOR rate swap curve has become more inverted than a month ago with expectations of further rate declines.

[Related -A Buyback Boost?]

3 Huge Stocks Grabbing Headlines -- and How to Trade Them

 

BALTIMORE (Stockpickr) -- Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generating investment ideas. Instead, let the crowd do it for you.

 

Read More: 5 Breakout Stocks Under $10 Set to Soar

 

From hedge funds to individual investors, scores of market participants are turning to social media to figure out which stocks are worth watching. It's a concept that's known as "crowdsourcing," and it uses the masses to identify emerging trends in the market.

 

Crowdsourcing has long been a popular tool for the advertising industry, but it also makes a lot of sense as an investment tool. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.

 

While some fund managers are already trying to leverage social media resources like Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for investors who want a starting point in their analysis. Today, we'll leverage the power of the crowd to take a look at some of the most active stocks on the market today.

 

Without further ado, here's a look at today's stocks.

 

Read More: 10 Stocks Billionaire John Paulson Loves in 2014

 

Tesla Motors

 

 

Nearest Resistance: $290

Nearest Support: $245

Catalyst: Analyst Note, Technical Setup

 

Tesla Motors (TSLA) has been the definition of a momentum stock in 2014, rallying close to 70% since the calendar flipped to January -- but Monday's 9% drop in shares made Tesla the poster-child for the tech stock momentum correction that started the week. Tesla's particularly bad selling was spurred by an analyst note from Morgan Stanley suggested that shares were overpriced near-term -- and the big drop comes despite an overall positive tone to the Tesla note.

 

But things could look a whole lot worse from a technical standpoint. Tesla has been bouncing its way higher in a textbook uptrending channel for more than a year now, and this week's drop puts shares back at the trend line support level that's been a buying opportunity all year long. Wait for a bounce before adding to a TSLA position here.

 

Read More: 5 Toxic Stocks to Sell Now

 

Facebook

 

 

Nearest Resistance: $84

Nearest Support: $72

Catalyst: Technical Setup

 

Facebook (FB) was another big technology name that corrected hard for technical reasons in Monday's session. Like many other tech names, Facebook has been bouncing its way higher in a well-defined uptrending channel since the start of the summer -- and Monday's pullback puts shares back within grabbing distance of trend line support for the fifth time in the channel.

 

The 50-day moving average has been a good proxy for support on the way up. If you decide to buy the bounce in FB here, I'd recommend putting a protective stop on the other side of that 50-day.


 

Read More: 10 Stocks George Soros Is Buying

 

RadioShack

 

 

Nearest Resistance: $1.10

Nearest Support: $0.90

Catalyst: Restructuring

 

RadioShack's (RSH) restructuring is keeping the micro-cap electronics retailer in the headlines, this time following a change-up in the C-suite. CFO John Feray resigned from RSH, bringing Holly Etlin back at interim CFO (she previously served as interim CFO during another round of management shakeups from last July through February). Now shares of RadioShack are consolidating sideways in a symmetrical triangle, bleeding off some of the extreme volatility that's been plaguing this stock since the calendar flipped to September.

 

That reduction in volatility likely won't last long. This setup is likely to end up with a volatility squeeze. But traders will need to be quick to take advantage of it.

 

To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.



 

-- Written by Jonas Elmerraji in Baltimore.

 

RELATED LINKS:

 

>>4 Under-$10 Stocks to Trade for Breakouts

 

>>5 Rocket Stocks Worth Buying in September

 

>>It's Not Too Late to Buy Apple -- but Hurry Up

 

Follow Stockpickr on Twitter and become a fan on Facebook.

 

At the time of publication, portfolios managed by the author were long TSLA.

 

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

 

Follow Jonas on Twitter @JonasElmerraji

Benzinga Weekly Preview: Fed Meeting In Focus

Related FDX Earnings Expectations For The Week Of September 15 Morgan Stanley Highlight's Potential Catalysts For FedEx Corporation Earnings Buyback Mania Inflates 2Q Earnings Growth (Fox Business) Related ORCL Earnings Expectations For The Week Of September 15 D.A. Davidson & Co. Sees MICROS Systems Acquisition As Good For Oracle Corporation Tech M&A Surges in 2Q (Fox Business)

The Federal Reserve is set to hold its two-day monthly policy meeting next week on Wednesday and Thursday, which investors will be eagerly awaiting for details about the bank’s rate hike plans.

Ahead of the meeting, Fed officials have indicated that the bank will likely maintain a low interest rate well into 2015, however there has been a lot of speculation that the bank will make a move sooner than expected should the labor market improve more quickly than forecast.

Key Earnings Reports

Next week, investors will be waiting for several key earnings reports, including FedEx Corporation (NYSE: FDX), Oracle Corporation (NASDAQ: ORCL), Rite Aid Corporation (NYSE: RAD) and ConAgra Food, Inc. (NYSE: CAG).

FedEx Corporation

FedEx is expected to report first quarter EPS of $1.94 on revenue of $11.47 billion, compared to last year’s EPS of $1.53 on revenue of $11.02 billion.

On August 7, Merrill Lynch gave FedEx a Buy rating with a $175 price objective, noting that the company has a high potential for growth.

“FedEx reiterated its $1.6 billion profit improvement plan at Express (from fiscal year 2013’s full-year base) and its target for a 75 percent run-rate by year-end fiscal year 2015, leading to its $8.50-$9.00 EPS target in fiscal year 2015 (we are at $8.75). In its recent 10-K filing, it noted that pension expense was expected to decrease $215 million in fiscal year 2015, indicating that EBIT needs to improve only $530 million, or 15 percent from fiscal year 2014, to reach its target.

"Its original plan was to reach $950 million in EBIT improvement by this point (75 percent of $1.6 billion at Express, or $1.2 billion, less the $250 million improvement it gained in fiscal year 2013). We believe this highlights that FedEx’s targets could prove conservative, although since it set those targets, international trade down, a new postal service contract and rising fuel costs have tempered some of that original potential. Beneficially, staff cuts were bigger than expected,with 3,600 employees accepting buyouts, with the final 25 percent off the payrolls in May 2014 (boosting fiscal year 2015).”

On June 19, Credit Suisse was more conservative on FedEx, giving the company a Neutral rating with a $156 target price. The analysts at Credit Suisse said that oil prices present a considerable risk to the company’s profits.

“Credit Suisse's Global Commodities research team believes that there is considerable upside price risk for oil, and further note that 'not much has to go "wrong" for oil to enter an upward spiral/trajectory,' given already tight supply/demand dynamics. More recently, escalating turmoil and violence in the Middle East (particularly Iraq) is creating further upside risk to oil prices.”

On September 8, Morgan Stanley gave FedEx an Equal-Weight rating, saying that the company will likely beat expectations.

“Taking a look at normal seasonality, FedEx’s earnings in the fiscal first quarter have typically shown a 18 -19 percent sequential decrease (depending on whether we look at average sequential change over the past 10 years or 5 years). Consensus at $1.94 per share implies first quarter earnings decline ~21 percent sequentially, which may be conservative for the following reasons: (1) Freight data points have remained strong, even accelerated in some instances, through August; (2) Savings from cost realignment initiatives at FedEx Express, while expected to be back-half loaded in fiscal year 2015, should provide some tailwind to first quarter earnings vs. normal seasonality; and (3) Fuel surcharge lag impact, which was a significant year-over-year headwind to first quarter 2014 results, should be a year-over-year tailwind to first quarter 2015 results.”

On September 6, S&P Capital IQ gave FedEx a Strong Buy rating with a $180 price target, noting that the company’s profit improvement program will likely increase its operating income significantly.

“We are positive on FedEx's profit improvement program, which seeks to add $1.7 billion to operating income by fiscal year 2016, with up to 75 percent of this target expected to be achieved by fiscal year 2015. We think the goal is realistic, using a combination of cost savings, efficiency improvements and incremental revenue-generating ideas.

"We also expect the company to benefit from improvement in the U.S. and global economies over the next year, which we believe will lead to increased volumes across FedEx's entire network. We think the shares will benefit from increased investor interest in logistics stocks on concrete signs of economic improvement.”

Oracle Corporation

Oracle is expected to report first quarter EPS of $0.64 on revenue of $8.77 billion, compared to last year’s EPS of $0.59 on revenue of $8.38 billion.

On June 25, Merrill Lynch gave Oracle a Buy rating with a $46 price objective, saying that the company’s plans for its cloud services will help drive revenue in the coming year.

“To what extent Oracle will see success in all the cloud layers –- Software as a Service (SaaS), PaaS (Platform as a Service), IaaS (Infrastructure as a Service) -– is debatable, but at a minimum, it makes it harder to lose existing customers and easier to upsell add-on cloud solutions. One advantage that Oracle has is that the integrated stack allows it to deliver cloud services more profitably. Oracle added just 35 employees in the fourth quarter to its 19 global data centers, while the cloud accelerated.”

On June 23, Credit Suisse gave Oracle an Outperform rating with a $45 target price, noting that the company’s acquisition of Micros Systems will help expand the company’s customer portfolio.

“Micros extends Oracle's commerce platform, customer experience cloud and industry portfolio, which includes commerce, sales, service, social, and the oracle marketing cloud. Specifically, by combining (1) Responsys and Eloqua (i.e., providing CMOs support for both B2C and B2B marketing automation and campaign management), (2) BlueKai (i.e., enabling for customization of campaigns and analysis of customer data), (3) RightNow Service (e.g., web self-service, chat, e-mail, social network integration, community building, fully integrated agent desktop, Intelligent Voice Automation) and (4) Endeca InFront (e.g., catalog search, navigation) with Oracle’s ATG Commerce and WebCenter and Oracle’s leading CRM and merchandising solutions (e.g., Fatwire, Siebel Marketing, Oracle Fusion CRM SFA), Oracle can enable omni-channel CRM, retail and commerce for sales, marketing, service and loyalty, as well as provide merchandising, pricing and order capture (e.g., Web, store, phone, mobile device). The acquisition of Micros provides Oracle with software at the point of sale and thus visibility into store activity (as well as deeper exposure to both the hospitality and retail verticals), enabling a broad omni-channel commerce experience similar to the strategy highlighted by NetSuite's acquisition of Retail Anywhere in early 2013.”

On September 9, DA Davidson gave Oracle a Neutral rating with a $46 price target, noting that the addition of Micros will likely help grow the company’s global portfolio.

“We estimate that Micros will add roughly $1.5 billion to Oracle’s revenue line, or 3.7 percent of our current fiscal year 2015 revenue estimate of $40.1 billion. The acquisition, which will cost Oracle $5.3 billion, or $4.6 billion net of cash, should be immediately accretive, and is Oracle’s largest acquisition since its purchase of Sun Microsystems in 2010.”

On September 6, S&P Capital IQ gave Oracle a Hold rating with a $44 price target, cautioning that the company’s shares are fully valued.

“We downgraded our opinion on the shares in March 2014, reflecting our concerns about revenue growth and what we saw as a largely full valuation. Oracle has been acquiring SaaS companies over the past few years. In January 2012, it purchased RightNow in a transaction valued at $1.5 billion. In April 2012, it acquired Taleo in a deal valued at $1.9 billion. In February 2013, Oracle purchased Eloqua in a transaction worth some $935 million. In February 2014, the company acquired Responsys for some $1.6 billion.”

Rite Aid Corporation

Rite Aid is expected to report second quarter EPS of $0.07 on revenue of $6.47 billion, compared to last year’s EPS of $0.03 on revenue of $6.28 billion.

On September 4, Credit Suisse gave Rite Aid an Outperform rating with an $8.50 price target, citing the company’s impressive August sales.

“Rite Aid reported solid August sales driven by continued strength in the pharmacy, which offset weaker than expected front-end results. Total comp growth of 3.9 percent was slightly ahead of our estimate of 3.7 percent and consensus of 3.3 percent. The pharmacy comp of 5.2 percent exceeded our 4 percent estimate, as sales likely benefited from continued inflation. Script growth of 3.7 percent was the second-highest result seen in the last 18 months, although the trend decelerated modestly from July. The front-end comp of 1.1 percent missed our 3.0 percent target. A pullback in promotions and a shift in back-to-school shopping to other channels could be drivers of the weaker-than-expected front-end result, in our view. We continue to rate Rite Aid Outperform. While the company's fiscal second quarter should experience similar headwinds to the first quarter, the back half of the year should see a meaningful ramp from MCK benefit, new generics and ACA, as well as benefits from Rite Aid's internal initiatives (remodels, file buys, expense control).”

On September 6, S&P Capital IQ gave Rite Aid a Hold rating with a $7.50 price target, noting that the company will likely see expansion in the coming quarter.

“We expect benefits over the next 12 months from expansion of the company's loyalty card program, continued progress on Wellness store remodeling efforts, increased prescription file buys and improved purchasing efficiencies. Despite limited flexibility due to a highly leveraged balance sheet, we expect progress on these actions to help strengthen its store base and better position the company to benefit from provisions of the new health care law that went into effect in January 2014.”

ConAgra Food, Inc.

ConAgra Food is expected to report first quarter EPS of $0.35 on revenue of $3.77 billion, compared to last year’s EPS of $0.37 on revenue of $4.20 billion.

On June 27, Merrill Lynch gave ConAgra an Underperform rating with a $30 price objective, cautioning that the company’s earnings growth will likely be depressed in the coming quarter.

“Our $30 price objective is based on a 13x target multiple on our C2015 estimate of $2.32, which includes Ralcorp and Ardent Mills. Our target multiple represents a discount to the packaged food group, which reflects expectations for muted earnings growth. Stabilizing/improving sales growth for consumer and private brands are key factors needed to improve earnings and valuation.”

On June 26, Credit Suisse gave ConAgra Foods a Neutral rating with a $31 target price, citing headwinds in the coming quarter for their caution.

“ConAgra reported fourth quarter adjusted EPS of $0.55, in-line with last week's pre-announcement.The company recorded $605 million of goodwill impairment charges related to Ralcorp and $76 million of impairments to the Chef Boyardee brand, due in part to the sales declines following the curious decision to eliminate EZ open lids. Management demonstrated appropriate humility on the earnings call regarding the Ralcorp integration but asserted that the problems had to do with the weak condition of the Ralcorp assets rather than the strategy of marrying a private label business with brand. That may be the case, but in our view, the pendulum shift to private label has regrettably diverted management attention and resources away from the stewardship of brands like Chef, Healthy Choice and Orville. We may be jumping to conclusions, but it is quite possible that the urgency to compensate for weakness in private label played a role in the decision to cut costs on Chef at the expense of packaging convenience.”

On September 6, S&P Capital IQ gave ConAgra Foods a Buy rating with a $34 target price, citing the integration of Ralcorp for its optimism.

“While we are disappointed in recent results from the private label business and the quality of the potato crop for Lamb Weston, we believe the company is well-positioned to benefit in fiscal year 2015 from completion of the integration of Ralcorp and expected margin benefits from efficiency improvements and supply chain cost savings as comparisons ease.”

Economic Releases

The Fed meeting will be the star of next week’s economic calendar, but U.S. labor data will also take top bill. Investors will be interested to see how the U.S. labor market is progressing for a better idea of the Fed’s future plans for an interest rate hike.

Daily Schedule

Monday

Earnings Releases Expected: Analogic Corporation (NASDAQ: ALOG) Economic Releases Expected: U.S. industrial production, U.S. manufacturing production

Tuesday

Earnings Expected: Adobe Systems Incorporated (NASDAQ: ADBE) Economic Releases Expected: British PPI, British CPI, German ZEW economic sentiment survey, U.S. PPI, U.S. rebook

Wednesday

Earnings Expected: Cracker Barrel Old Country Store, Inc. (NASDAQ: CBRL), FedEx Corporation (NYSE: FDX), Lennar Corporation (NYSE: LEN), United Natural Foods, Inc. (NASDAQ: UNFI) Economic Releases Expected: British unemployment rate, Eurozone CPI, U.S. CPI, U.S. current account, Japanese trade balance

Thursday

Earnings Expected From: ConAgra Foods, Inc. (NYSE: CAG), Oracle Corporation (NASDAQ: ORCL), Pier 1 Imports, Inc. (NYSE: PIR), Rite Aid Corporation (NYSE: RAD) Economic Releases Expected: British retail sales, U.S. housing starts, U.S. initial jobless claims, U.S. continuing jobless claims, Federal Reserve rate decision

Friday

Earnings Expected From: No notable earnings expected Economic Releases Expected: German PPI, eurozone current account

Posted-In: Earnings Economic DataEarnings News Previews Pre-Market Outlook Markets Trading Ideas Best of Benzinga

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Beijing is making it harder for Chinese to watch American TV shows

A woman in Beijing walks past an advertisement for a streaming version of "24" HONG KONG (CNNMoney) Beijing has issued a set of new rules for websites that stream foreign television series, a move that could make it harder for Chinese Internet users to get their fix of American TV shows.

Internet companies that offer foreign TV shows must now obtain a "film screening license" or "television screening license," according to a notice from the State Administration of Press, Publication, Radio, Film and Television. The companies will also be required to obtain a publication license for each foreign show they want to stream.

While the regulator did not outright cap the number of shows, companies are encouraged to provide "an appropriate number of foreign television programs."

Earlier this year, regulators pulled "The Big Bang Theory," "NCIS," "The Good Wife" and "The Practice" from streaming video outlets without much of an explanation, suggesting that new restrictions on the booming industry might be in the pipeline.

While still dwarfed by state broadcasters, streaming TV content is gaining popularity in China -- especially with younger audiences and the middle class. "The Walking Dead" and "House of Cards" are among the biggest hits, racking up tens of millions of views.

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Youku Tudou (YOKU), Sohu (SOHU) and search giant Baidu (BIDU, Tech30) -- all of which trade in New York -- are industry heavyweights. The foreign shows they offer are licensed from their original producers.

The Internet and media are closely controlled in China. Services including Facebook (FB, Tech30) and Twitter (TWTR, Tech30) are banned, and Beijing has invested heavily in a firewall that restricts access to controversial websites. Films are censored, and Beijing limits imports of foreign movies to 34 a year.

But the nascent Web streaming industry has managed to escape some regulatory scrutiny. The content is often racier or more controversial than shows broadcast on state-owned television channels such as CCTV.

"The Walking Dead" is an ultra violent post-apocalyptic horror drama from cable network AMC, and political corruption is a major theme on Netflix's (NFLX, Tech30) "House of Cards." The most recent season of the Kevin Spacey-led hit even highlights the inner workings of a fictional Chinese Politburo.

The new regulations suggest that! Beijing might take a more active role in limiting this kind of programming. The rules require shows to consist of "healthy content" that satisfies "the growing spiritual and cultural needs of the public."

Analysts have also suggested that Beijing may be trying to protect the interests of state broadcasters including CCTV, which have been challenged by upstart satellite and Internet content providers.

It wouldn't be the first time officials have tried to protect government-run media interests at the expense of private operators. Last year, programmers were warned to cut down on wildly popular reality television and talent shows that were stealing attention from CCTV programs.

-- CNN's Esther Pang contributed reporting.

Learning To Love Volatility

There's nothing like good market volatility. It makes me sleep well at night. Plunging prices, several days of bad news, it makes me all smiles. No, I'm not a masochist. I just know that weak-minded investors become nervous and sell in a roller-coaster market, and that gives me more opportunities to buy at cheap prices.

It wasn't always the case that I loved volatility. In my younger years, frightening drops led to restless nights and emotional selling. That didn't do me any good because the market recovered every time! Today, I can look beyond short-term volatility and control my emotions. This puts me at an advantage over people who blow out of the markets when bears come hunting, and gives me a proven way for future gains.

Figure 1 illustrates the change in the Chicago Board Options Exchange's CBOE Volatility Index® (VIX®)  compared to the change in the S&P 500 price. The VIX is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. Since its introduction in 1993, the VIX has been considered by many to be a key barometer of investor sentiment and market volatility. In general, higher volatility corresponds with falling stock prices and lower market expectations.

We haven't had a good dose of volatility in quite some time. In fact, this summer, the VIX has been the lowest in five years.

Figure 1: CBOE S&P 500 price volatility and S&P 500 price return since 2010.

Source: CBOE data through August 5, 2014

Very low volatility always makes me nervous. It's not that I fear higher volatility and a drop in prices; rather, some investors become complacent and begin buying stocks because they underestimate the risk. When "normal" volatility comes back, complacency can turn to apprehension, and this can cause ill-timed investment decisions.

Last week, the VIX jumped to levels not seen in several months (see Figure 2). S&P 500 prices began rolling over early in the week and dumped about 2.6% throughout the week. Prices are down again this week. In my opinion, this shift in sentiment is a good thing.

Figure 2: CBOE Volatility Index (VIX) from May 5, 2014 to August 5, 2014.

Source: CBOE data through August 5, 2014

We're rewarded in the public markets for taking risk. Volatility is probably the most "predictable" risk out there. It's actually far predictable than market returns over a 10-year period (see my book All About Asset Allocation).

Volatility is not only common, it's necessary. A good dose of higher VIX creates the pause that refreshes. It shakes out the weak investors and sets up a return premium for those of us who can withstand the annoyance. Learn to embrace volatility and you'll be a better investor for it.

See blog disclosure here.