Soft December ends boffo 2013 for auto sales

Auto sales flattened in December as storm-wary buyers stayed home and others already had bought during the November "black Friday" promotions, but many car companies still mustered 2013 records.

The 21 automakers selling new cars and trucks in the U.S. snagged 15.6 million buyers last year, according to sales tracker Autodata, up 9.2% from 2012 and highest since 2007. That's still short of the 17 million-plus yearly tallies in the pre-recession heyday, but healthy nonetheless.

Among those reporting full-year sales records: Hyundai, Subaru, Nissan, Audi, BMW, Mercedes-Benz, Maserati, Land Rover, Porsche.

Kia and Honda had their second-best sales years.

"Much stronger than we had a right to expect, with unemployment still high, overall economic growth at best moderate and consumer confidence generally down," said Jack Nerad, a top analyst at Kelley Blue Book.

But plenty of old vehicles in America's driveways — average age is 11-plus years — cheap loans and a sense of wealth from the rising stock market "all were all drivers of what turned out to be very robust auto sales," he said.

Incentives were common in December, but not especially generous, averaging $2,676 per vehicle, according to TrueCar.com, price tracker and researcher. That's 4% more than a year ago. TrueCar says the average transaction price in December was $30,786, down only 0.6% from a year ago.

Automakers are forecasting a bit more than 16 million sales this year. "The economy continues to grow," said General Motors chief economist Mustafa Mohatarem. "We're a long ways from meeting all the expected demand."

Sales signatures of 2013:

•Detroit was resurgent. General Motors, Ford Motor and Chrysler Group, combined, accounted for 45.2% of all new-vehicle sales in 2013, up from 44.5% in 2012.

That's the first time the Detroit 3 boosted their full-year share of the pie in 25 years, except in 2011 when a tsunami wiped out Toyota and Honda production in Japan, according to the Automo! tive News Data Center.

•Pickups roared. An improving economy put more tradesmen to work and they finally decided to replace their aging trucks, and the trucking gentry bounded back into the market. Pickups priced $40,000 and up were about one-third of pickup sales.

Big-pickup sales of 1.9 million for the year were up 16.8%, Autodata tallies show.

•Leasing — because it promises lower payments — accounted for a record 27.5% of all December sales, according to Edmunds.com senior analyst Jessica Caldwell. In two or three years, as those leases expire, used car buyers could find great bargains, especially on luxury models, which are the most-leased vehicles.

•Small cars were a hard sell. Autodata totals show small cars of all types, combined, fell 8.8% in December and were down 7.8% for all of 2013.

•Small SUVs, on the other hand, were popular. And they didn't have to be new designs to get the spotlight.

Honda 's now-aging CR-V — best-selling SUV of any size or type in the U.S. — hit nearly 304,000 sales in 2013, putting it in the fast company of the high-volume midsize sedans, such as Ford Fusion and Nissan Altima.

Ford's Escape small SUV, which is a new design, notched about 294,000. But General Motors' Chevrolet Equinox is about as hoary as they come in that segment, and it was next at about 238,000.

Toyota RAV4, a new model, rounds out the top-selling SUVs — of any kind, not just smaller SUVs — with 218,000.

Any of those sales numbers is enough to keep a big auto plant running on two shifts, perhaps with some overtime.

Zuckerberg Looks to Rake In $2 Billion in Facebook Share Sale

Steve Jennings/Getty Images for TechCrunchFacebook CEO Mark Zuckerberg. MENLO PARK, Calif. -- Facebook plans to offer 70 million shares of its Class A stock in a sale that includes more than 41 million shares from chairman and CEO Mark Zuckerberg, who also will buy Class B shares that carry more voting weight. The secondary offering of stock comes as the social media network prepares to join the Standard & Poor's 500 index. After a premarket stock drop of more than 4 percent, Facebook (FB) stock recovered somewhat and was down less than 2 percent in late morning trading Thursday. The Menlo Park, Calif., company said Thursday that the Class A shares will be offered mainly to index funds whose portfolios are based on stocks included in the index. The S&P 500 (^GPSC) will add Facebook on Friday after markets close. The index is a list of companies that have a market capitalization over $4 billion and is meant to be a snapshot of the U.S. economy. At Wednesday's closing price of $55.57 a share, that would put the total value of the offering, not counting expenses, at about $3.89 billion. Zuckerberg's offering of 41.3 million shares would generate about $2.3 billion based on Wednesday's close, not counting expenses. The company said Zuckerberg will use most of the proceeds from his sale of Class A shares to pay taxes he will incur in connection with exercising an option to buy 60 million shares of Class B stock. He's also using part of it for charitable contributions. It's Zuckerberg's decision to sell shares that likely led to Facebook's stock price decline. That said, Standard & Poor's equity analyst Scott Kessler noted that Zuckerberg's ownership has declined "only slightly" since Facebook's May 2012 initial public offering, and that the planned sale "would only minimally reduce his stake and voting power." "We are not concerned by this news," Kessler said in a note to investors, reiterating a "Buy" rating on Facebook's stock. Each Class B share gives the shareholder 10 votes, while each Class A share comes with one vote. The deal will give Zuckerberg control over nearly 63 percent of the voting power of the company's outstanding stock, according to a Securities and Exchange Commission filing. Facebook Inc. will offer 27 million Class A shares, and the company expects to use any proceeds for working capital. The company will have 2.54 billion Class A and Class B shares outstanding after the offering, or about 4 percent more than it had at the end of September. Facebook's shares slid 98 cents, or 1.8 percent, to $54.59 in late morning trading Thursday. That's up about 44 percent from Facebook's $38 IPO price and down 2.3 percent from the all-time high of $55.89 that it hit on Wednesday.

1. Activision Blizzard (ATVI) Life was easy when everyone was playing . Facebook has reinvented the way game-hungry masses spend their time, logging into Facebook to tend to virtual farms, mafia campaigns, or item-finding experiences. It's not a surprise that the traditional video game industry has been struggling for three years. Market leader Activision Blizzard doesn't even make games anymore, and its player count has been steadily declining over the past year. is still a growing franchise, but that can't last forever. As traditional game companies are struggling, Zynga (ZNGA) -- which accounts for 18% of Facebook's revenue -- is thriving.

Yellen to defend Fed’s stimulus policies

Janet Yellen, President Obama's nominee to succeed Ben Bernanke as Federal Reserve chairman, will defend the Fed's controversial stimulus policies at her confirmation hearing Thursday, according to her written testimony.

"I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy," Yellen will say in her opening statement to the Senate banking committee, which was released Wednesday afternoon.

Yellen is known as one of the Fed's most "dovish" policymakers — meaning she has placed more emphasis on reducing unemployment than in staving off eventual high inflation.

Committee Republicans are expected to argue that the Fed's $85 billion in monthly bond purchases will stoke inflation in future years while providing steadily diminishing benefits to the economy.

In her statement, Yellen says that current conditions support the Fed's stimulus.

"We have made good progress, but we have farther to go to regain ground lost in the crisis and the recession," her statement says. "Unemployment is down from a peak of 10%, but at 7.3% in October, is still too high, reflecting a labor market and economy performing far short of their potential. At the same time, inflation has been running below the Federal Reserve's goal of 2% and is expected to continue to do so for some time."

She adds: "For these reasons, the Federal Reserve is using its monetary policy to promote a more robust recovery."

Yellen is also expected to support strengthening regulation of large financial institutions to reduce the threat of another financial crisis, but not at the expense of hindering small banks.

Beefing up oversight and requiring banks to hold more capital to protect against possible losses "are important tools for addressing the problem of financial institutions that are regarded as 'too big to fail,' " her statement says.

"In writing new rules, however, the Fed should continue to limit the regulatory burden for community! banks and smaller institutions, taking into account their distinct role and contributions."

Yellen also noted that she has led a Fed effort to more clearly communicate with the public, including setting a 2% goal for annual inflation.

The goal "has helped anchor the public's expectations that inflation will remain low and stable in the future," her statement says. "In this and many other ways, the Federal Reserve has become a more open and transparent institution. I have strongly supported this commitment to openness and transparency, and will continue to do so if I am confirmed and serve as chair."

Yellen is expected to be confirmed by the Democratic-controlled Senate before Bernanke steps down in January.

Some Republican senators, including Sen. Rand Paul, R-Ky., and Sen. Lindsey Graham, R.-S.C., have threatened to block her nomination, but Democrats are expected to join with a handful of Republicans to remove the block.

Home loans become a little easier to get

More people are getting home loans with lower credit scores and smaller down payments.

Last month, the average FICO score for a closed home loan was 732, down from 750 a year ago, shows data from mortgage tracker Ellie Mae.

The average down payment was 19%, vs. 22% a year ago. What's more, almost one-third of closed loans had FICO scores under 700, vs. 17% a year ago. The top FICO score is 850.

"We continue to see things open up ever so slightly month by month," says Jonathan Corr, Ellie Mae president.

MORTGAGE FRAUD: Jury finds BofA liable for Countrywide loan fraud

The standards to get a home loan remain tight, mortgage experts say. But lenders are reducing some restrictions as housing prices recover and as higher interest rates curtail their refinance business.

"We're starting to see some of the banks … get more creative … to drive more volume to the door," says Jeff Taylor, managing partner at mortgage analytics firm Digital Risk.

Earlier this month, Bank of America dropped its minimum down payment requirement for non-conforming loans under $1 million to 15% from 20%. Non-conforming loans, which cannot be sold to Fannie Mae or Freddie Mac, are over $417,000 in most parts of the country.

Wells Fargo also reduced non-conforming loan minimum down payments to 15% from 20% in July.

JPMorgan Chase, meanwhile, reduced down payment requirements in Arizona, Florida, Nevada and Michigan — states that were especially hard hit by foreclosures.

The bank's minimum down payment is now 5%, down from 10%, for primary homes and 10%, instead of 20% for second homes in those states. The change brings down payment requirements in those states in line with others, says JPMorgan spokeswoman Amy Bonitatibus.

"These markets have shown strong signs of improvement," Bonitatibus says. Improving home values lessen risk for lenders.

While U.S. home prices were up 12.4% in August from a year ago, they were up more than that in Arizona, Nevada and Flori! da, CoreLogic data show. Michigan was up 12.3% year over year.

JPMorgan and Wells made their changes in July after a sharp interest rate spike in May cut into the refinance business.

Along with improving home prices, more access to private mortgage insurance is also enticing lenders to do smaller down payment loans, says Keith Gumbinger of mortgage tracker HSH.com.

Mortgage giants Freddie Mac and Fannie Mae require mortgage insurance for loans where borrowers have less than a 20% stake. When the housing market crashed, the mortgage insurance industry lost billions and insurance became tough to get. Now that industry is recovering, too, Gumbinger says.

While banks are easing some loan requirements, home lending standards remain tight and will likely stay there, says Cameron Findlay, economist at Discover Home Loans.

New lending rules expected to take hold in January require lenders to make home loans that meet federal standards or face greater liability from borrower lawsuits should the loans go sour.

Findlay doesn't expect lenders to do many loans that fall outside of the those standards.

"We're seeing tweaking of the underwriting standards, but it's not a wholesale loosening," says Guy Cecala, publisher of Inside Mortgage Finance. "The pendulum is still too far toward restrictive."

House Republicans blast SEC on private funds, say focus should be on RIAs

The Securities and Exchange Commission's emphasis on regulation of private investment funds threatens to diminish its oversight of registered investment advisers, according to House Republicans.

Under the Dodd-Frank financial reform law, the SEC has taken on about 1,500 additional advisers to private-equity and hedge funds. The Dodd-Frank measure requires that private funds with more than $150 million in assets under management register with the SEC so that the agency can better monitor any systemic risk the funds pose to the financial system.

Private funds must file a so-called Form PF that provides details about their funds' trading practices and leverage. The SEC also has launched so-called “presence exams” that are targeted at high-risk areas of private-fund operations.

In a Sept. 12 letter to SEC Chairman Mary Jo White, two leading Republicans overseeing the agency asserted that it is reviewing private funds to strengthen protection of their investors — who must meet certain high income and asset thresholds to buy shares — rather than to determine systemic risk.

“The attention the SEC has paid to enhancing the regulatory scrutiny afforded to sophisticated investors suggests that the SEC has prioritized the protection of 'millionaire and billionaire' investors over 'mom and pop' investors,” wrote Rep. Jeb Hensarling, R-Tex., and Rep. Scott Garrett, R-N.J. Mr. Hensarling is the chairman of the House Financial Services Committee. Mr. Garrett is chairman of the panel's Capital Markets Subcommittee.

The lawmakers told Ms. White that the SEC needs to focus its efforts on reviewing registered investment advisers. Ms. White has testified before the committee this year that the SEC examines annually approximately 8% of registered investment advisers and that 40% have never been examined.

“Many registered investment advisers provide investment advice to investors who are often less sophisticated and have fewer resources to conduct due diligence on their investment advisers and the quality of their investment advice,” Mr. Hensarling and Mr. Garrett wrote. “Before the SEC expends valuable and limited resources to protect sophisticated and institutional investors in private funds — the investors who need such protection the least — the SEC should prioritize the protection of less sophisticated investors who need such protection the most.”

The SEC declined to comment.

An investment adviser advocate said that he hopes the SEC's Office of Compliance Inspections and Examinations will employ presence exams to increase its coverage of registered investment advisers.

The “OCIE has given a high priority to presence exams for private equity and hedge fund advisers,” said Neil Simon, vice president of go! vernment relations at the Investment Adviser Association. “We believe this program should be extended to investment advisers and not limited to the new registrants.”

Mr. Hensarling and Mr. Garrett wrote that the SEC examination process is “burdensome, costly, inefficient and inflexible” for private funds, which they argued “create thousands of jobs and provide financing to struggling companies.”

The legislators have been private-equity champions, leading the House panel to approve a bill this year that would exempt private fund advisers from SEC registration if their funds had low debt levels. They've also pushed the SEC to implement a regulation that would allow private funds to advertise to the public.

Jobs, Not Inflation, Will Drive U.K. Rates

NEW YORK (TheStreet) -- Against the dollar, the pound is trading at its highest levels in eight months. Recent rallies have been driven by minutes from the September meeting at the Bank of England, where policymakers voted 9-0 decision to keep stimulus programs on hold.

This is a significant difference from what was seen during the August meeting, when a dissenting minority saw a "compelling" need for policy changes that were more accommodative.

This is also an implicit suggestion that the BOE is confident that improving macroeconomic data indicate a sustainable trend.

The reduced potential for additional monetary stimulus has pushed the pound to gains of nearly 7% since the end first quarter, which is one of the best performances we have seen this year in developed-market currencies. [Read: Yen Weakness Far From Over] But, at the same time, it should be noted that the currency is still down nearly 30% from its 2007 highs against the dollar. At this stage, it is clear that in order for pound rallies to sustain themselves, we will need to see higher yields and a commitment to raising interest rates. Without this, the pound is in a precarious position and vulnerable to large moves to the downside given the strength seen in the last few months. Supportive Data To be sure, economic data largely support the Bank of England's more hawkish stance. The economy in England, the third largest in Europe, is expected to expand 1.3% in 2013 and by 2% next year. This is slightly less than the GDP expectations for the U.S., where expectations rest at 1.6% for this year, and 2.7% for 2014. But England's August Purchasing Managers' Index (PMI) report showed that the service sector grew at its highest rate since 2006. [Read: There's Still More Upside in Silver Wheaton] A broader measure, the Citigroup Surprise Index (which tracks positive and negative results in all economic releases, relative to market expectations) has risen to 72 this month after hitting lows of -33 in May. But if we are going to see the higher interest rates needed to sustain long-term rallies in the pound, we will need to see the U.K.'s unemployment rate fall below the central bank's target of 7%.

Rate Expectations

Over the last decade, BOE decisions to raise interest rates have generally been based on surges in consumer price inflation, which in some cases have reached levels many would consider excessive for a developed economy.

Current policy goals at the BOE set the inflation target at 2% using a two- to three-year time horizon. But most recent comments from Governor Mark Carney suggest that the BOE has shifted focus and is much more concerned about the state of the labor market. In the three months through July, unemployment in the U.K. dropped to 7.7%, which is still well above the central bank's target. In order to reach the 7% goal need to see any changes in interest rate, the U.K. would need to create more than 750,000 new jobs.

All of this means that we still have some way to go before the BOE is likely to make a true commitment to rising rates. The pound at its elevated levels will be without a true bullish driver until we see the added incentive of higher yields for long-term positions. [Read: Luxury Watches -- Haute Horlogerie Is Happening] And when this stronger pound is taken into consideration along with the increased chances of reduced stimulus from the Federal Reserve, the pound is likely to experience some downside corrections into the final months of the year. At the time of publication, Cox had no positions in securities mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Cox is based in China, and has lectured at several universities there on international trade and finance, focusing primarily on macroeconomics and price behavior in equity markets. His articles appear on a variety of Web sites, including MarketBulls.net, Seeking Alpha, FX Street and others. Investing strategies are based on technical and fundamental analysis of all the major asset classes (stock indices, currencies, and commodities). Trade ideas are generally based on time horizons of one to six months.

Is J.P. Morgan Chase Facing a Systematic and Forced Breakup?

Being an executive at J.P. Morgan Chase & Co. (NYSE: JPM) can be no easy job at the moment. This is one of only a few large institutions that could have survived without a government bailout, and now many missteps and outside efforts have put this banking giant inside of a serious quagmire. With all of the regulatory efforts at work simultaneously against the bank, it gets easier and easier to argue that the regulatory bodies are pressuring this banking giant into a breakup of some sort.

The London Whale debacle may go down in the books as the historical death sentence. Jamie Dimon lost his ability to speak critically and publicly against regulators and politicians after eating crow over the “tempest in a tea kettle” analogy. Despite taking a multibillion loss, the bank never really lost money in any of its quarterly reports. Still, now there are criminal charges over cover-ups by executives and staffers. And the London Whale himself is working with prosecutors. Hmm …

Any “banking lawsuits” seem to entangle J.P. Morgan, even if they seem to be larger offenses of Bank of America Corp. (NYSE: BAC). This appears to be the case, whether it is a circuit court, the Department of Justice, housing regulators, the SEC and on and on. Suits over securitizations are still happening some five and six years after the fact. Does it seem a mere coincidence that Bank of America wants to fold the Merrill Lynch entities back into the Bank of America brand, even if it is just to avoid dual filings? Maybe Bank of America’s effort is to make it far more difficult for regulators to break up the giant banks.

Can you believe that J.P. Morgan now is being targeted for nepotism over hiring the friends and family of Chinese ministers and higher-ups around winning banking and investment banking deals in China? Is that bribery, or is it a culture of “I will take care of yours if you take care of mine.” This is one of those instances that it is almost impossible to fathom how a company could be probed over who they hire. Many businesses hire friends and family of their partners. If regulators go after this, they better look at every aspect of society and business because businesses and people hire people who are friends of their business.

Most industry insiders probably would agree that Jamie Dimon is the best, or at least in the top few, banking CEOs out there, even after the London Whale issues. A recent effort from shareholders tried to split the role of chairman and CEO from Jamie Dimon. It failed as a shareholder vote, but you can be almost certain that the effort will come back up again next year. Citigroup Inc. (NYSE: C) even came out of the woodwork on the split chairman and CEO role, saying that the split role seems to work very well for Citigroup. For years Citigroup has had serious J.P. Morgan envy, but that was simply free press for Citigroup.

Many politicians and regulators (throw in much of the public too) would like to see the big banks broken up. If not a breakup, many at least want a total wall from trading and derivatives risks not putting banking deposits at risk. Sheila Bair is an opponent of the supermarket model of the largest banking giants, and her criticism and efforts actually do have some support on both sides of the political aisle.

Now the Federal Reserve has released its charges against the banks and systemically important financial institutions with more than $50 billion in total client assets. The breakdown there was not seen, but this charge certainly will be heavier on J.P. Morgan as the king of assets than it will be on those “smaller” banks with $50 billion to $100 billion in assets. That was for 2012 as well, and it is a part of the Dodd-Frank charges.

How would a breakup really work? In all likelihood it would work the same way that a Citigroup Inc. (NYSE: C) breakup would work. Trading and underwriting operations would have to be quarantined, while the pure brokerage and retail account management efforts likely would remain an in-bank effort. After all, it makes sense for Joe Public to go the bank and to be able to check in with a financial advisor too. But in contrast, Citigroup has been exiting its Smith Barney effort with Morgan Stanley (NYSE: MS) now in control. That would create a J.P. Morgan unit around the riskier side of the business, and Chase Bank offices would be a subsidiary of Chase.

If J.P. Morgan were to be formally broken apart, you would end up with two separate companies. One would look like Wells Fargo & Co. (NYSE: WFC), with no major international trading operations that can topple a bank or the financial system out of the blue. One would look like Morgan Stanley (NYSE: MS) or even Goldman Sachs Group Inc. (NYSE: GS), where trading and investment banking efforts are free to prevail.

It is getting ever harder to find anyone who really loves the big banks. Have you ever seen anyone wearing a T-shirt that says “Have you hugged your banker today?” out in public? Still, the endless pressures sure seem to be pointing toward a breakup of some sorts. Even if it is not an informal breakup conspiracy, it is almost impossible to argue that there is not a regulatory effort to keep J.P. Morgan from being any more dominant than it currently is.

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Retirement Assets Continue to Recover: ICI

Investors took advantage of a growing economy and favorable market conditions to add almost a trillion dollars to retirement accounts in the first quarter.

The Investment Company Institute reports in its quarterly roundup that total U.S. retirement assets were $20.8 trillion as of March 31, up 4.6% from $19.9 trillion on Dec. 31. Retirement savings accounted for 36% of all household financial assets in the United States.

Assets in individual retirement accounts totaled $5.7 trillion, an increase of 5.1% from year-end 2012. Defined contribution plan assets rose 5.7% to $5.4 trillion.

Government pension plans—including federal, state and local government plans—held $5.2 trillion in assets as of the end of March, a 5.3% increase from the end of the fourth quarter of 2012. Private-sector defined benefit (DB) plans held $2.7 trillion in assets at the end of the first quarter, and annuity reserves outside of retirement accounts accounted for another $1.9 trillion.

Defined Contribution Plans

Americans held $5.4 trillion in all employer-based DC retirement plans on March 31, of which $3.8 trillion was held in 401(k) plans. Those figures are up from $5.1 trillion and $3.6 trillion, respectively, as of December 31. Mutual funds managed $3.1 trillion of assets held in 401(k), 403(b), and other DC plans at the end of March, up from $2.9 trillion at year-end 2012. Mutual funds managed 57% of DC plan assets at the end of the first quarter.

Individual Retirement Accounts

IRAs held $5.7 trillion in assets, up from $5.4 trillion at the end of 2012. Forty-six percent of IRA assets, or $2.6 trillion, was invested in mutual funds.

Other Developments

Target date mutual fund assets totaled $529 billion, an increase of 10% in the first quarter. Retirement accounts held the bulk of target date mutual fund assets: 91% of target date mutual fund assets were held through DC plans and IRAs.

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Check out Median Retirement Balance Is $3,000 for All Working-Age Households on AdvisorOne.

Ford Makes Big Gains on Toyota's Turf

The hybrid version of Ford's Fusion sedan has been a hot-seller in import-friendly markets like California, stealing sales from Toyota. Photo credit: Ford Motor Co.

For decades, Ford's (NYSE: F  ) bread and butter has been its pickup trucks. But in recent years, the Blue Oval has poured a ton of money and attention into its cars as well, creating fuel-efficient cars, like the Focus and Fusion, that compare well with the best of the imports.

Lately, there are signs that Ford's strategy is paying off, as Ford is gaining market share in places like California that have long been dominated by import brands like Toyota (NYSE: TM  ) . In this video, Fool.com contributor John Rosevear looks at the latest sales numbers from some import-friendly regions of the U.S. -- and at how Ford is slowly but surely tempting longtime import buyers back into the Detroit fold.

Ford's latest cars aren't just doing well in the U.S.: Its Focus has become one of China's best-sellers, and more Fords are climbing China's sales charts. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", says that Ford is one of two global auto  giants that is exceptionally well-positioned to benefit from China's ongoing auto boom. You can read this report right now for free -- just click here for instant access.

Is the Dow's Best Yet to Come?

As the Dow Jones Industrial Average (DJINDICES: ^DJI  ) begins the third quarter up 155 points as of 11:50 EDT this morning, it has history on its side. Though investors felt some serious turbulence as the first half of the year's trading came in for a landing, the index and its compatriots still recorded impressive gains -- the Dow itself up 14%. So if history truly repeats itself, is the index in store for even more soaring in the coming months?

First of July
Even though investors have an abbreviated trading week due to the Independence Day holiday, they're wasting no time in capitalizing on some good economic news this morning. Sending the Dow over the all-important 15,000 mark, investors were happy to see the ISM manufacturing index beat expectations with an almost two-point jump from May's reading -- the lowest seen in four years. Coming in at 50.9, the June reading gives hope that continued improvements in manufacturing will help support the economic recovery during the second half of the year.

Another report this morning indicated that spending on new residential construction was also on the rise in May, with overall construction spending also up. With private residential construction spending driving the growth in overall spending, the data once again proves the strength and momentum of the housing recovery, an essential piece of the economic recovery.

Though Mr. Market may have been getting used to the negative reaction from investors that these kinds of positive reports were getting in the prior months, investors may be turning a new leaf as the beginning of a new quarter is upon them.

Financials cashing in
Both the good housing news and last week's report on improving consumer spending numbers have helped the Dow's financial component stocks rebound quickly from last week's correction. American Express (NYSE: AXP  ) is still riding high, up 2.01% as of this writing, following the news that both personal income and consumer spending were up. Since the company's largest operations are based on consumer spending, especially in the higher-income demographic, which has enjoyed a faster rebound than other groups, the card-provider is soaring.

While Bank of America (NYSE: BAC  ) , JPMorgan (NYSE: JPM  ) , and Wells Fargo (NYSE: WFC  ) all operate credit card divisions for their customers, the housing news this morning is a much bigger boost than the consumer spending data. All three are vying for new mortgage loan activity as the housing market recovers, and though there has been some slowing of refinancing activity due to higher interest rates, all three stand to eventually benefit from those new, normalized rates.

While B of A continues to try to repair some new damage to its mortgage-related reputation, both JPMorgan and Wells are well situated to jump on new business. Combined, the two banks accounted for nearly 39% of the new mortgage business in 2012. Much like the history that points to a continued climb for the Dow in the second half of the year, if history repeats itself for the banks, they are in the prime position to cash in on the continued housing recovery before the close of 2013.

Many investors are terrified about investing in big banking stocks after the crash, but the sector has one notable standout. In a sea of mismanaged and dangerous peers, it rises above the rest as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

1 Hotel's Surprising Move

The following video is from Monday's MarketFoolery podcast, in which host Chris Hill and analysts Jason Moser and Jeff Fischer discuss the top business and investing stories of the day.

The Hilton Midtown is the largest hotel in New York City, with nearly 2,000 rooms. Beginning in August, the Hilton will no longer offer room service and will cut 55 jobs as part of the move. What does this mean for other competitors? In this installment of MarketFoolery, our analysts discuss the big change in the hotel business.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The relevant video segment can be found between 13:21 and 17:37.

For the full video of today's MarketFoolery, click here.

Why Multi-Fineline Electronix's Earnings May Not Be So Hot

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Multi-Fineline Electronix (Nasdaq: MFLX  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Multi-Fineline Electronix generated $9.4 million cash while it booked net income of $24.3 million. That means it turned 1.1% of its revenue into FCF. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Multi-Fineline Electronix look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With questionable cash flows amounting to only 3.1% of operating cash flow, Multi-Fineline Electronix's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 5.1% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 89.7% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

If you're interested in companies like Multi-Fineline Electronix, you might want to check out the jaw-dropping technology that's about to put 100 million Chinese factory workers out on the street – and the 3 companies that control it. We'll tell you all about them in "The Future is Made in America." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Multi-Fineline Electronix to My Watchlist.

Stocks to Watch: McDonald’s, Coca-Cola, Verizon

Among the companies with shares expected to actively trade in Tuesday’s session are McDonald's Corp.(MCD), Coca-Cola Co.(KO) and Verizon Communications Inc.(VZ)

McDonald’s promised significant changes after reporting a worse-than-forecast 30% drop in third-quarter earnings and calling its challenges “more formidable than expected.” Shares fell 2% to $89.75 in premarket trading.

Coca-Cola unveiled a broader cost-cutting program and warned that it doesn’t expect to meet previous financial targets as the beverage giant again posted lackluster quarterly soda volume and struggled with currency headwinds. Shares dropped 4.6% to $41.29 premarket.

Verizon Communications said it added 1.52 million of its most lucrative long-term wireless contracts in the third quarter, again driven by a surge in tablet connections. But per-share earnings fell below Wall Street estimates. Shares declined 0.9% to $48.05 premarket.

Kimberly-Clark Corp.(KMB) said Tuesday it plans to cut up to 1,300 jobs as part of a restructuring initiative to reduce costs, while also reporting a 2.9% increase in third-quarter earnings. Shares rose 0.9% to $109 premarket.

Lockheed Martin Corp.(LMT) on Tuesday reported a forecast-beating 1.7% rise in third-quarter profit and raised its 2014 earnings outlook for the third time this year, but said sales and margins will drop sequentially in 2015. Shares lost 2.7% to $170.80 premarket.

United Technologies Corp.(UTX) said its sales rose 4.6% in the latest quarter, driven by higher equipment orders at its Otis elevator and other businesses. Shares gained 2.2% to $103.75 premarket.

Lexmark International Inc.(LXK) said its earnings rose 12%, driven by higher hardware and services revenue, and the company boosted the low end of its outlook for the year. Shares jumped 11% to $44 premarket.

Apple Inc.(AAPL) on Monday said its quarterly profit rose 13% as strong demand for its new larger-screen iPhones helped to overcome sluggish iPad sales. Shares were up 2.6% to $102.38 premarket.

Harley-Davidson Inc.(HOG) posted an expected quarterly decline in motorcycle shipments, while profit and revenue also fell. But earnings topped analysts’ expectations, sending shares up 6.4% to $62.10 premarket.

Reynolds American Inc.(RAI) said cigarette volumes slipped again, but revenue and profit grew thanks in part to higher prices.

Travelers Cos. said its operating profit edged up 1.1% in the third quarter, easily topping expectations, amid an unusually quiet U.S. hurricane season so far this year and strong investment earnings.

AbbVie Inc.(ABBV) and Shire (SHPG) PLC officially agreed Monday to terminate their $54 billion deal, killing the year’s biggest agreed-upon merger.

Illinois Tool Works Inc.(ITW) raised its 2014 profit outlook and reported third-quarter earnings rose 17% as most of its business segments posted revenue growth and margins strengthened.

Omnicom Group Inc.(OMC) posted a stronger-than-expected 24% increase in earnings in the third quarter, helped by revenue growth in all markets.

Regions Financial Corp.(RF) reported an 11% increase in profit for the September quarter, but its revenue declined.

Brinker International Inc.(EAT) said its first-quarter profit increased 12%, helped by higher sales at its Chili’s Grill & Bar and Maggiano’s Little Italy chains.

Illumina Inc.(ILMN) on Monday raised its 2014 guidance as third-quarter results topped analysts’ expectations due to strong demand for the gene-sequencing company’s products.

Staples Inc.(SPLS) said late Monday it is investigating a possible card data breach.

Chipotle Mexican Grill Inc.(CMG) warned its sales growth next year may slow from the robust gains reported in recent periods, even as the burrito chain posted stronger-than-expected earnings and revenue for its third quarter.

Steel Dynamics Inc.(STLD) reported another quarter of sharp growth as demand grew amid a recovery in the automotive, energy and construction markets.

United Parcel Service Inc.(UPS) plans to increase freight rates by an average of 4.9% a package after the holiday season, in the U.S., Canada and Puerto Rico, the company said Monday.

Texas Instruments Inc.(TXN) projected a fourth-quarter profit that tops Wall Street’s estimates as the chip maker also reported its third-quarter earnings rose 31% thanks to stronger sales and margins.

Zions Bancorp sa(ZION)w improved credit quality and enhanced capital levels in the third quarter, but its profit fell 14% along with debt extinguishment and a net loss on a securities sale.

4 Big Stocks to Trade (or Not)

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: Must-See Charts: 5 Big Trades for S&P 2,000



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: 5 Toxic Stocks You Need to Sell Now

RadioShack

Nearest Resistance: $2

Nearest Support: $1.60

Catalyst: Rescue Deal

RadioShack's (RSH) ongoing rescue efforts are making the firm one of the biggest-volume movers for yet another session -- shares of RSH are up 12.6% as I write this afternoon. RadioShack's big leap higher happened on Wednesday, on news that one of the firm's investors, hedge fund Standard General, was talking to the electronics retailer about financing a lifeline that would avoid a bankruptcy filing. Investor excitement over the news has spurred a three-day buying frenzy in RadioShack that's carrying over to today.

From a technical standpoint, the end of this firm's long-term downtrend last week is helping to turn the ship around. With a breakout above $1.60 being tested this afternoon, RSH has a pretty clear path up to resistance at $2. There's still a lot of event risk in RadioShack right now, but for investors who aren't risk averse, there's still upside potential in this stock.

GoPro

Nearest Resistance: N/A

Nearest Support: $48

Catalyst: Options Volume

Options traders are helping to spur buying in shares of recent IPO GoPro (GPRO) this afternoon. An unusually large trade in September $52.50 calls means that a big aggressive bet is being made on the action camera maker. The volume is proving enough to break shares out to new highs, a factor that could help create a self-fulfilling prophecy in GPRO.

Making new highs is significant from an investor psychology standpoint because it means that everyone who has bought shares in the last year is sitting on gains. As a result, the "back to even" mentality is less of a concern than it would be for a name with a higher proportion of shareholders sitting on losses. For traders who aren't risk-averse, there's still time to build a position in GoPro now.

FireEye

Nearest Resistance: $40

Nearest Support: $28

Catalyst: Technical Setup

Tech name FireEye (FEYE) is up close to 5% on big volume this afternoon, boosted by technical factors for another straight session. FEYE started off 2014 in a bad way, dropping more than 27% since the start of the year. But now shares are looking "bottomy," and this stock could be in store for higher ground in the second half of the year.

The key level to watch is up at $40. If that resistance level gets taken out, then we've got a signal that buyers are finally back in control of this stock. Stay away from the long side of FEYE until $40 is behind it.

Veeva Systems

Nearest Resistance: $40 

Nearest Support: $26

Catalyst: Q2 Earnings

Software firm Veeva Systems (VEEV) is up more than 17% this afternoon, following the firm's second quarter conference call for fiscal 2015. Veeva reported earnings of 9 cents per share, beating analysts' 7-cent best guess. The firm also reported a big hike to its guidance for full fiscal 2015 earnings, hiking its profit range from between 26 cents and 28 cents to between 30 cents and 31 cents.

Technically speaking, now looks like a good time to be a buyer in VEEV, even if you missed today's move. Shares have been forming an ascending triangle bottom for the last several months, and today's breakout above $26 resistance is the buy signal for the pattern. From here, $40 resistance looks like the next meaningful stumbling block on the way up, leaving plenty of room for profit before the next big glut of selling pressure. If you decide to be a buyer, use a protective stop on the other side of the 50-day moving average.

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



-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

>>5 Breakout Stocks Under $10 set to Soar

>>4 Stocks Spiking on Big Volume

>>5 Stocks With Big Insider Buying

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in the names mentioned.

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

La-Z-Boy Incorporated Meets EPS Estimates, Misses on Revenue; Stock Plummets (LZB)

After the closing bell on Tuesday, La-Z-Boy Incorporated (LZB) reported its fourth quarter earnings, posting slightly higher revenues and EPS than last year’s Q4 figures.

LZB’s Earnings in Brief

La-Z-Boy reported fourth quarter revenues of $353.3 million, up from last year’s Q4 revenues of $345.8 million.  Net income for the quarter was down to $12.24 million compared to last year’s Q4 figure of $18.31 million. The company's adjusted EPS came in at 33 cents, which is up from last year’s Q4 EPS of 30 cents. LZB met analysts’ EPS expectations of 33 cents, but revenue missed the expected $369.2 million. Same-store sales for the quarter were down 0.9% for quarter, compared to 11.2% growth in last year’s Q4.

CEO Commentary

LZB chairman, president and CEO Kurt L. Darrow had the following comments: “Overall, we are pleased with our results for fiscal 2014 full year.  With respect to our performance, we increased sales, operating profit, cash flow and the dividend while strengthening our balance sheet.  Additionally, we recorded a 6% increase in written same-store sales for the La-Z-Boy Furniture Galleries® network of stores, while solidifying one of the largest growth initiatives in the company’s history with our 4-4-5 store strategy.  We improved the performance of both our wholesale upholstery and retail segments, demonstrating our integrated retail model is delivering results. Moving forward, we believe the initiatives we have established throughout our wholesale and retail operations, coupled with the financial strength and flexibility to invest in our business, will position us for continuing, long-term profitable growth.”

LZB’s Dividend

La-Z-Boy paid its last dividend on June 10, and we expect the company to declare its next quarterly dividend of 6 cents in the coming months.

Stock Performance

LZB stock was down $2.34, or 9.42%, in after hours trading. YTD, the stock is down 21.7%

LZB Dividend Snapshot

As of Market Close on June 17, 2014

Click here to see the complete history of LZB dividends.

Fiduciary Will Stay on SEC Agenda ‘Until It’s Solved’

Steve Luparello, director of the Securities and Exchange Commission’s Division of Trading and Markets, said Monday that the issue of whether to craft a fiduciary rule for brokers is “not so much a policy challenge as an implementation challenge,” and that while deciding whether to move forward on a fiduciary rule is on the agency’s agenda this year, “being on the agenda and getting it done are two different things.”

Luparello, who made his comments during a panel discussion at the Financial Industry Regulatory Authority’s annual conference in Washington, noted after being asked by FINRA CEO Richard Ketchum where the agency’s debate on the “the F word” currently stands, the lack of “coalescence of thought” among the SEC commissioners on how to move forward with a rulemaking.

However, Luparello added that the “fiduciary issue will stay on the commission’s agenda until it’s solved.”

Ketchum noted that he sees the main stumbling blocks to the SEC deciding on a rule proposal being the “interpretive laws” as well as the “concern with litigation.” But Ketchum said he sees an “overwhelming cultural benefit” for firms to build a compliance culture around “what’s in the best interest of the investor.”

Said Ketchum: “For some time I’ve said that we need to get there [to adopting a fiduciary rule], but you have to describe what that means to existing business models today. There’s a good deal of debate on what the impact is.”

Dan Kosowsky, chief compliance officer of Morgan Stanley Wealth Management, agreed that crafting and implementing a fiduciary rule is “a tougher challenge than just adding a fiduciary duty and saying you’re done.”

As to how the SEC is collaborating with the DOL regarding its rule to amend the definition of fiduciary under the Employee Retirement Income Security Act, and what Ketchum called the “potential for inconsistent standards” among the agencies' rules, Luparello said that it has been “very important to include the DOL in [the SEC’s fiduciary] conversations, and that’s what’s been happening.”

---

Check out FINRA ‘Aggressively’ Seeking BD Feedback on CARDS: Ketchum on ThinkAdvisor.

 

Muni regulator pursues rule to increase price transparency

As a new study shows that hidden costs make municipal bonds more expensive for retail investors than corporate bonds, the industry regulator is poised to make moves that it hopes will bring more transparency to the market.

On Tuesday, the S&P Dow Jones Indices released a report that found a hidden transaction cost of 1.73% built into muni-bond markups.

The transaction cost of investment-grade corporate bonds was 0.87%.

The Wall Street Journal was the first to report the findings.

The $3.671 trillion muni-bond market increasingly is made up of retail investors who are trying to cut through the murky atmosphere when making purchases.

“The issue du jour is price transparency,” said Andrew Kintzinger, a partner at Hunton & Williams. “The market is opaque.”

The Municipal Securities Rulemaking Board is trying to address that problem with a rule that would require for the first time that muni securities dealers seek the best execution prices for retail investors. The rule is designed to promote market competition and efficiency.

“Everything we do boils down to that fundamental fairness, to ensure the retail investor gets a fair price,” said MSRB executive director Lynette Kelly.

The best-execution rule, which is modeled on a similar Financial Industry Regulatory Authority Inc. rule for equity and fixed-income markets, was proposed Feb. 19. The deadline for public comments is March 21.

(See also: MSRB to follow Finra regarding suitability rules)

When the MSRB put out a concept release on the proposal last year, it received criticism from some financial firms, who said that the idea was unworkable because of the stark liquidity differences between muni and equity markets.

In an Oct. 7 letter on the concept proposal, Wells Fargo Advisors said that the MSRB should keep in place its present rule, which calls for firms to offer fair and reasonable prices.

“A more prescriptive best-execution rule could slow down the execution process in many municipal securities,” wrote Robert J. McCarthy, director of regulatory policy at Wells Fargo Advisors. “The 'best execution' requirements may cause dealers to delay execution of a municipal security at a fair market value to fulfill the Finra rule's multifactor 'reasonable diligence' analysis.”

Despite the certainty of industry push-back, the prospects for the rule are good, according to Mr. Kintzinger.

R! 20;The MSRB has been aggressive in taking on the topics of price transparency and disclosure in the market,” he said. “Investment advisers and brokers are going to want to keep a real focus on what the MSRB is proposing.”

Rules proposed by the MSRB, a self-regulatory organization whose board comprises public and industry representatives, must be approved by the Securities and Exchange Commission.

There will probably be modifications to the best-execution rule along the way because if underwriters must give the best price to investors and a fair and reasonable price to issuers, both groups could be hurt, said Nathan Howard, an attorney at Affinity Law Group.

“What it ultimately looks like at the end of the day is hard to say,” Mr. Howard said.

“There will be some best execution,” he said. “We won't see the MSRB walking away from it.”

In addition to the price transparency rule, the MSRB also has plans to upgrade its Electronic Municipal Markets Access website. By the end of April, the regulator will add a feature that allows investors to compare muni-bond offerings in similar geographic regions or with similar credit ratings and other characteristics.

The MSRB also soon will put out a concept release to add a centralized transparency platform to the website that would provide pre- and post-trade information on muni bonds.

“We have this transparent website which is unprecedented in the securities markets,” Ms. Kelly said. “It's incredibly exciting.”

For momentum to be sustained, the SEC also will have to be on board. In July 2012, the SEC released a report containing several recommendations to improve muni-market structure and disclosure.

“I don't think municipal securities rule making is going to be at the top of the [SEC] agenda,” said Hester Peirce, a senior research fellow at the Mercatus Center at George Mason University.

“They just have other priorities right now,” he said. &! #8220;The! y haven't devoted many regulatory resources to municipal securities.”

The SEC didn't respond to a request for comment.

U.S. Dollar Lower Against Japan's Yen

Overnight, the Dollar-Yen was higher and lost the gains as the session wore on. USD/JPY is trading at 118.33, down 0.12. Trading is choppy. Some chatter is making the rounds about weak equities as the cause of the dollar selling.

Posted-In: Futures Forex Markets

© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Wednesday Analyst Moves: Dicks Sporting Goods Inc, Intel Corporation, PetSmart, Inc., More (DKS, INTC, PETM, More)

Before Wednesday’s opening bell, a number of big name dividend stocks were the subject of analyst moves. Below, we highlight the important analyst commentary for investors.

Oppenheimer Downgrades Apollo Global Management

Apollo Global Management LLC (APO) was downgraded to “Perform” from “Outperform” at Oppenheimer based on a valuation call. APO has a dividend yield of 0.77%.

Credit Suisse Upgrades Dick’s Sporting Goods

Dick’s Sporting Goods (DKS) was upgraded to “Outperform” from “Neutral” at Credit Suisse and given a price target of $65. Credit Suisse believes that Dick’s private label program has shown strength and that the company has good management. The price target suggests an 18% upside to Dick’s current price. DKS has a yiel

Morningstar: City Pensions in Good Shape, Sort Of

Morningstar states the obvious in its latest report on the pension liabilities of largest U.S. cities, but seeing the numbers behind it brings the municipal burden into stark relief, and in the largest of the large (New York City and Chicago), it ain’t pretty.

“Overall, 22 of the largest 25 cities have the majority of their pension liabilities tied to single employer, agent multiple-employer, or cost-sharing multi-employer (CSME) plans in which the city is the majority participant,” says the report, “The State of City Pension Plans 2013: A Deep Dive Into Shortfalls and Surpluses.”

The report means that the pension liability will have to be funded either solely or mainly by the city. Large cities also tend to have greater autonomy in terms of pension benefits and, in many cases, funding decisions, Morningstar notes.

“Funding these plans can be a substantial burden to these governments, often accounting for a larger portion of annual spending than debt service. In rare cases, this has even led to municipalities filing for bankruptcy.”

The report finds that while some cities are adequately managing their aggregate pension liabilities, many municipal pension systems “are coming under duress.” The fiscal solvency and management of these plans vary greatly, according to two key drivers of Morningstar’s pension analysis: the funded ratio and the unfunded actuarial accrued liability (UAAL, or unfunded liability) per capita.

“In aggregate, the cities’ pensions are 66.4% funded, with an unfunded liability of $3,776 per capita,” it says. “However, the median ratios are markedly better, at 76% and $1,556 unfunded liability per capita. Some of the largest cities, most notably New York City and Chicago, are poorly funded, with large unfunded liabilities, skewing the overall data.”

For comparison, Morningstar recently found that state pension plans currently have an aggregate funded level of 72.6%, with a UAAL per capita of roughly $2,600.

While New York City and Chicago fared poorly, Washington is the strongest among the selected cities, with its pension plans funded at over 100%, leading to a negative unfunded liability. Seven cities have funded ratios of at least 80%, which is considered to be strong by Morningstar and recommended by the Government Finance Officers Association.

In the table below, ordered by population, note that Funded ratio percentage column. Seven cities fall below Morningstar’s fiscally sound threshold of a 70% funded ratio.

Boeing Shares Climb Thanks To Strong Earnings

Tweet 0 Disqus Email Print Feedback Share Tweet 0 Disqus Email Print Feedback 0 Disqus Boeing Shares Climb Thanks To Strong Earnings October 23, 2013 | Filed Under » Aerospace/Defense Products & Services, Earnings Recap, Equity Tickers in this Article » BA, UTX, GE, LMT, NOC This has not been an easy year for Boeing (NYSE:BA). Not only was it dogged by safety issues related to its 787 Dreamliner, but the fiscal drama in Washington raised questions about the future of its defense business. Nonetheless, the Chicago-based has overcome these doubts and thrived.

The aerospace giant today reported better-than-expected quarterly earnings fueled by a 14% surge in deliveries. It also is speeding up production of the Dreamliner - which is attractive to airlines since it is 20% more fuel-efficient than more conventional aircrafts – and they're also hurrying along the wide-body 777 and the single-aisle 737. The company also raised its earnings guidance for the year. Shares, not surprisingly, have hit a 52-week high.

Boeing's results had plenty for investors to like. Free cash flow more than doubled to $2.3 billion and cash and marketable securities jumped 11% to $15.9 billion. Operating margins in Boeing's commercial aviation unit rose to 11.6% from 9.5%. The company delivered 26 777s, up 30% from a year earlier. Its backlog is at a record $415 billion.

"Our overview of the business environment remains strongly positive," said Chief Executive James McNerney during the company's earnings conference call. "Airline customers continue to replace old aircraft in favor of new ones that offer compelling operating economics and increased fuel efficiency."

Boeing expects to deliver between 635 to 645 aircraft, including about 60 787 Dreamliners, this year. Those estimates may prove to be conservative given the surge in demand for air travel.

McNerney has managed the company through some challenging times, including the lengthy delays for Dreamliner, which cost the company billions. He hasn't escaped unscathed. Japan Airlines, which received the second delivery of the Dreamliner, recently stunned Boeing by placing a huge order with Boeing's rival Airbus.

Shares of Boeing, which have surged more than 70% this year, had more room no run as Wall Street cheers the company's better-than-expected quarterly results. Stern Agee has a $164 price target on the stock and Stifel Nicolaus' estimate is $130 average estimate. That implies a potential upside of more than 20%. The shares are not cheap, trading at a price-to-earnings multiple of 22.4, under its 5-year high, according to Reuters. They also are more expensive than United Technologies (NYSE:UTX) (19) General Electric (NYSE:GE) (16) and Lockheed Martin (NYSE:LMT) (12).

Under McNerney, Boeing has sharply reduced costs by eliminating jobs and squeezing suppliers. Contractors that don't play ball with Boeing are placed on "no-fly lists," meaning that they won't get new business from the aerospace giant. He certainly isn't winning any popularity contests.

"I'm sounding like Darth Vader here," McNerney was quoted by the Seattle Times as saying earlier this year.

The company's defense business, the second largest behind Lockheed Martin, held up despite the uncertain fiscal environment. Operating margins rose to more than 9.25%. Revenue at Boeing Defense, Space and Security rose 3% to $8.05 billion. Profit, though, fell 19% to $673 million because the company is winding down production of its C-17 military transport aircraft. The business, though, captured more than $7 billion in new orders. Both Lockheed Martin and Northrop Grumman (NYSE:NOC), two of the biggest defense contractors, also reported better-than expected results.

The Bottom Line

Though no one can predict blue skies for Boeing, the company certainly has plenty going for it. This Blue Chip stock would be a good addition to investors' portfolios. McNerney has defied the naysayers in the past and probably will do so again in the future.

Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.

Top Insider Trades: HD PBF ARRY GBDC

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By Jonathan Moreland, founder of Insider Insights and author of Profit From Legal Insider Trading.

NEW YORK (TheStreet) -- It is a victory for common sense. Tracking the trading behavior of company executives, directors and large shareholders in the stocks of firms they're registered in as "insiders" has proven to be profitable, according to both academic studies and (more importantly) the experience of professional investors.

Below are lists of the top 10 mainly open-market insider purchases and sales filed at the Securities and Exchange Commission Monday, Sept. 16, 2013 as ranked by dollar value. Please note, however, that these are only factual lists, not buy and sell recommendations. Dollar value is only one metric to assess the importance of an insider transaction, and, frankly, often not even the most important metric that determines if an insider transaction is significant. At InsiderInsights.com, we find new investment ideas just about every day using these and more intricate insider screens to determine where we should focus our subsequent fundamental and technical analysis. And while stocks don't (or shouldn't) move up or down based on insider activity alone, insiders tend to be good indicators of when real stock-moving events like earnings surprises, corporate actions, and new products may be in the offing. So use these regular Top Insider Trades columns as the initial research tools they are meant to be, and click the links in the tables to analyze a company's or insider's full insider history. Also feel free to contact us with any questions on our proprietary insider data, and how it is best analyzed.

Sprint (S) Softbank BO 5,939,626 39,987,332 Nanoviricides (NNVC) Boniuk M DIR 857,142 2,999,997 Thursday, January 8, 2015 BRE Offloads Two Assets - Analyst Blog BRE Properties, Inc. (BRE) – an apartment real estate investment trust (REIT) – announced the divestiture of 2 communities – Summerwind Townhomes and Arcadia Cove – in Los Angeles and Phoenix, respectively. The properties that were sold last month reflect the company's strategy of offloading non-core assets and using the proceeds to fund its core development pipeline. Financial Aspects The vending of these unencumbered properties helped the company generate a net profit of about $22 million. Specifically, the sale of Summerwind Townhomes- which was fully owned by BRE Properties – generated total proceeds of $46.8 million. On the other hand, the Arcadia Cove communities – where BRE properties had 15% interest – lead to total proceed of $6.0 million. Notably, the sales price of Summerwind Townhomes depicts 5.9% seller's capitalization rate based on trailing 3-month NOI of the asset. Fund Usage BRE properties will utilize the proceeds to pay-off outstanding amount under the $750 million unsecured revolving credit facility. In addition, the company will use the amount to finance its proposed development projects over the coming months and for other corporate needs. Conclusion Including the aforementioned as well as first-quarter divestitures, BRE Properties generated sales proceeds of about $100 million in 2013. Moreover, the company is aiming to sell additional communities in the $75–$125 million range in the second half of 2013. We believe the divestiture is a strategic fit as the fund generated would help reduce the company's debt as well as finance its growth plans in supply-constrained premium markets. This, in turn, would help the company outperform competitive pressure. BRE Properties currently carries a Zacks Rank #3 (Hold). Some better performing REITs include Sun Communities Inc. (SUI), Essex Property Trust Inc. (ESS) and Camden Property Trust (CPT) – all of which have a Zacks Rank #2 (Buy). Tuesday, January 6, 2015 Why the Dow Jumped 128 Points Today Still gathering momentum in anticipation of corporate earnings, the markets rallied again today. Wall Street got some help from the Federal Reserve, which released the minutes of its latest meeting earlier than expected today. Bulls cheered the release, which suggested the central bank will only slow quantitative easing efforts when the job market improves markedly. Ending at an all-time record close, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) added 128 points, or 0.88%, to finish at 14,802.  Health care was one of the strongest sectors today, and Merck (NYSE: MRK  ) shares didn't disappoint, adding 2.9% to lead the Dow. A Jefferies analyst raised his price target on the shares to $48, citing his bullish view on pharmaceuticals, because of compelling valuation. The company also announced that the FDA will review Merck's application to market an antifungal drug it's trying to hawk in Europe as well. It's no surprise that the FDA also played a role in Pfizer's (NYSE: PFE  ) 2.8% climb today; drug manufacturers often live and die by the rulings of the regulator. Shares soared after the FDA labeled an experimental breast cancer treatment as a breakthrough medicine, meaning the agency will give priority review to the drug, speeding up the process it requires to get to market. With tech stocks also flying high today, Cisco Systems (NASDAQ: CSCO  ) advanced 2.4% Wednesday. Trading a little over 10 times forward earnings and paying a 3.3% dividend, Cisco shares offer compelling value in a Dow that's risen 13% this year alone. The company's new offerings with Microsoft to boost data-center productivity may also help send the stock higher if they catch on quickly. But not everyone can be winners. Wal-Mart Stores (NYSE: WMT  ) , for instance, was one of only four decliners in the Dow, slipping 1% on PR-related negativity. The executive who called the retailer's sales "a total disaster" in February, sparking investor fear, is leaving the company. A Facebook group of Wal-Mart critics, "Making Change," derided the departure as "more of the same failure to address the real issues." Once a high-flying tech darling, Cisco is now on the radar of value-oriented dividend lovers. Get the low down on the routing juggernaut in The Motley Fool's premium report. Click here now to get started. Analyst Moves: Caterpillar Inc., The Coca-Cola Co, Intel Corporation, More (CAT, KO, INTC, More) Before Monday’s opening bell, a number of big name dividend stocks were the subject of analyst moves. Below, we highlight the important analyst commentary for investors. Morgan Stanley Downgrades Amgen  Amgen (AMGN) was downgraded to “Equal Weight” from “Overweight” at Morgan Stanley, based on a valuation call and AMGN’s lack of near-term catalysts. MS has a price target of $177 on AMGN, suggesting an 11% upside to the stock’s current price. AMGN has a dividend yield of 1.98%. Morgan Stanley Downgrades Baxter Baxter International (BAX) was downgraded to “Underweight” from “Equal Weight” at Morgan Stanley, based on a valuation call. MS currently has a price target of $73 on BAX, suggesting the stock will remain flat at its current price. BAX has a yield of 2.84%. Two Firms Change Ratings on C.R. Bard C.R. Bard (BCR) was upgraded to “Equal Weight” from “Underweight” at Morgan Stanley, as MS believes BCR has earnings flexibility. MS has a price target of $187 on BCR, suggesting a 12% upside to the stock’s current price. JP Morgan downgraded C.R. Bard to “Underweight” from “Neutral” based on a valuation call and a $162 price target. JPM’s price target suggests a 3% downside to the stock’s current price. BCR has a yield of 0.53%. JP Morgan Downgrades Caterpillar Caterpillar (CAT) was downgraded to “Underweight” from”Neutral” at Caterpillar, as the company’s exposure to the energy and mining sectors should be a headwind. JPM has an $8o price target on CAT, suggesting the stock price will fall by 13%. CAT has a yield of 3.05%. BofA/Merrill Lynch Upgrades Coca-Cola Enterprises Coca-Cola Enterprises (CCE) was upgraded to “Buy” from “Neutral” at BofA/Merrill Lynch, based on a valuation call and $52 price target. The price target suggests an 18.5% upside to the stock’s current price. CCE has a yield of 2.28%. JP Morgan Downgrades Cablevision Cablevision Systems Subscribe to: Posts (Atom) Blog Archive ►  2019 (38) ►  March (19) ►  February (19) ►  2018 (22) ►  August (2) ►  July (11) ►  June (3) ►  May (6) ▼  2015 (91) ►  June (9) ►  May (10) ►  April (7) ►  March (17) ►  February (17) ▼  January (31) Soft December ends boffo 2013 for auto sales Zuckerberg Looks to Rake In $2 Billion in Facebook... Yellen to defend Fed’s stimulus policies Home loans become a little easier to get House Republicans blast SEC on private funds, say ... Jobs, Not Inflation, Will Drive U.K. Rates Is J.P. Morgan Chase Facing a Systematic and Force... Retirement Assets Continue to Recover: ICI Ford Makes Big Gains on Toyota's Turf Is the Dow's Best Yet to Come? 1 Hotel's Surprising Move Why Multi-Fineline Electronix's Earnings May Not B... Stocks to Watch: McDonald’s, Coca-Cola, Verizon 4 Big Stocks to Trade (or Not) La-Z-Boy Incorporated Meets EPS Estimates, Misses ... 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