Markets Open With Lighter Staffs Than Normal

Happy Halloween.  The markets are open, but staffing is lighter than normal as residents in NYC try to get back to normal daily life but are still dealing with power outages, transportation delays, etc.  As such, I would expect lighter than normal trading.  The wildcard is that the markets have been closed for the last 2 days so there could be some pent up trading that needs to get done before month-end (today).

The damage from the hurricane spread as far as Cleveland, where my parents have told me that Trick or Treating has been cancelled for tonight and rescheduled for Sunday. 

In M&A news, Warnaco (WRC) will be acquired by PVH for a 30% premium.  Also, Disney (DIS) has said it will buy Lucasfilm for $4 billion.

In economic news, the Chicago PMI for October rose to 49.9 but that was below expectations. 

There were lots of companies that delayed their earnings reports due to the closing of the markets.  As I look at stocks of companies that reported this morning, I am pleased to see more stocks trading higher on their reports than trading lower.

Stocks rising on earnings: F, GM, MA, PWR, AMG, BWA, NUS, AMT, ETN, SPW

Stocks falling on earnings: STX, BNNY, MAC, CAM

Asian markets were mostly higher overnight, thought China's gains lagged once again.  Europe's markets are also generally higher this morning, despite data showing the Eurozone unemployment rate ticked higher to 11.6%.

The dollar is lower today, which is helping commodities.  Oil prices are higher to $86.50.  Gold prices are also up a bit near $1719.  But copper prices look weak today.

The 10-year yield is slightly lower today to 1.70%.  And the volatility index (VIX) is higher today by 3.5% near the 18.50 level.  The VIX has been consolidating last weeks gains around these levels and still looks poised to test the 20 level again at some point.

Trading comment: Markets are open for trading, but I expect volume to be light today.  The gains were higher in the opening hour but seem to have already faded.  The SPX has given up almost 10 points as of this post.  And the Nasdaq remains in the red as its leader AAPL continues to trade lower following last week's earnings report.  Markets never move in straight lines, and I would not be surprised to see some strength in the market in the near-term.  But I want to remain cautious until we see some more concrete signs that this correction has run its course.

KAM Advisors has long positions in AAPL

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Stock Markets Remained Closed From Sandy

The stock market remains closed today.  In futures trading this morning (electronic), the S&P 500 futures closed 0.3% higher.  Contracts on the NYMEX will continue to trade today (interest rate and commodity derivatives).  The NYSE is trying to open in some form tomorrow for end of month trading, but no decision has been made yet.

Sandy made landfall in New Jersey, but has lost its hurricane status and is now classified as a storm.  As many as 8 million people are without power.

Getting back to the economy, the Case-Shiller Home Price Index rose 2.0% in its latest reading.

Overnight in Asia, markets were mixed.  The Bank of Japan launched its 9th easing operation of 11 trillion Yen, bringing the total to 91 trillion Yen.  Also, the Bank of India lowered its cash reserve ratio 25 basis points to 4.25%. 

In Europe, markets are higher after some blue chip companies reported solid earnings.  Companies like BP, UBS, and Deutsche Bank all topped earnings estimates.  In Spain, their flash GDP reading came in just above expectations but still contracted -0.3%.

Oil prices have eased back to $85.50 and gold prices are also a bit lower near $1708.

The 10-year yield is at 1.72% in electronic trading.

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Monday Morning Musings

Well this is certainly an interesting morning in the markets.  Hurricane Sandy, or at least the anticipation of the storm, has shut down most of the exchanges for trading today and most likely tomorrow.  I heard the NYSE has not been shut down for weather for over 100 years.  Pretty surprising.

The bond market was open for trading this morning but will close at noon EST.  The options market is closed today as well.

Overnight action in Asia was mostly lower.  China was down -0.5% after reports suggested that there is little chance of an interest rate cut at this time.  Tonight the Bank of Japan will comment on a potential increase to its asset purchase program.

Europe's major markets are also lower this morning.  Bond yields in peripheral countries are rising.  Similar to comments we made last week, a Bank of England member tempered GDP expectations saying that the data may have been boosted by the Olympics.

In economic news in the US, personal income increased 0.4% (in-line) in September and personal spending rose more than expected to 0.8%.

The dollar is higher today, and commodities are down slightly.  I believe commodities futures markets are also closing early today.  Oil is lower to $85.90 and gold is down a bit today near $1708.

In bond trading today, bond prices are higher and pushing yields on the 10-year note down to 1.71%.

The VIX closed at 17.81 on Friday and is closed today due to the CBOE being closed for trading.

Trading comment: I would have normally been saying that I would be looking for some end of the month strength or maybe some window dressing to boost the markets ahead of month end.  But now I'm not even sure that we will see any trading before month end.  The markets could open again Wednesday, but I wonder if the uncertainty and the liquidity concerns from the 2-day closure will manifest itself in some pent-up selling pressure.  I think if that materializes I might still view it as a short-term buying opportunity heading into early November.

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Once Bullish, Leon Cooperman Grows Wary of Stock Valuations

For years famed investor Leon Cooperman has talked up stocks. But on last night’s show, he sounded the alarm.

Cooperman, who is a widely followed investor and chairman of the hedge fund Omega, has made headlines for quite some time calling stocks 'the best house in the financial asset neighborhood.'

Back in 2011, Cooperman outlined his pro-stock market thesis at length on CNBC.

But on The Kudlow Report, Cooperman made a surprising statement that presumably reflected a shift in his outlook. He told Larry, “I think the stock market presently is fairly valued. I believe the profit cycle is peaking.”

Cooperman went on to say that the market multiple may be too high.

“Historically the market multiple is around 15,” said Cooperman, but over the past 50 years or so the growth rate has been much more robust. If we’re moving into a period of slower growth than the premium investors are willing to pay for stocks will probably decline. 

That’s not to say Cooperman is a seller – he’s not. “I’m not aggressively bullish or bearish,” he explained, “I’m simply saying I think the market is now fairly valued.”

And he reiterated something he’s said many times before. 

“If you must put money to work I still don’t think there’s a better alternative than common stocks – the Fed has made all the alternatives very unappealing."

Nonetheless, his commentary suggests his outlook is shifting.

Cooperman also told Larry Kudlow that he thought all the concerns about the fiscal cliff or the confluence of tax hikes and spending cuts that could go into effect as soon as January 1^st – are overblown.

“They’ll kick the can down the road,” he said. “There’s no way a politician will allow the cliff to hit.”

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Start Operationalizing Your Buyer's Journey

I was surprised to hear so much talk about the 'buyer's journey' at a recent Sales 2.0 conference. More talk than I often hear at marketing conferences! Having said this, it was clear that many people who talked about buyer's journeys did not know what the term meant.

A hesitant raise of hands at one sales enablement panel showed that a little more than half the room thought that their company used a buyer's journey framework. The panelists didn't buy that answer. Sniffed one, "Most companies lift the sales stages right out of their CRM system and call that a buyer's journey."

What isn't a buyer's journey? It isn't a sales methodology. It isn't build rapport, uncover needs, identify options, propose solutions, and close the deal. It isn't a product life-cycle. It isn't development, launch, grow, mature, decline. It isn't marketing stages. It isn't build awareness, create interest, engage, and persuade. All of these processes can be useful to guide an important function. However, they all describe vendor's journeys – not buyer's journeys.

So, what is a buyer's journey? A buyer's journey is a framework that describes the cognitive process each buyer must personally traverse leading from Apathy (Do I care?) to Commitment (How can I buy this?).  IDC's Customer Creation Framework highlights three simple stages of this journey: Exploration, Evaluation, and Purchase. You can break these stages into sub-steps if you like.

In the simplest terms, a buyer's journey is really nothing more than a list of questions.  Buyers have different questions at different steps of their journey.  If buyers get their questions answered clearly, positively, credibly, and with relevance, they will take another step. If they do not, they stall or abandon their quest.

Let's take the example of some questions on a buyer's journey towards a new car:

• Exploration: Is my current car headed for a problem – how do I know? Are there new cars that I would like better? What cars are new this year? What do I really need?
• Evaluation: Which cars offer the best value? Which do I find most attractive? Is this supplier trust-worthy? What do the experts say? What do my friends think? How can I test drive?
• Purchase: How much can I afford? Should I buy this now? Do I find terms acceptable?

Operationalizing a buyer's journey

 

1) Collect a list of questions.

 

Start small. Select just one of your products and its most typical buyer. What questions does this buyer have about the problem? About alternative solutions? About acquiring, adopting, and using products like the one you offer? Finally, what questions might a buyer have specifically about your product?  Most companies will need multiple question lists for multiple situations. But don't boil the ocean at the beginning.

Where do you get these questions? Ask your buyers! Ask the people in your company who talk to buyers – sales people, customer support, systems engineers, etc. Listen to social media chatter.  My experience has been that you can collect 95% of the questions you need after you have talked to about 30 people who have a broad range of roles and backgrounds.

 2) Answer the questions.

 

If your company has EVER sold a product, then somewhere, someone has the answers to the buyer's questions. It probably isn't the marketing team – but that's okay. Go back the same people and places from which you gathered the questions.  Some questions can be answered easily. Others will be thorny.  Some questions will have happy answers. Other questions will be evil.

Do not avoid the thorny and evil questions!  I like this quote from Robert Frost, "The best way out is always through."  Every unanswered question is a place where prospects can get frustrated and where leads will stall or fall out of your pipeline.

You can collect both the questions and the answers in a spreadsheet or an FAQ document.

 3) Put the answers on your website and give them to your sales team.

 

Keep your initial content super simple. Make sure the answers to all the important questions are easily found on your website. Make sure that your sales team has easy access to all of the answers.

 

 4) Improve

 

Later, you can explore the best way to deliver your answers to buyers – how should the message be voiced? What content types and media work best at different steps and with different buyer personas? How do I best map the buyer’s journey steps to the sales process?

 But these are secondary issues. If you don’t first have the answers that your buyer needs, all these secondary questions are a total waste of time.

 

 

 

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Japan Adds To Recent Stimulus Program

The markets are higher in early trading, although the early strength is already beginning to fade.  There is still a lot of time left today, so we will have to see if there is any late day strength that shows up.

In economic news, durable goods orders surged back from last month's -13.1% decline to increase 9.9% in September.  Ex-transportation durable goods rose 2.0%.

10-year yields are getting a bounce on the data, with yields reaching 1.81%.

It was another big night and morning for earnings reports.  I haven't seen any big standouts the way CAT, etc. made the headlines.  But there are certainly lots of sharp reactions in the stocks.

Stocks rising on earnings: BG, BIIB, ASPS, RS, RCL, DLX, COP, PCP, MCK, AKAM, SRCL, PG

Stocks falling on earnings: CAB, FFIV, CLF, SWI, MJN, SHW, DFT, FFIV, NOV, UA, JAH

Asian markets were mostly higher overnight.  The Bank of Japan announced another round of stimulus to the tune of 400-700 billion JPY.  The Nikkei rose 1.1%.  But talks of fiscal package in China did little to boost their market, which fell -0.7%.

Europe is also higher this morning on the heels of a positive GDP report from the UK.  GDP rose 1.0% in Q3, but likely got a boost from the Olympics which should fade next quarter.

The dollar is flattish, oil prices are flat near $85.75, and gold prices are higher to $1717.  Copper prices are lower again, and are not trading as if China is rekindling growth.

Trading comment: The major indexes have not been able to muster much of a bounce the last couple of days, despite being short-term oversold.  I think it is likely we will see a short-term bounce soon, but it will probably still be too soon to buy.  I would prefer to wait for the market to pull back again after any bounce and see if it can find some firm support.  That would be a better bottoming process from which to launch a more sustainable rally.

KAM Advisors has long positions in SRCL, PG

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Does the Fed Have Grave Concerns About the Economy?

On Tuesday, the Federal Reserve re-affirmed its commitment to using unconventional efforts to stimulate the economy.

In the latest Fed statement, the central bank said it would keep buying $40 billion in mortgage-backed debt per month to push interest rates lower.

The Fed also repeated its vow to keep interest rates near zero until mid-2015.

Although that may seem like the Fed is sending a signal to markets that they’re intent to drive the economy, no matter what the cost – that may not be what the Fed is really saying.

According to former Fed Governor Kevin Warsh the move isn’t a show of strength – it’s something far more ominous.

“I think the Fed revealed in their actions just how grave they think the economy is,” he said on The Kudlow Report.

The statement shows, “just how concerned they are about the economy’s prospects – just how concerned they are about the 'fiscal cliff' and Europe.”

Warsh served as a member of the Board of Governors of the Federal Reserve System from 2006 to 2011. From 2002 to 2006, Warsh was Special Assistant to the President for Economic Policy, and Executive Secretary of the National Economic Council.

His take on the Fed – as someone who was once on the inside – is that the Fed feels they’re the only institution standing between the nation and a terrible downturn.

“The central bankers feel their doing it all by themselves – that they’re not getting help from Congress or the administration.”

It seems Wall Street may share the skepticism expressed by Warsh. Again both the Dow and S&P closed lower.

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