New Year Starts Out Down Despite Record End for 2013

• Chain Store Sales Snapshot:
  • Chain store sales rose 1% for the week and 3% year-over-year.
  • Gift card expenditures and an increase in retailers offering storewide promotions on Christmas Eve help increase the sales numbers.
• Case-Shiller Home Price Index:
  • The 10-city composite rose 13.6% year-over-year.
  • The 20-city index also increased 13.6% year-over-year.
    • Not seasonally adjusted, month-to-month, the 10- and 20-city composites both increased 0.2%.
    • Seasonally adjusted month-to-month, the 10- and 20-city composites rose one percent and 1.1%, respectively.
• Conference Board Consumer Confidence:
  • The consumer confidence index increased to 78.1, a 6.1 point rise.
  • Stronger assessments of buyers’ current situations and brighter expectations were the indications causing the increase.
    • December’s increase offsets most of October’s and November’s losses.
• Jobless Claims:
  • Initial jobless claims slid 2,000 to 339,000.
    • With the holidays, it will be several weeks before we get a solid reading.
  • The four-week moving average increased from 348,750 to 357,250.
  • Continuing claims fell 98,000 to 2.833 million.
• ISM Manufacturing Index:
  • The ISM manufacturing index came in better than expected, but still fell to 57 from 57.3 for December.
    • New orders edged up, while inventories dropped below its expansionary threshold of 50 for the first time since August.
    • The employment index rose, but production and new export orders fell between November and December.
  • Manufacturing appears to have improved late in the fourth quarter, while wider gap between new orders and inventories sets up well for factory output this quarter.

Earnings

• Cal-Maine Foods, Inc. (NASDAQ: CALM)
  • Cal-Maine Foods earnings jumped 83%, as the egg producer’s production costs dropped and sales increased, as part of the company’s push to sell specialty eggs.
    • The largest producer and distributor of fresh-shell eggs in the U.S. has stepped up efforts to meet the growing demand for specialty eggs, e.g., nutritionally enhanced, organic and cage-free, which garner higher retail prices.
  • For the quarter, Cal-Maine reported a profit of $26.1 million, or $1.08 a share, up from $14.3 million, or $0.60 a share, last year.
    • Sales climbed 7.7% to $354.3 million.
    • Cal-Maine’s higher priced specialty eggs accounted for 24% of total egg sales.
    • The company sold 252.8 million dozen eggs, up 6.2% from a year before, and the average price increased 1.3% to $1.34 a dozen.

M&A News

• Blackstone Takes Stake in Crocs:
  • Crocs rose the most in more than four years after saying CEO John McCarvel will retire.
  • Blackstone Group will invest $200 million in the maker of colorful plastic clogs.
  • The shares climbed 21%, the biggest gain since August 2009.
    • The Blackstone stake comes after Crocs attempted to find a buyer for the whole company.
    • The shoemaker plans to use the funds from Blackstone’s investment in convertible preferred stock to increase share repurchases to $350 million.
      • The buybacks should reduce publicly traded common stock by about 30%.
• Fiat Buying Chrysler:
  • Fiat will get full control of Chrysler in a $4.35 billion deal, ending a standoff that had clouded the future of both companies.
  • The deal clears the way for consolidation of the two auto makers.
    • Chrysler is valued at slightly more than $10 billion.
  • The total price being paid for the 41.5% in Chrysler that Fiat didn’t already own is lower than some analysts had predicted.
    • Fiat said it would pay the United Auto Workers health-care trust $3.65 billion for its 41.5% stake in Chrysler.
      • The trust received the stake as part of Chrysler’s government-led bankruptcy in 2009.

Interest Rates

• The two-year Treasury rate fell one basis point to 0.38%.
• The five-year Treasury rate fell one basis point to 1.72%.
• The 10-year Treasury rate remained at 3%.
• The 30-year Treasury yield fell one basis point to 3.93%.