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Tonight’s Agenda

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Tonight’s Agenda

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  1. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION DISCUSSED DURING HAWKTRADE MEETINGS.  Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost. Investing in any financial instruments does not guarantee that an investor will make money, avoid losing capital, or indicate that the investment is risk-free. There are no absolute guarantees in investing. HAWKTRADE and its members do not bear any responsibility for losses or gains made by members trading on their personal accounts based on analysis from HAWKTRADE meetings.

  2. Tonight’sAgenda • State of the Union • Market Recap/ Earnings Results • Retail Sales Numbers • Options 101: Buying a call/put

  3. Obama SOTU Highlights

  4. Obama SOTU Highlights • A balanced approach to deficit reduction that includes reforming tax code, closing loopholes, and Medicare reforms. • A boost of manufacturing in America, called for greater investments in housing, infrastructure, alternative energy, scientific research, and technology. • Comprehensive immigration reform • 34,000 U.S. troops withdrawn from Afghanistan by the end of 2013 • Modest gun control measures to reduce violence. • Raising minimum wage 27% to $9/hr.

  5. Rubio Gives GOP response

  6. Minimum Wage: Pros • 60% of job losses since recession have been mid-wage positions, 58% of growth has been low-paying jobs • Min. wage is below living wage: • $15,080 annually. • poverty threshold for a single individual was $11,702 and the poverty threshold for a family of 4 with two children under 18 was $22,881.  • More consumer spending • +$1 to min. wage=$2,800 additional spending for household yearly • Upping min. wage to $9.50=$60 billion over 2 years • Increased earnings for those above min. wage

  7. Minimum Wage: Cons • Company’s can’t afford to hire as many workers as before at the lower levelso they either hire less people or pass the costs on the consumers and raise prices. • Leaves min. wage worker in same situation. • Lower incentives to move up: Increasing the likelihood and duration of unemployment for low-wage workers, particularly during economic downturns.

  8. Santelli on Minimum Wage / Rubio

  9. Would raising minimum wage to $9 an hour help or hurt our economy? DEBATE:

  10. SI Swimsuit models Ring Closing Bell

  11. Markets Pause after rally, end week flat

  12. Dow at Historic Territory 14,091 13,981

  13. Retail Sales Report- January • Definition: Retail sales measure the total receipts at stores that sell merchandise and related services to final consumers. Sales are by retail and food services stores.

  14. Retail Sales Numbers • Why is this important? -Consumer spending typically accounts for about two-thirds of GDP and is therefore a key element in economic growth.

  15. Retail Sales Numbers Strengths Weaknesses Misc. store retailers down 2.6% Health and personal care down 1% Clothing and accessories down 0.3% • Gasoline sales up 0.2% • General merchandise up 1.1% • Nonstore retailers up 0.9% • Bldn. Material and garden supplies 0.3%

  16. Retail Sales Numbers

  17. What the report means • Retail numbers were generally positive which means that the size of the economy grew. • The small numbers indicate that sales grew marginally compared to prior months. • Clearly the pace of spending slowed in January. However, it is hard to discern the impact of higher taxes given that January came off a strong December. • Pullback is normal after a strong month. It is going to take additional reports to determine the impact of higher payroll and income taxes on retail sales.

  18. Twitter Contest • Follow @Hawktrade on twitter • Go to Bloomberg Economic calendar and look at estimates for next weeks CPI number. • Starting at 8AM tomorrow morning, tweet your guess for either CPI/ or CPI less food and energy. • Winner gets $15 Starbucks gift card next meeting.

  19. What to look for in Earnings Top Line Number Bottom Line Number Bottom line = Net Income Accounts for a company's income after all expenses have been deducted from revenues. A company's bottom line can also be referred to as net profits. Bottom line describes how efficient a company is with its spending and operating costs E.P.S.= Net Income-Dividends # Shares outstanding • Top Line = Gross Sales or Revenue • Only indicates how effective a company is at generating sales • Doesn’t account for any costs. • Determines how fast a company is “growing”

  20. Earnings Highlights last Week

  21. Pepsi Earnings Top Views, Helped by Price Increases • E.P.S. slightly beat estimates • Revenue slightly higher than expected, 5% organic revenue growth. • EPS growth in 13’ expected to be 7% due to increased prices and higher worldwide sales. • Raised its dividend to $2.27 per share from $2.15.

  22. Coke Vs. Pepsi

  23. McGraw-Hill • Reported earnings on Tuesday • EPS of $.72 in line with analyst’s estimates • Revenue ($1.23 billion) did not meet 4th quarter expectations • Stock ($44.95) movement was limited based off earnings, no surprises

  24. McGraw-Hill • Parent of credit rating agency Standard & Poor’s Corp. • Facing a $5 Billion fraud lawsuit by the U.S. government • Claiming S&P gave too high of ratings to mortgage investments during the 2008 Financial crisis

  25. Down 22.95% since 2/1/13

  26. Inside Job documentary showing at 4:00pm next Sun. before meeting • Clearly and simply explains what happened in 2008 and yrs. before to cause housing crisis. Popcorn provided (OBV)

  27. DirecTV • Earnings of $942 mil Up 31% from $718 mil • Focusing on growth in Latin America up $22% • 658,000 new subs Compared with 590,000 Last year there

  28. What is Zipcar? • A company allowing families, businesses and mainly college students to borrow a car • You register for $25 and pay their annual $50 fee then pay to drive. • Rates: Mon-Thurs Hourly from $8, Daily from $66 Friday - Sunday Hourly from $9, Daily from$72

  29. Zipcar Earnings • Avis is buying Zipcar at $500 million- $12.25 per share • Announced earlier this year • Profit for the quarter was $13.8 million compared with $3.9 million a year ago • $.09 a share to $.34 a share

  30. Zipcar odd Trading lesson- Arbitrage

  31. Options Lesson one: Option Basics

  32. Options 101 • Options are a financial contract that allows an investor to speculate in assets that he/she doesn’t own. • Options can be used to predict the direction of stocks, currencies, commodities, or stock indexes as a whole.

  33. Options 101- Option Features • Strike Price- The price the trader thinks the stock will go to, either above, below, or at the current market price. • Expiration date- How long the option contract is good for; anywhere between a week to over a year.

  34. Types Of Options There are 2 positions you can take with options: • Buy a Call (Bullish on stock) • Buy a Put (Bearish on Stock)

  35. Options 101 • One option contract= right to buy 100 shares of company at some point in the future at a certain price. • Ex: CMG- current price= $314 • June 13th call at strike price of $340 costs $11.40 • $11.40= 100 shares times $11.40 • So = $1,140 for one option contract.

  36. Options 101- Option Prices • Options are priced based on their intrinsic value (how close to the strike price they are) plus their time value (How long do they have until they expire) • The farther away the expiration date the more expensive the time value aspect is. • The farther away (either up or down) the strike price is from the current (spot) price the less it costs b/c the stock is less likely to move that much before the expiration date.

  37. ITM vs. OTM

  38. Option Greeks Delta, Gamma, Vega, Theta Delta: The effect of a one dollar increase in a stock price to the price of the option.

  39. Option Greeks- Delta Buying stock has D=1 ATM: D=.50 ITM= the more in the money the closer to D=1 Farther OTM you go, the closer to D=0

  40. Option Greeks- Delta CBOE options Calculator *put in stock symbol to get Delta for option. http://www.cboe.com/framed/IVolframed.aspx?content=http%3a%2f%2fcboe.ivolatility.com%2fcalc%2findex.j%3fcontract%3dA8DAC572-AD45-4641-A7A8-FCA56A76BE34&sectionName=SEC_TRADING_TOOLS&title=CBOE%20-%20IVolatility%20Services

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