Sunday, December 4, 2016 - 4:54pm

Visa Inc (NYSE: V) and Mastercard Inc (NYSE: MA) announced on Thursday that they would delay the liability shift for EMV migration at fuel pumps from October 2017 to October 2020. Following this news, Stifel analysts Christopher C. Brendler, John Davis and Joab Dempsey decided to downgrade their rating on shares of VeriFone Systems Inc (NYSE: PAY) to Hold.

As per a report issued Friday, the experts see this move as “the final straw,” after sticking with the stock in spite of two recent disappointments. “This time, we believe we have an opportunity to be more prescient and prefer to step aside before the company reports fiscal 4Q results in 10 days,” the analysts pointed out.

While the experts believe VeriFone’s guidance carried enough slack to remain unchanged in the face of this adversity, they think the likeliness is not particularly elevated, especially taking into account the firm’s estimate of “how material fuel upgrades are to PAY's 2017 outlook.”

Consequently, and in spite of their confidence in the management team and their belief that the pumps issue largely escaped its control, they decided to move to the sidelines, cutting their price target from $18.00 to 15.00.

VeriFone shares closed Friday down 4.55 percent at $15.52.

Image Credit: By secretlondon123 (Flickr: card reader segfault) [CC BY-SA 2.0], via Wikimedia Commons

Sunday, December 4, 2016 - 4:44pm
Public Domain
  • Shares of this footwear maker popped after its CEO bought shares.
  • The stock also saw an analyst's upgrade last week.
  • The share price is still down handily year-to-date.

It has been a good week for Skechers USA Inc (NYSE: SKX) investors, with the share price up around 18 percent in the wake of notable insider buying. The question is whether this is the push the stock needs to finally recover after a disappointing earnings report last summer or if shares will fall back toward the 52-week low of $18.81 hit back in October.

Conventional wisdom says insiders and 10 percent owners really only buy shares of a company for one reason: They believe the stock price will rise, and they want to profit from it. CEO Robert Greenberg last week bought 500,000 shares of the footwear maker. The share prices for those purchases ranged from $21.75 to $22.18. That cost him nearly $11 million.

Also helping boost shares last week was an analyst upgrade that cited the emergence of a new product cycle.

Skechers currently has a market capitalization near $4 billion but offers no dividend. Short interest is less than 5 percent of the float, and the consensus recommendation of analysts is to Hold shares. The stock jumped about 18 in the past week, but it is down more than 13 percent year to date. Friday's close at $26.16 was well above Greenberg's purchase prices.

Next week should reveal whether this was a case of over-exuberance or Skechers really does have room to run.

Skechers closed Friday down 0.87 percent at $26.16.

Sunday, December 4, 2016 - 4:36pm
Public Domain

Speaking on CNBC's "Options Action," Dan Nathan suggested traders consider a bullish options strategy in Health Care SPDR (ETF) (NYSE: XLV). He explained that the sector is underperforming the rest of the market, and he believes it has potential to recover and catch up with the rest of the market.

Nathan thinks there could be more room on the downside for XLV, but it is limited to a drop of 3.5 percent to $66. To make a bullish bet, he wants to sell the January 66 put and buy the January 70 call for a total credit of $0.05. If the stock stays above $66 at the January expiration, he is going to collect the premium and he will have additional profit if the ETF trades above $70.

Sunday, December 4, 2016 - 4:30pm
Public Domain

TASER International, Inc. (NASDAQ: TASR) and Digital Ally, Inc. (NASDAQ: DGLY) have been locked in a bitter patent infringement lawsuit battle concerning auto-activation camera technology. Now it looks like the patent duel is spilling over into the press.


Here is a timeline of bitterly fought battle:

  • In September 2013, Digital Ally filed a patent application called US 8781292 B1 in the U.S. Patent and Trademark Office (PTO). Digital Ally claimed it had pioneered the development of its VuLink ecosystem, which provides intuitive auto-activation functionality as well as coordination between multiple recording devices.
  • Taser, which had a similar system in the market, requested the PTO to reconsider the 292 Patent granted to Digital Ally.
  • In September 2015, Taser got the patent office to make an initial, non-final decision to reject Digital Ally's patent claims.
  • In January 2016, Digital Ally revealed that the patent office concluded the 292 patent for auto-activation technology is valid, and the patent belongs to Digital Ally. Subsequently, the company initiated a lawsuit.
  • On February 2, Digital Ally amended its complaint, alleging that Taser also bribed officials and otherwise conspired to secure no-bid contracts for its products in violation of both state law and federal antitrust law. Digital Ally's lawsuit also seeks monetary and injunctive relief, including treble damages, for these alleged violations.
  • On October 14, Digital Ally reported via a release the Federal District Court issued a ruling that denied the request of Taser to continue the stay of discovery on the antitrust claims included in Digital Ally's lawsuit against Taser.
  • On Thursday, Taser said it is challenging the validity of Digital Ally's patents and submitting public documents from its own presentation made as early as 2009. The company's contention is that under U.S. law, a patent is not valid if it claims technology publicly described by another before the patent's filing date.

The back and forth exchanges via the media is continuing unabated, as both Digital Ally and Taser fight tooth and nail over the patent infringement case. Investors are keyed in to the developments, given the magnitude of hit for the company in the wrong side of the judgement.

On Friday, Digital Ally closed down 3.03 percent at $4.80. Taser closed up 0.72 percent at $27.92.

Sunday, December 4, 2016 - 4:24pm
Public Domain
  • This weekend's Barron's includes 10 top stock picks for 2017.
  • The prospects for a broadcaster to the Hispanic market, a coal miner emerging from bankruptcy and a telecom giant's new service are also examined.
  • Another featured post predicts retail winners and losers from a corporate tax cut.

"Our Favorite 10 Stock Picks for 2017" by Andrew Bary presents Barron's top stocks picks for the year ahead, including Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), Citigroup Inc (NYSE: C) and Walt Disney Co (NYSE: DIS). See why they leaned toward laggards rather than momentum stocks, and see how the 2016 favorite picks fared.

In "Growing Hispanic Market Favors Entravision," David Englander makes the case that valuable spectrum and positive demographic trends could boost shares of broadcaster Entravision Communication (NYSE: EVC), which caters to the Hispanic market in the United States. In addition, should investors stick with Callaway Golf Co (NYSE: ELY)?

Jack Hough's "Retail's Rising Tide" suggests a corporate tax cut will boost retailers like TJX Companies Inc (NYSE: TJX) but will not reverse the fortunes of the likes of GameStop Corp. (NYSE: GME) and American Eagle Outfitters (NYSE: AEO). A rising tide may lift all boats, says Barron's, but it will not keep them all afloat for long.

The emergence from bankruptcy of miner Arch Coal, Inc. Class A (NYSE: ARCH) coincides with a surge in the price of coal, according to "Arch Coal's Shares Could Catch Fire" by Jack Willoughby. "Arch's timing coming out of bankruptcy couldn't have been better," says one expert quoted in the article. See why Barron's believes shares of the revived miner could rise as much as 75 percent.

In Tiernan Ray's "AT&T's Game-Changing DirecTV NOW: Can It Make Money?" the focus is on whether AT&T Inc. (NYSE: T) is well-positioned with an innovative new streaming service as broadband moves to wireless. While the future of television looks peachy, says Barron's, the burden of proof is on AT&T to show this new service really is as transformative as it implies.

Also In This Week's Barron's

  • How America loses in the war between Donald Trump and the media.
  • Whether Wall Street has turned bullish on Trump.
  • The dearth of women in the fund industry.
  • Strategies for selling loser investments and avoiding taxes on the winners.
  • A plan to save the country with Build America Bonds.
  • How to prepare for the Trump era.
  • Teaching the newly rich how to manage their money and emotions.
  • Whether payouts will rebound as energy stocks rally.
  • What is next for Starbucks Corporation (NASDAQ: SBUX).
  • Whether to believe the OPEC hype.
  • The "right" health plan for America.

Sunday, December 4, 2016 - 4:15pm
Public Domain

On Friday, the United States released its last jobs report of the year, corresponding to the month of November. As per the note, 178,000 new jobs were created over the month, almost in line with expectations of 180,000 new jobs. Unemployment consequently decreased from 4.9 percent to 4.6 percent, hitting its lowest point since August of 2007.

To better grasp the meaning of these figures, Benzinga reached out to TD Ameritrade Chief Strategist JJ Kinahan.

“[I found] two surprising things; one good, one bad,” he said. “The good surprise was that construction jobs were the third area where we created jobs last month. That’s a really good sign of a healthy economy.”

“[In addition], there were 300,000 people who were previously unemployed who found jobs [at least seasonally],” Kinahan said. “The negative surprise is that the average hourly earnings went down for the first time in a while. That’s just something to start keeping an eye on [although] one month does not make a trend.”

Interest Rates And Declining Earnings

Moreover, he noted, declining earnings was not something the Federal Reserve wanted to see, in terms of justifying an interest rate hike soon. Nonetheless, he added, the jobs report does not change his expectations for the timing of a rate hike. “If you look at Fed funds, we were at a 99 percent probability. So, I think this was probably the least important employment report we’ve had in a long time,” he explained. “The reason I say that is, unless they had a blowout number to the upside, or a really bad number, I think that the reaction that we saw is exactly what was locked in.”

“Nobody knows what to do with this,” Kinahan added. “They just don’t feel it’s that important a number, because everything is locked in.”

Liked this interview? Now check out our chat with an industry expert who discussed the future of 3D printing.

Sunday, December 4, 2016 - 4:09pm
Public Domain

On CNBC's "Options Action," Carter Worth said he believes Visa Inc (NYSE: V) is heading lower, to $70.

He analyzed its chart and concluded that although Visa Inc managed to make new price highs, it was never able to reach new highs in its relative performance to the S&P 500. He also noticed that the stock has broken its trend line. Worth believes these signs are concerning, and he would take a short position in the name.

Mike Khouw suggested a bearish options strategy as a way to take a short position in the name. He wants to buy the March 75/65 put spread for $2.65. The break even for the trade is at $72.35 or 4.45 percent below the current stock price. He can maximally make a profit of $7.35 with the trade.

Sunday, December 4, 2016 - 4:00pm

"BoycottTrump," an app launched by the Democratic Coalition Against Trump, has cracked the top 10 in the Apple Inc. (NASDAQ: AAPL)'s App Store and Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)'s Google Play.

The app is a database listing over 250 companies and people with some sort affiliation to President-elect Donald Trump, either past or present.

“We are pretty confident once we start seeing Trump’s plan in action, once we start horrendous administration, people are going to get sick of it and realize that they were conned pretty quickly,” the app's co-founder Nate Lerner told Benzinga.

Notable Entries

Everything ranging from Tom Brady’s endorsement of Trump to Starbucks Corporation (NASDAQ: SBUX), which has stores in the Trump Towers, is listed.

“We want to find the ones that you probably didn’t realize were connected to Trump. Gucci is a great example, Gucci has not supported him in any regard, but their flagship store is in Trump Tower. It would be a very symbolic move for them to remove that store, which is what we’re calling them to do,” said Lerner.

Another example is MillerCoors’ chairman, Pete Coors, who has been a huge support to Donald Trump.

“People want to fight against Donald Trump right now, but it’s very hard to [do that]. There’s only so much the average person can do [to] take a stand against Donald Trump, and you feel very powerless. So, you have this creation to allow them to make a difference on an individual level and be united,” he added.

Focus Of The App: Beyond Financial Implications

Lerner insists the application is not to make a financial impact toward Trump, but to rally people around a cause. The app continues to gain traction and has garnered over 80,000 users since its launch on November 21.

“Our pure and only focus right now is to stop him and hold him accountable, and that was our unique brand during the election and more unique now that the election is over. It’s going to be quite difficult, but we’re certainly up for the challenge,” Lerner concluded.

BoycottTrump is available for iPhone and Android devices.

Image Credit: By DonkeyHotey (Boss Trump) [CC BY 2.0], via Wikimedia Commons

Sunday, December 4, 2016 - 3:35pm
Public Domain

The Labor Department's non-farm payrolls report rolled in on Friday to reveal happy tidings for the economy. The jobless rate plummeted to a nine-year low of 4.6 percent.

The statistics sent people into a tizzy, ratcheting up expectations for a Fed rate hike as early as December. When a 0.3-percentage-point drop is met with enthusiasm, why can't an economy strive for a 0 percent unemployment rate? Is a 0 percent unemployment possible or rather feasible?

Jobless Rate Meaning

Jobless rate is the number of unemployed people expressed as a percentage of the total labor force. The International Labor Organization considers the following people as unemployed:

  • Ones without work.
  • Currently available for work.
  • Seeking work.

A 0% Jobless Rate Could Kick Up Inflationary Pressure

Inflation and the unemployment rate are inversely correlated. The logic is this: High wage inflation is often considered a proxy for the general inflation level.

High unemployment rate would mean demand for labor force is less relative to the supply (availability of manpower). This in turn has the potential to depress wages, as people would be willing to be hired at lower wages. Alternatively, when the jobless rate is low, there are enough (and more than enough) jobs available than the availability of labor force. In order to allure the limited labor force, employers may have to jack up wages, which in turn increases wage inflation.

Thus, there is logical evidence to substantiate the proposition jobless rate and inflation are inversely correlated.

Against this backdrop, can an economy handle a scenario that presents galloping inflation levels in the wake of the jobless rate dropping to 0 percent? If you consider the many ill effects of inflation, including the hit to exporters from their products becoming less competitive in the global markets, reduced savings and fall in real wages, it could be tough proposition altogether.

A 0% Jobless Rate Could Mean Little Technological Advancement

Economists define a type of unemployment called structural unemployment. This category of unemployment arises from the lack of demand for employees who are available, with technological advancement being the most common cause of it.

Can the present generation, so accustomed and spoiled by the advances of science of technology, sacrifice the comforts offered by these for having a 0 percent unemployment level? Since a 0 percent unemployment rate often comes at the expense of technology, it is highly impractical and undesirable.

A 0% Jobless Rate Would Mean We Are Stuck In The Rut

To understand this, it is imperative that we learn another concept called frictional unemployment, which arises due to people being in the process of moving from one job to another. If jobless rate is 0 percent, frictional unemployment can't exist, forcing us to hold onto the job we have, however undesirable it is.

As we have seen above, and as it is common with any economic concept, extremes are always undesirable and a middle-of-the-approach is often the most desirable option. At least to keep inflation in check, enjoy the fruits of technology and help a move to a more desirable employment, a small amount of jobless rate is in fact a welcome idea.

Visit BZTeach for more awesome educational content!

Sunday, December 4, 2016 - 3:30pm
Public Domain

Carter Worth spoke on CNBC's "Options Action" about food commodities, and he said that the segment is underperforming raw industrial materials. He thinks food commodities are eventually going to catch up, and he suggested traders consider getting a long exposure.

Mike Khouw believes it would be a good idea to sell the January 18 puts in Potash Corporation of Saskatchewan (USA) (NYSE: POT) for $0.75. The trade breaks even at $17.25 or 4.54 percent lower, and Khouw is going to collect the whole premium if Potash Corporation trades above $18 at the January expiration.