Morning Movers: Japan Shocker Sends Stocks Soaring; AbbVie Flies on Earnings

Stocks are in overdrive this morning after the Bank of Japan shocked the market by announcing that it would buy more government debt.

Joe Buglewicz for The Wall Street Journal

S&P 500 futures have gained 1%, while Dow Jones Industrial Average futures have risen 1%. Nasdaq Composite futures have advanced 1.5%.

Boston Beer (SAM) has jumped 8.9% to $252 after its earnings easily topped the Street’s consensus due to lower costs and higher shipments.

Western Union (WU) has gained 2.4% to $17.10 after it beat earnings forecasts and said its full year profit would come in at the top of its previously announced range. MoneyGram International (MGI), however, has plunged 12% to $11.14 after reporting a 22 cent profit, well below forecasts for 33 cents.

Citigroup (C) has dropped 0.3% to $52.99 after reducing its previously released earnings due to increased legal expenses.

AbbVie (ABBV) has jumped 4.% to $63.65 after beating earnings, raising guidance and saying that it’s Hepatitis C drug could get FDA approval before the end of the year.

Mid-Afternoon Market Update: NQ Mobile Climbs On SEC Filing; Huntsman Shares Slide

Related BZSUM Mid-Day Market Update: Micron Gains On Buyback Announcement; Sarepta Shares Dip Mid-Morning Market Update: Markets Down; Merck Posts Upbeat Earnings

Toward the end of trading Monday, the Dow traded up 0.01 percent to 16,806.73 while the NASDAQ tumbled 0.04 percent to 4,481.83. The S&P also fell, dropping 0.21 percent to 1,960.40.

Leading and Lagging Sectors

Non-cyclical consumer goods & services shares rose by 0.04 percent in today’s trading. Top gainers in the sector included John B Sanfilippo & Son (NASDAQ: JBSS), up 3.3 percent, and Blyth (NYSE: BTH), up 3.1 percent.

In trading on Monday, energy shares were relative leaders, up on the day by about 2.30 percent. Top losers in the sector included Petróleo Brasileiro S.A. (NYSE: PBR), down 14 percent, and Rex Energy (NASDAQ: REXX), off 9.8 percent.

Top Headline

Merck & Co (NYSE: MRK) reported better-than-expected earnings for the third quarter and narrowed its forecast for the year.

The Whitehouse Station, New Jersey-based company posted a quarterly profit of $895 million, or $0.31 per share, versus a year-ago profit of $1.12 billion, or $0.38 per share. Excluding certain items, its earnings declined to $0.90 per share from $0.92 per share.

Its revenue slipped 4.3% to $10.56 billion. However, analysts were expecting earnings of $0.88 per share on revenue of $10.64 billion.

Equities Trading UP

NQ Mobile (NYSE: NQ) shares shot up 6.60 percent to $9.53 after the company filed its SEC Form 20-F,l which showed full compliance and no attempts to delete documents.

Shares of Micron Technology (NASDAQ: MU) got a boost, shooting up 3.35 percent to $32.10 after the company announced a new $1 billion stock repurchase authorization.

Prosensa Holding N.V. (NASDAQ: RNA) shares were also up, gaining 8.20 percent to $13.00 on the FDA requirement of additional data from Sarepta on Eteplirsen. Prosensa Holding is also looking to provide a drug to treat Duchenne muscular dystrophy.

Equities Trading DOWN

Shares of Parsley Energy (NYSE: PE) were down 10.63 percent to $15.47. Goldman Sachs downgrades Parsley Energy from Neutral to Sell and lowered the price target from $25.00 to $15.50. Parsley Energy is expected to release its Q3 financial and operating results on November 11, 2014.

Sarepta Therapeutics (NASDAQ: SRPT) shares tumbled 32.72 percent to $15.85 on the FDA requirement of additional data from Sarepta on Eteplirsen.

Huntsman (NYSE: HUN) was down, falling 5.27 percent to $23.21 despite reporting upbeat earnings for the third quarter. However, the company reported revenue of $2.88 billion, versus estimates of $2.91 billion.

Commodities

In commodity news, oil traded down 0.60 percent to $80.52, while gold traded down 0.25 percent to $1,228.70.

Silver traded up 0.02 percent Monday to $17.19, while copper rose 0.74 percent to $3.06.

Eurozone

European shares closed lower today. The eurozone’s STOXX 600 slipped 0.62 percent, the Spanish Ibex Index fell 1.45 percent, while Italy’s FTSE MIB Index tumbled 2 percent. Meanwhile, the German DAX slipped 0.91 percent and the French CAC 40 declined 0.81 percent while UK shares dropped 0.92 percent.

Economics

The Markit services PMI fell to 57.30 in October, versus a prior reading of 58.90. However, economists were expecting a reading of 58.00.

The pending home sales index gained 0.3% to reach 105 in September, versus 104.7 in August.

The Dallas Fed general business activity index fell to 10.50 in October, versus a prior reading of 10.80. However, economists were expecting a reading of 11.00.

Posted-In: Earnings News Guidance Futures Commodities Options Buybacks FDA

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Long-Term Unemployed: The Inflation Wild Card

As the economy improves, understanding when the long-term unemployed will return to the workforce has become, particularly in the last few months, the central issue among economists as to when the Federal Reserve should begin looking at raising interest rates in anticipation of higher inflation.

But the problem is that economists are in deep disagreement as to when, or even if, the long-term unemployed will have a material impact on putting pressure on wages, which bolsters our thesis that America’s central bankers will again likely fail to time rates correctly.

Fed Chair Janet Yellen’s position is that wage gains continue to proceed at a historically slow pace in this recovery, with few signs of a broad-based acceleration, though she does expect the long-term unemployed to eventually rejoin the workforce.

In late April, in her first major monetary-policy framework speech to the Economic Club of New York, she said, “The long-term unemployed are likely to move back more actively into the labor force and into the job market and exert pressure on wages and prices. Clearly, we will have to watch unfolding evidence and evaluate it with an open mind.”

But even with the jobless rate near a five-year low, more than 3.7 million Americans have been unemployed six months or longer. Their share of the total ranks of the jobless exceeded 30 percent for the first time in 2009 and hasn't fallen below that level since. That gauge stood at 35.8 percent in March, down from a record 45.3 percent in April 2010, according to Bloomberg estimates.

As such, some economists disagree with Yellen’s position that the long-term unemployed should continue to be factored into inflation projections or that they will help hold down inflation pressures or provide slack. As such, they believe the short-term unemployed should be the focus of the central bank’s inflation targets an! d analysis, noting that the rate of 4.3 percent is now more or less back to its long run average – and thus argues for a less accommodative stance.  

In a paper for the Brookings Institution, former White House chief economist Alan Krueger looked at data on the long-term unemployed from 2008 to 2013 and documented the incidence of repeat joblessness. About 36 percent of those workers were in a job 15 months later, according to his analysis. But only 11 percent were in steady, full-time jobs. ​​

Krueger, in his paper, argues that the long-term unemployed are on the margins of the labor force, both because they give up on searching for a job and because employers start to discriminate against the long-term unemployed.  "We tentatively conclude that the long-term unemployed exert relatively little pressure on the economy," he said, in a Financial Times interview. As a result, the economist concludes that long-term unemployment does little to hold down wages, and, as noted, with short-term unemployment back to normal, rates should start to rise in anticipation of increased inflation.

Notwithstanding this, many argue that most measures of U.S. wage inflation are sluggish at best. In response to this argument, Yellen has said that it is premature to jump to this conclusion. She has offered that the Fed would be alert to "wage pressures that can translate into price pressures and be an early warning indicator of an impending uptick in inflation.”

But even as these economists make compelling arguments, both sides suffer from one main weakness, which is that the United States has never throughout its history had a similar period where its population suffered comparable periods of long-term joblessness. Thus, there is no baseline of comparison.

Producer Prices, Inflation Expectations on the Rise

Even as economists debate whether wage pressure is being exerted on the economy, investors have continued to react to recent inflationary signals, such as ! the rise ! in producer prices, with increased buying of inflation protection securities (See Chart A).

Chart A: Investors Continue to Buy Up Inflation-Protection Securities

 

As noted in a previous report, the prices businesses receive for their goods and services rose in March, defying a long stretch of subdued inflation across the U.S. economy, according to the Wall Street Journal. The producer price index for final demand, which measures changes in prices for everything from food and machinery to warehousing and transportation services, rose a seasonally adjusted 0.5% from February, the Labor Department reported on April 11. The index rose 0.6%, excluding the volatile categories of food and energy.

Economists surveyed by the Wall Street Journal had expected the index to rise a more modest 0.1%, and predicted a 0.2% increase excluding food and energy. The index fell 0.1% in February, unchanged from the Labor Department's initial estimate. The PPI for final demand was up 1.4% in March from a year earlier, the biggest year-over-year increase since last August.

The PPI measures the prices businesses receive from buyers such as governments, consumers and other businesses. The Labor Department overhauled the report this year to measure a much broader swath of the U.S. economy.

Given increasing expectations for inflation over the next few years are increasing as measured by demand for inflation protection securities, we recommend investors hold new portfolio holding iShares Barclay TIPS Bond (TIP), which we added to our Survive Portfolio in early March to enhance our fixed income offerings. TIP which is up 3.45% since the beginning of the year is a buy up to 118.

Housing Construction Increases In September

Housing starts rose 6.3% last month, primarily due to construction of multi-family units, according to this morning's update from the US Census Bureau. The single-family slice of starts, by contrast, rose just 1.1% last month vs. August. The multi-family growth bias looks set to persist, based on the September data for newly issued housing permits. New permits overall rose a tepid 1.7% last month as single-family permits retreated 0.5%; fresh authorization to build multi units of five or more, however, jumped 7.0% in September vs. August. It's fair to say that the housing market's growth rate has slowed in general and that's not likely to change anytime soon. But the key point in today's report remains upbeat, albeit moderately so via a gentle tailwind that's blowing in residential construction activity.

[Related -A Pair Of Bullish Surprises: Jobless Claims & Industrial Production]

The trend doesn't look impressive, at least not by recent standards. But it's clear that the bias for expansion remains intact. The year-over-year pace for housing starts accelerated last month to 17.8%–more than double the annual rate of increase through August. But the yearly gain for permits decelerated to a sluggish 2.5% rise, which suggests that the growth in starts will moderate in the months ahead.

[Related -Fear Poll: Fed/QE, Ebola and Technicals Top Worry List]

The fact that housing is still expanding is the main takeaway in today's release. It's been clear for some time that the recovery in this crucial corner of the economy has been trending lower. The latest numbers suggest a degree of resiliency, however. The upbeat trend is even more encouraging in the wake of yesterday's surprisingly strong numbers for initial jobless claims and industrial production.

"The trend in starts continues to be up," the chief economist at Nationwide Insurance tells Bloomberg. "As the job market's gotten better, as the mortgage rates have remained low and in the last week gone even lower, the underlying demand for single-family homes has improved," according to David Berson.

It remains to be seen if the ill winds blowing in from Europe will take a sizable bite out of the US expansion in the weeks and months ahead. But based on this the latest numbers, it's clear that the American economy remains in a moderate growth mode. As a result, it's still reasonable to argue that business cycle risk for the US remains low.

David Rolfe's Wedgewood Partners Q3 2014 Portfolio Commentary

Review and Outlook Our Composite (net-­of-­fees) was basically flat (+0.30%) during the third quarter of 2014. This rounding-­error gain is below both the gain in the Standard & Poor's 500 Index of +1.13% and the gain of +1.49% in the Russell 1000 Growth Index.

Our Composite year-­to-­date gain of +3.8% has lagged substantially the gains in the Standard & Poor's 500 Index and the Russell 1000 Growth Index of +8.3% and +7.9%, respectively. A somber fact: Over the past six months, nearly two-thirds of our current portfolio has underperformed the S&P 500 Index. In the never ending zero-­interest rate environment of Quantitative Easing the chase for return and yield continues to reward the stocks of poorer quality (i.e. low/no profits), higher debt-­ leveraged company stocks and reward company stocks that pay out higher 2 percentages of earnings in the form of dividends. Individual stock selection mistakes aside, we believe that our investment focus on higher quality growth companies at reasonable valuations is simply ill-­suited in the current ebullient environment. In fact, 2014 may well go down as one of the worst years for active equity managers in the past two decades. According to The Leuthold Group: Last year provided managers not only with huge gains but also with comparatively favorable odds of beating the S&P 500. In 2013, about 60% of the issues in the 1500 composite topped the +29.6% gain in the S&P 500. That percentage has been cut in half over the last nine months. The latest reading of 30.2% compares to those recorded in the late 1990s' "bifurcated bull" – an excruciating time for active managers that ultimately ended badly for all.

And speaking of the late 1990s, according to Jay R. Ritter, a professor of finance at the University of Florida, already in 2014 72% of IPOs have "negative earnings." The typical level according to Ritter's studies is approximately 40%. In 2013, 64% of all IPOs had negative earnings. The highest levels since 1980 were the tech bubble years of 1999 and 2000 when IPOs then had negative earnings of 76% and 80%, respectively – the garbage-bin crop of IPOs in 2014 isn't far behind. But notably, we have been in such periods of cheap, easy and bubbly cost of debt (2007) and equity (2000) before. Such periods don't tend to end well either. A word or two in this Letter on the Fed seems in order as well. The correlation of the relentless growth in the Federal Reserve's balance and the relentless rise in the S&P 500 Index has be nearly 90% since 2009. According to Gluskin-­Sheff, over half of the U.S. Treasury market sits on the balance sheets of the world central banks. Three more still, zero-­profit motivated global central banks have actually increased their purchases of net new issued U.S. Treasury notes and bonds – net $540 billon over the past year, or 80% of the flow of new U.S. debt. Global central banks now own a staggering $6.4 trillion of U.S. debt. We should all remember that the high-­priest Mandarins guiding our nation's monetary policies have been unusually consistent over the past few decades of either being far "too-­easy" for far too long -­ or either far "too tight" for far too long. The future exit by Fed Chairman Yellen from our current grand experiment with Quantitative Easing will follow, we believe, and we fear, the Fed's woeful track record on this score. At Wedgewood Partners, company-­specific investment discipline will always trump Fed mandarin-­watching theatre.

Our worst performers during the third quarter were Cummins (CMI) (-­14.5%), Schlumberger (SLB) (-­13.8%) and Cognizant Technology (CTSH) (-­8.5%). Our best performers during the quarter were EMC (EMC) (+11.1%), Berkshire Hathaway (BRK.A) (+9.2%) and Apple (AAPL) (+8.4%). During the quarter we trimmed positions in Apple as it approached our maximum position weighting of 10%. We added to existing positions in Qualcomm (QCOM), LKQ (LKQ) and Cognizant Technology (CTSH) – all on improved prospective risk-­reward on respective share-price declines. The Great Bull Market of 2009-2014 started on March 9, 2009 when the S&P 500 Index stood at 667. The S&P 500's relentless bull market advance over the course of the next 2,000 days would reach a record high index level of 2000 in late August. Relentless indeed, according to Bespoke, the S&P 500 Index has been up seven quarters in a row – the best streak since 1998 and the fourth best since 1950.

Furthermore, the S&P 500 has not corrected by at least -­10% in +1,130 days – the fifth longest bull streak since 1926. This one-­way stretch is the longest since August 1987 and the fifth-­longest stretch since 1928. The only bull markets that have lasted longer were in 1974-­1980 (2,248 days), 1949-­1956 (2,607 days) and 1987-­ 2000 (4,494 days). From a historical perspective, the Great Bull Market of 2009-­2014 has been only average in length of time, but exceptional in terms of gains. Rare is the bull market that triples in gain in just six years. The S&P 500 Index officially tripled in price when the S&P closed above 2001 on August 29. Not to be out done by such a middling +200% gain, the S&P 500 Equal-­Weighted Index is up +280%. Stock market index bragging rights during this bull market go to the Value Line Arithmetic Index, which is up almost five-­fold (+365%).

As the stock market continued its relentless bull charge with nary a correction, our current views on the investing environment and individual stock opportunity set are little changed from our views expressed in our first quarter 2014 and second quarter 2014 Client Letters – at least through mid-­September. As you could imagine (and we hope, expect) we have been net sellers of stock year-­to-­date and our cash position has correspondingly risen to high single digits.

While the major market indices remain relatively close to bull market highs, as of the writing of this letter there has been considerably more turbulence under the stock market's surface. In fact, we may just be entering a period of long awaited bargain hunting. Even though the S&P 500 is still up only +1% year-­to-­date, the Dow Jones Industrial Average is now -­2% on the year, the NYSE Composite has declined -­10% from recent highs and the Russell 2000 Index is down -­13% from recent highs and is down nearly -­10% on the year. Specifically too, higher quality company stocks (our favored fishing pond) which have not participated much at all in the market's advance over the past few quarters, have corrected as well. Our investment-­process pencils are fully sharpened as such emerging opportunities hopefully become fatter pitches.

Continue reading here.

Also check out: David Rolfe Undervalued Stocks David Rolfe Top Growth Companies David Rolfe High Yield stocks, and Stocks that David Rolfe keeps buying

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Earnings Scheduled For October 14, 2014

Related C Stocks To Watch For October 14, 2014 MKM Partners Previews Banks And Brokers, Maintains Bullish Stance Retail Sales Take the Stage, 3Q Earnings Rev Up (Fox Business) Related JNJ Stocks To Watch For October 14, 2014 J&J's Alios BioPharma Reports Presented Positive Results of Anti-RSV Nucleoside Analog AL-8176 Retail Sales Take the Stage, 3Q Earnings Rev Up (Fox Business)

Citigroup (NYSE: C) is expected to report its Q3 earnings at $1.12 per share on revenue of $19.05 billion.

Johnson & Johnson (NYSE: JNJ) is estimated to report its Q3 earnings at $1.44 per share on revenue of $18.38 billion.

JPMorgan Chase & Co (NYSE: JPM) is expected to report its Q3 earnings at $1.38 per share on revenue of $24.00 billion.

Domino's Pizza (NYSE: DPZ) is projected to report its Q3 earnings at $0.61 per share on revenue of $434.84 million.

Intel (NASDAQ: INTC) is expected to post its Q2 earnings at $0.65 per share on revenue of $14.44 billion.

Del Frisco's Restaurant Group (NASDAQ: DFRG) is estimated to report its Q3 earnings at $0.08 per share on revenue of $61.85 million.

Wells Fargo & Company (NYSE: WFC) is expected to report its Q3 earnings at $1.02 per share on revenue of $21.10 billion.

CSX (NYSE: CSX) is estimated to post its Q3 earnings at $0.48 per share on revenue of $3.15 billion.

KMG Chemicals (NYSE: KMG) is projected to report its Q4 earnings.

JB Hunt Transport Services (NASDAQ: JBHT) is expected to report its Q3 earnings at $0.84 per share on revenue of $1.59 billion.

Wolverine World Wide (NYSE: WWW) is projected to post its Q3 earnings at $0.59 per share on revenue of $720.37 million.

Bank of the Ozarks (NASDAQ: OZRK) is estimated to post its Q3 earnings at $0.39 per share.

Synergetics USA (NASDAQ: SURG) is projected to post its Q4 earnings at $0.03 per share on revenue of $17.32 million.

Linear Technology (NASDAQ: LLTC) is expected to post its Q1 earnings at $0.54 per share on revenue of $372.59 million.

Posted-In: Earnings scheduleEarnings News Pre-Market Outlook Markets

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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The European Crisis Is Going Global – and We're Along for the Ride

After printing $4 trillion since 2008, we've little to show for it.

Endless debates about the effectiveness of QE, or its lack thereof, haven't spawned better decisions, especially in Europe. Think periphery nations like Greece, Spain, Portugal, and Italy.

Better yet, take a look at the stock market, where worries about Europe's economy rattled investors. It's certainly not a pretty picture...

Recently one European national leader offered a somewhat unique response for dealing with the financial crisis and debt bubble.

It appears an unorthodox, yet sound, approach on the surface. But when you scratch beneath, it turns out just the opposite is true.

Developed economies would do well to consider the true state of this country's example of a "model" recovery before an even more catastrophic, debt-ridden future arrives, and erupts...

Iceland Isn't Greece... It's Worse

The country I'm talking about is Iceland. 

With a population of just under 320,000, its economy lacks diversity, with fishing, aluminum, and energy as its dominant sectors.

Something it does have is the world's oldest functioning legislative assembly, the Alþingi, established in the year 930. That's a long time to have practiced democracy.

You'd expect that experience could have saved this tiny country's economy, but as it turns out Iceland has a lot more in common with the birthplace of democracy: Greece.

And unfortunately, the parallels are eerily similar.

Greek households, it's estimated, have lost $215 billion of wealth in the last seven years.  Unemployment still runs near 27% with 44% of incomes below the poverty line.

Debt to GDP currently sits at 175% (EU's highest) and its latest annual deficit is 12.7%. 

Bailed out by $332 billion in "rescue" loans from the European Union and International Monetary Fund, Greece is now saddled with a national debt of $470 billion. That's nearly half a trillion dollars, for a nation whose economy represents 1.4% of the entire EU.  

Most of that money, by the way, goes to repay mainly German and French banks that were highly invested in Greek debt. The country's output has shrunk by a staggering 25% in the last six years.

This didn't have to happen to Greece. So why did it?

When Greece over-borrowed and over-spent in the past, it had its own currency, the drachma.  So, floating exchange rates with other currencies effectively devalued the drachma, which decreased domestic demand for pricier imports. It also lowered the costs of Greek labor and exports, spurring foreign investment in the country, as well as tourism.

It was the free market at work - Adam Smith's classic "invisible hand," as it were. But now Greece is handcuffed with the euro as its currency. That's a large reason things went south in Greece; devaluing its currency is no longer an option.   

So the Greeks will instead suffer under austerity for years, perhaps generations, along with a shrinking economy and soaring unemployment.

The "Opposite" Road to Recovery for the Icelandic Economy

Iceland, however, took the opposite route... sort of.

In 2008, overextended Icelandic banks also collapsed under the weight of their inflated mortgage "assets." Its financial sector shrank to a mere fifth of its former self. 

The country let its banks fail and imposed capital controls. Deposits held in Iceland by foreigners are stuck. Foreign-held bank debt was sacrificed.

Some bankers were investigated and then charged with fraud; at least one went to jail.

Iceland was able to take a different route because it has sovereignty and could decide its own future. 

The Icelandic krona dropped in value by half, its people accepted agonizing reforms, and the economy has posted better than 3% growth. There's even a risk the economy is overheating, with forecasts for 2014 and 2015 of 3.1% and 3.4% growth respectively.

Not being part of the EU and having its own currency allowed Iceland to make its own rules and decisions.

On the surface, Iceland appeared to do what Greece had done in the past when it used the drachma - default and devalue.

Or so it seemed...

Instead of austerity, Icelandic politicians resorted to capital controls.

The nation's central bank took on a massive IMF bailout in order to help (somewhat) prop up the krona. That's why Iceland's "recovery" from the crisis looks so impressive, for now.

But the bailout has caused national debt to triple, with currently over 17% of taxes going to pay its interest alone. Unemployment is low, but so are living standards, while prices have skyrocketed with inflation. And the now much weaker currency makes for costly imports, a needed lifeline for this tiny - and remote - nation.

Real estate prices have been devastated thanks to vanishing demand and high mortgage rates, leaving homeowners to deal with negative amortization loans. Remember those?

The IMF would like us to believe Iceland's debt-to-GDP is at a manageable 84%.

At the Clinton Global Initiative Symposium in New York, Iceland's President Ólafur Ragnar Grímsson said "When you look at Iceland and how we have recovered in six years, we have recovered more than any other European country that suffered from the financial crisis."

Things looked so good, Iceland lost its appetite to join EU, even withdrawing its negotiating team from discussions. But Grímsson failed to mention that debt-to-GDP is 221% when you count outstanding bank liabilities. On that basis, only one country is worse: Japan at 227%.  Even Greece is better at 175%.

The Nordic nation's top central banker has raised the idea of relaxing capital controls. But foreigners hold some $7.4 billion in Icelandic accounts, and many would want to leave, exposing banks to serious risks.

This "Volcanic" Eruption Will Rip Through Markets

Iceland has already endured difficult economic times, but its massively inflated debt has only softened the blow for the time being. The country is still running annual budget deficits, so odds are increasing they'll have to eventually default on a crushing debt load.

What lessons can we learn from all of this? 

What Jim Rickards said about Iceland in The Death of Money holds true for the United States: "...They should have accepted considerable short-term pain and administered real structural reform rather than just paper over with still more debt." 

That would have led to a true and robust recovery with capital properly allocated, instead of being misdirected thanks to artificially low rates.

As it turns out, despite a somewhat different approach, Iceland is actually no better off than anywhere else. And it's only a matter of time before its economy erupts like the country's second-highest peak: the volcano Bárðarbunga.  

Here's the thing... we're now all sitting under a similar "volcano."

How to Invest in the Best Minds in Silicon Valley in Just One Move

Note to Readers: The tech landscape is shifting rapidly, and no fewer than 10 top tech companies have recently installed new CEOs who were brought in to improve their companies' operations, cash flow, and profits. Here's how to invest in all 10 with one solid foundational play to hold for the long haul...

When longtime Oracle Corp. (Nasdaq: ORCL) Chief Executive Officer Larry Ellison stepped down Sept. 18, it took not one but two new chief executives to replace him.

The media treated it as if a pope were retiring - or maybe Derek Jeter.

But really, besides the double-headed CEO thing, this was hardly news.

More than half a dozen disruptive tech trends are hitting Silicon Valley all at once, and, well, the industry's veterans aren't getting any younger. And so, a quiet revolution is sweeping the top ranks of tech's biggest and most powerful companies.

Here's proof: In the past three years, 10 top global tech companies have announced new CEOs.

And today I'm going to show you how to invest in the 11 members (remember: Oracle takes up two slots) of this New Guard all at once for a price well below what many of these stocks cost.

This one investment has already thrashed the overall market by 46.5% so far this year.

Now let me tell you all about it...

The Changing of the Tech CEO Guard

In my 30-plus years knocking around Silicon Valley, I can't remember a similar stretch of time with so many CEO changes.

Despite the huge pace of change in technology, Silicon Valley has long been home to a number of senior leaders who stayed at the top for many years.

Just look at Ellison, now 70. Since cofounding Oracle's predecessor, Software Development Laboratories, in 1977, he had served as the company's only CEO. That's a nearly 37-year tenure, one that Bloomberg lists as the longest in the current tech industry.

At Microsoft Corp. (Nasdaq: MSFT), there were only two CEOs for most of the company's history - founder Bill Gates for 25 years followed by Steve Ballmer for 14 more.

Robert Kotick has held the CEO spot at Activision Blizzard Inc. (Nasdaq: ATVI) for roughly 23 years, and Steve Sanghi at Microchip Technology Inc. (Nasdaq: MCHP) is just a few months behind him. Next January, John T. Chambers will celebrate his 20th year as CEO of networking giant Cisco Corp. (Nasdaq: CSCO).

Jeff Bezos at Amazon.com Inc. (Nasdaq: AMZN), Steve Singh of Concur Technologies Inc. (Nasdaq: CNQR), and Scott Scherr at Ultimate Software Group Inc. (Nasdaq: ULTI) are all tied at 18 years. And Reed Hastings of Netflix Inc. (Nasdaq: NFLX) is right behind them with a 16-year stint.

Thus, until recently, Silicon Valley has placed a high priority on having stable leadership. That's because it's nearly impossible to find executives who have all the unique skills required to run far-flung global tech enterprises.

So a top tech company's board often must extend the CEO a long-term contract that includes a hefty amount of stock options. So, both the board and the chief executive have every incentive to lock each other up for many years.

But that dynamic is changing as the tech landscape shifts rapidly.

In just the past five years, we've seen the rapid rise of Big Data and the Internet of Everything as well as mobile and cloud computing.

These companies need great leaders who can adapt to the lightning-fast pace of change all around them. And that's why we pay so much attention to tech leadership.

At Strategic Tech Investor, we have a five-part system for investing in tech to put us on the road to wealth. Rule No. 1 states that "Great companies have great operations" - and that usually starts with leadership.

How to Invest in 11 New Tech CEOs All at Once - for a Bargain

Our job now is to profit from the rise of this new generation of Silicon Valley leaders.

These men and women are change agents who have been brought in to improve their companies' operations, cash flow, and profits.

Thus, the arrival of a new CEO can serve as an explosive catalyst for a stock's share price.

You'd think we can't invest in all 10 of these global tech stocks with new leaders at once.

But you'd be wrong.

Of the top 20 holdings of Technology Select Sector SPDR (NYSE Arca: XLK), the New Guard we've been talking about takes up half of those slots.

This exchange-traded fund (ETF) represents more than 70 high-tech stocks, covering semiconductors, e-commerce, Big Data, mobile computing, the cloud, software, and telecommunications.

It's the largest tech-focused ETF out there. And it's up 25% in the past year, smashing the Standard & Poor's 500's 17% rise.

And for our purposes this is an excellent way to invest in Silicon Valley's changing of the old guard.

Let's take a look at three XLK holdings with newly installed CEOs that are helping this ETF crush the overall market:

Fresh-Faced Tech CEO No. 1: Marissa A. Mayer, Yahoo! Inc. (Nasdaq: YHOO)

Yahoo was one of the great plays of the early Internet age and still counts some 800 million regular users. But growth had slowed significantly. Much worse for investors, shares had remained in a downtrend for years.

And since leaving Google Inc. (Nasdaq: GOOG, GOOGL) to take the top spot at Yahoo in July 2012, Marissa A. Mayer has had a huge impact on the company's stock.

Mayer quickly set about revamping operations and looking for new strategic acquisitions. For instance, last year she paid $1.1 billion for the micro-blogging site Tumblr as a way to generate more traffic for Yahoo.

And she's handled Yahoo's big stake in Alibaba.

While Yahoo is still in turnaround phase, Mayer has been great for shareholders. Since becoming CEO, the stock is up nearly 160%. Over that same period, the S&P 500 is up just 48%.

Fresh-Faced Tech CEO No. 2: Brian M. Krzanich, Intel Corp. (Nasdaq: INTC)

Brian M. Krzanich became CEO of Intel in May 2013 and has been coming on strong. He's quickly made up the ground Intel lost by missing the early stages of the mobile revolution.

Just days after landing the CEO job, Krzanich made a $90 million mobile merger, buying a unit of ST-Ericsson SA that makes wireless GPS chips. Krzanich is also using Intel's new line of Atom microprocessors to target tablet computers.

In mid-July, the chip legend revealed it had shipped a record number of products in this year's second quarter. That included 10 million tablet semiconductors in the period, one-fourth of Krzanich's goal of 40 million a year.

Also in the period, Intel posted a 40% jump in profit from a year ago. Since Krzanich was named CEO, Intel has rallied for gains of roughly 42%. Those returns are nearly twice those of the S&P over the same period.

Fresh-Faced Tech CEO No. 3: Satya Nadella, Microsoft Corp. (Nasdaq: MSFT)

Satya Nadella is only the third CEO in Microsoft's history. And he's been off to a great start since assuming the role in February.

He's cutting overhead as he moves more aggressively into mobile and cloud computing. Nadella inherited from Ballmer the $9.6 billion merger with Nokia's handset unit, which he's using to target more mobile sales.

The new CEO recently cut the company workforce by 18,000, a 14% cut that is the largest in the company's history. But he's using mergers to produce new rounds of growth beyond PC software.

In July, Microsoft paid an undisclosed sum to buy InMage, a startup that provides cloud connectivity. And in early August, Nadella lured Peggy Johnson away from wire chip leader Qualcomm Inc. (Nasdaq: QCOM) to serve as Microsoft's new head of business development.

Wall Street is a fan. Since Nadella became CEO - less than a year ago - the stock is up 29%, compared to a 14% move in the overall market.

Besides the six CEOs represented in the graph above, the rest of Silicon Valley's New Guard whom you'll find in XLK are Safra A. Catz and Mark V. Hurd at Oracle, Lowell C. McAdam at Verizon Communications Inc. (NYSE: VZ), Steven M. Mollenkopf at Qualcomm, and Larry Page at Google.

XLK is benefitting from all these leadership changes. Over the past year, XLK has returned 25%, which is 25% better than the S&P 500.

And again, Technology Select Sector SPDR is a bargain when compared to its holdings. It trades at about $40, much less expensive than most of its top 20 holdings.

I didn't mention Timothy D. Cook in today's column, but XLD is a great way to invest in Apple Inc. (Nasdaq: AAPL) via an ETF. The iDevice company makes up about 16% of XLK's "weight."

This is a great foundational investment that gives you cost-effective access to some of the world's top technology firms. It's an ETF you can hold for the long haul.

And it doesn't take many investments like Technology Select Sector SPDR to give your portfolio a solid tech base from which you can build true wealth.

More from Michael Robinson: Even with interest rates low and the economy improving, many nervous investors, worried about a correction, are selling off. Whenever this sort of negative noise is in the air, I tell you it's not a time to sell - it's a profit opportunity. Here's how to invest in a market downturn to reduce your risk and increase your profits...

7 Pictures of a Breakfast Sandwich More Outrageous Than Taco Bell's Waffle Taco (UPDATED)

To go directly to the food porn, skip ahead to Pages Two and Three by clicking here.

And updated on Page Three to include an official response from Taco Bell. 

NEW YORK (TheStreet) -- Yum! Brands' (YUM) Taco Bell has received considerable publicity for attempting to take on McDonalds (MCD), Starbucks (SBUX) and others in the fast food breakfast wars.

For example, TheStreet recently dispatched Keris Alison Lahiff to a New York City Taco Bell where she -- no joke -- ordered and tried "one of everything" including the oft-advertised waffle taco: For those keeping tabs, I consumed a total 2,305 calories and 141.5g of fat in one sitting. Spare me your judgement; my 8-hour resulting nausea was punishment enough.

Sounds like fun, but it's no joke for investors. Consider something else Keris pointed out in her story: ... sales (at McDonalds) between (6:00am and) 10:30am comprise 20% of total revenue ... the burger giant holds a 31% share of a robust $5-billion on-the-go breakfast market. That explains why the space has become so crowded. It's not just McDonalds, Starbucks and Taco Bell, but the donut shops enter the mix as well. From Dunkin' Donuts (DNKN) to the westward moving chain Canadians go nuts over -- Tim Hortons (THI). As much as I love watching chains battle -- and have come to think of them as less evil than I did back in the day -- there's nothing like a quality local business. Not only are they distinct to a particular location, but they bring character it's difficult for national shops to duplicate. Starbucks has probably done the best job of creating worthy environments, but even they can't come close to the look and feel of a solid, well-placed and well-run local shop. The best ones produce menu items that look just as over the top as Taco Bell's waffle taco, but -- relatively speaking -- provide a better culinary experience. I tend to shun fast food because it almost never fails that I feel like crap after eating it. When you order what amounts to gluttonous food porn at a strong local restaurant, there's at least the chance that's not going to happen. Not a failsafe obviously, but if you do your research (Yelp (YELP) is best for this -- hands down) you can easily pick the diamonds from the heartburn-inducing rough. So, with that in mind and without any further adieu, crank it, yank it and rip the knob off ... Here are seven images of the sickest-looking, but best and tastiest breakfast sandwich you're ever going to find.

Stock quotes in this article: YUM 

For the record, the folks at C&M Cafe in the Culver City section of Los Angeles had no idea I was coming in. They have no idea who I am. I've been to this place several times after a Twitter friend Tweeted images of the breakfast sandwich I'm about to show you. But I never ordered this particular item. I guess I was scared.

But I shouldn't have been ...

The little red symbol doesn't mean heart healthy; it stands for "house favorite." And I gotta tell you, this is a solid sandwich. Sounds sort of disgusting. To some it might even look that way. But I can say -- after having consumed the concoction -- that this sandwich doesn't weigh you down. And it tastes darn good. On a previous visit, I overheard the owner of C&M order from one of her distributors. That intelligence reveals that she uses quality ingredients in her food. So she's probably not cutting the corners Taco Bell (also know as "Taco Hell") and other fast food establishments are notorious for cutting. Anyway ... enough talk ... action. Displaying food porn the way it should be displayed ... from every angle: More goodness after the click to Page Three ...

Stock quotes in this article: YUM 

Instinct prompted me to pick this sandwich up with my hands. But that's a bad move. The frosting from the cinnamon bun makes a serious mess. Your best choice -- manipulate the ingredient layers with a fork, as I did here, exposing the piece of art in all its finished glory:

Next a fantastic bite with intermingling of just the proper amount of each part of the whole. Every ingredient plays a role and plays it well:

A look at the second half of the sandwich -- unmolested: And the aerial view:

It's probably impossible, but if a chain could mass produce this -- exactly as is -- they would win the breakfast wars. Hands down. 

UPDATED: Late Saturday afternoon, Taco Bell responded via its Twitter (TWTR) account: @Rocco_TheStreet @TheStreet Challenge accepted. Taco Bell (@TacoBell) April 5, 2014 @TacoBell: @TheStreet Challenge accepted. You're going to make one of these!? http://t.co/6xFAB5wRtT Rocco Pendola (@Rocco_TheStreet) April 5, 2014
We'll let you know if anything transpires ... Follow @rocco_thestreet --Written by Rocco Pendola in Santa Monica, Calif.

Stock quotes in this article: YUM  Rocco Pendola is a full-time columnist for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

5 Dividend Stocks That Are About to Hike Payments to Shareholders

BALTIMORE (Stockpickr) -- Every correction in this market rally is sending an important message to investors: Don't ignore the dividend stocks.

Even in bull markets, dividends are make-or-break for your portfolio. For instance, just year-to-date, dividends have actually contributed more to the total returns in the Dow Jones Industrial Average than capital gains have. And it's not just the stodgy Dow.

Must Read: Must-See Charts: Trade These Big Stocks for Big Gains

In fact, even among the faster-moving S&P 500, dividend-paying stocks have contributed nearly a third of total returns this year. Put simply, if you don't own dividend stocks in this market, you're getting owned performance-wise.

But to find the biggest benefit from dividends, it's not enough to simply buy names with big payouts today. You've got to think about what they'll be paying tomorrow, too. So instead of chasing yield, we'll try to step in front of the next round of stock payout hikes.

For our purposes, that "crystal ball" is composed of a few factors: namely a solid balance sheet, low payout ratio, and a history of dividend hikes. While those items don't guarantee dividend announcements in the next month or three, they do dramatically increase the odds that management will hike their cash payouts to shareholders. And they've helped us grab onto dividend hikes with a high success rate in the past.

Without further ado, here's a look at five stocks that could be about to increase their dividend payments in the next quarter.

Must Read: 4 Bargain Bin Stocks to Pad Your Portfolio

AT&T

First up is AT&T (T), the company that has the distinction of being the highest-yielding stock in the Dow -- and not by a little, either. AT&T pays out a 5.23% dividend yield at currently price levels, a huge payout considering the fact that we're in a record-low interest rate environment. For income investors, it's hard to ignore the draw of that big 46-cent quarterly payout. Thing is, it looks ready to get even bigger.

AT&T is the nation's second-largest wireless carrier, with more than 99 million customers. It's also one of the biggest landline operators in the country, with more than 27 million phone lines and 17 million internet users. With the pending acquisition of DirecTV (DTV), AT&T will dramatically boost its exposure to the pay-TV market, particularly in high-growth Latin America. Ultimately, more services from AT&T means more cross-selling opportunities from its huge customer Rolodex, and that should help drive margins higher in the years to come.

Financially speaking, AT&T looks cheap right now compared to the rich valuations found elsewhere in the market. Besides the hefty dividend yield, shares currently sport a trailing 12-month price-to-earnings ratio of 10, a whopping 52% discount to the rest of the telecom sector. Given the dropping payout ratio at AT&T since 2011, a dividend hike looks in order in the next quarter.

If history is any guide, look for a dividend boost announcement in early November.

Must Read: How to Trade the Market's Most-Active Stocks

CVS Health

Drugstore chain CVS Health (CVS) may not sport the huge payout seen at AT&T -- it currently pays a 27.5-cent dividend that adds up to a 1.4% yield -- but it's another name that's looking primed to boost its payout in the next quarter. CVS has undergone some big changes in recent months. For starters, it changed its name slightly, signaling a new focus on overall consumer health (and ending $2 billion in annual tobacco sales within its stores).

The shift should give extra credibility for CVS, which operates some 7,000 pharmacy locations across the U.S. as well as a pharmacy benefit manager that handles more than a billion prescriptions each year. That integrated drugstore and PBM operation cuts out the middleman and gives CVS access to fatter margins. CVS has been working to recreate that structure elsewhere (particularly in the Latin American market) posting a pending 5 billion real bid for Brazilian drugstore chain Drogarias Pacheco in May, and the acquisition of Miami's Navarro Discount Pharmacies in September.

CVS has some big demographic drivers for growth in the years ahead. An aging population is driving pharmaceutical volumes here at home, and that increased demand should help to fuel profits for CVS. The introduction of MinuteClinic health clinic locations at approximately 500 of CVS' retail locations is another important growth driver it gives customers a cheaper alternative to a doctor's office, and a big incentive to fill prescriptions in-house. Importantly, MinuteClinic also makes CVS completely vertically integrated, driving bigger profit margins.

With profitability climbing, CVS looks due to announce a dividend hike next quarter.

Must Read: Warren Buffett's Top 10 Dividend Stocks

Stryker

Stryker (SYK) is another health care name that looks ready to hike its dividend payouts in the coming quarter. Stryker designs and manufactures medical equipment and instruments ranging from hip and knee implants to operating room equipment. The firm is one of the biggest names in the orthopedic implant space, which should see increasing demand as the average age of the U.S. population increases. SYK still earns 65% of its revenues here at home.

Stryker has upped its exposure to other corners of the medical world in recent years, growing to become the leading provider of operating room equipment as well. That means that Stryker benefits from overall procedure volumes, not just from orthopedic procedures, which are elective and have some correlation to the economy.

Financially speaking, Stryker is in good shape. The firm currently carries $878 million in net cash (that is, cash less debt), a number that's significant because it means that the firm carries zero leverage on its balance sheet. Given the capital-intense nature of the medical device business, that's an important distinction. Right now, SYK pays out a 30.5-cent quarterly dividend that adds up to a 1.5% yield at current price levels, but investors should be on the lookout for a raise in the quarter ahead.

Must Read: 5 Stocks With Big Insider Buying

Aflac

Specialty insurance firm Aflac (AFL) continues to provide an attractive alternative to conventional life insurers -- and shares even look cheap in 2014. Aflac is one of the biggest supplemental insurers in the world, with a lucrative business in the U.S. and Japan. Even though insurance products are largely commoditized these days, Aflac's brand success gives it fatter margins than the norm. Last quarter, net margins came in at a very respectable 13.8%.

Aflac's policies are designed to pay out cash benefits if customers meet a predetermined condition -- normally contracting a disease or being involved in an accident. Because they're loss-of-income policies, Aflac has an easier sale in an environment where everyone remembers the Great Recession from several years ago. Likewise, since they're deducted directly from paychecks in many cases, there's no sticker shock effect from seeing money go out each month.

Japan is, by far, Aflac's biggest market, contributing around 80% of the firm's profits. Japanese Aflac customers are also extremely sticky -- the firm estimates that the average customer stays with Aflac for nearly 20 years. An aging population in Japan (much like here) is more cognizant of the fact that supplemental health or income coverage may be a good idea, and that continues to be a big driver for Aflac.

ALF's payout ratio has been in a steady decline in the last several years, which means that Aflac's dividend isn't keeping up with its income growth. With a payout ratio down around 20%, there's plenty of room for Aflac to boost its 37-cent payout in the next quarter.

Must Read: Buy These 5 Momentum Movers to Stomp the S&P

Williams-Sonoma

Last up is high-end housewares stock Williams-Sonoma (WSM), a name that's been a strong performer so far in 2014: at this point, WSM's 15.6% total return is nearly triple the performance of the S&P once dividends are factored in. A combination of growing luxury segment spending and well-run store chains is the driver for WSM's relative strength in the market right now.

At current levels, the firm pays out a 2% dividend yield.

Williams-Sonoma goes beyond its namesake kitchenware brand. In addition, it owns the Pottery Barn, West Elm, and Rejuvenation marquees, operating nearly 600 stores worldwide in total. As a brand-name housewares retailer, Williams-Sonoma captures thick margins, a trend that's been expanding as it leverages its own valuable brand to offer an increased share of private label merchandise to shoppers.

Likewise, the firm's financials look strong. Historically, WSM has avoided turning to debt to grow its store footprint (in fact, it's even opted to franchise stores in some foreign markets), and that means that its balance sheet is squeaky clean. That, in turn, clears the way for a boost to the firm's 33-cent quarterly dividend payout. Instead of paying lenders, WSM is free to pay shareholders. Investors should look out for the possibility of a dividend hike by the end of the year, just be cognizant of the fact that this stock's yield could drop as its price momentum carries shares higher.

Buying WSM here locks in the yield today.

-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

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>>QE5 Is Coming -- and Here's How to Profit

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

Open Enrollment at Work: 3 Must-Knows About Your Health Benefits

Monkey Business Images/Shutterstock More than 43 percent of Americans get health insurance through a current or former employer. For most of them, the open enrollment period -- the one time each year that they can change insurance coverage for the following year -- is approaching. Here are three things to keep in mind. 1. Your Employer Probably Changed Your Choices According to the National Business Group on Health, employers expect a 6.5 percent increase in health care benefit costs in 2015, and to reduce those cost increases, they're looking at ideas like consumer-driven health plans to help give workers more incentive to control their own health care costs. In addition, private health-insurance exchanges are becoming more popular, and some companies are changing pharmacy benefits and other specialty areas. Most employers offer extensive education when they make big plan changes, understanding that most people will be reluctant to change the coverage they already have. By taking advantage of that education, you can not only learn more about the reasoning behind any changes but also better understand whether you can reap some financial benefits from using the new plan options. At the same time, you can also make sure that benefits you were counting on for the future aren't going away -- and if they are, you still have a couple of months in 2014 to try to take advantage of existing provisions in this year's coverage. 2. Think Seriously About the Nature of Your Health Care Needs Typically, you can choose different levels of coverage. One choice might offer extensive coverage of nearly every conceivable health care expense -- with high-ticket monthly premiums. Another might save you on upfront premiums but require larger copays, higher deductibles and more out-of-pocket costs. Obviously, you can't always anticipate a major health care expense a year in advance, but looking at your past health experience can help guide you. Healthy individuals often do better choosing low-cost plans that require them to pay more of their costs if problems do crop up. Those who expect greater use of medical services often end up doing better with more comprehensive plans, but again, it's worth it to take a look at your policy for the direct answers. 3. Sometimes, You Can Make Changes at Other Times The open enrollment period is so important because most of the time you can't change coverage in the middle of a year. But there are some exceptions during "special open enrollment periods." Most of the qualifying events involve changes in family status, with marriage, divorce, domestic partnership or the birth of a child being the most common instances in which you'll have an opportunity or obligation to change coverage. In addition, if you have coverage through multiple employers, a change in coverage under one employer might trigger the ability to make changes with others. Similarly, becoming eligible for other benefits such as Medicare and Medicaid allows changes outside the usual open enrollment period. More from Dan Caplinger
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