It's hard to find a stock that isn't higher on the first trading day of 2013 as investors around the world cheered the fiscal cliff deal.
What does it say about consumers that the two credit and debit card processing giants are doing so well?
Are individuals, much like the federal government, putting off tough decisions about reining in spending? Perhaps. After all, shares of several large card issuers, such as American Express (AXP), Capital One (COF) and Discover Financial Services (DFS) have all been big winners lately too.
But traders on StockTwits were quick to point out that both companies probably deserve to be trading where they are simply because so many consumers prefer plastic over paper. It may not be a sign that the consumer is overburdened with debt.
True. And credit card delinquencies have not been an issue for major banks for a while now. So it could be the case that consumers are simply using credit cards (or debit) in a responsible way.
But one StockTwits user joked that a good way for charge-happy consumers to stay fiscally fit is to buy what they know.
Very true. And even though it's fair to wonder anytime a stock is at an all-time high if the valuations are too frothy, both stocks still look attractive.
Shares of each trade for about 20 times 2013 earnings forecasts. That's a premium to the broader market. However, analysts expect earnings for Visa and MasterCard to increase by about 19% a year, on average, for the next few years. And that level of growth is far better than most other financial stocks as well as the broader market.
One trader noted that both stocks were given favorable reviews by an analyst to start off the New Year.
Ha! Referring to Barclays (BCS) as Libor St. (or should it be Lie-bor St?) is very amusing. Anyway, I agree that it's probably a bit of a nitpick to choose Visa over MasterCard considering that both stocks trade for roughly the same earnings multiple and have nearly identical growth forecasts.
And as another trader points out, both companies appear to be holding up well despite potential threats from newer payment companies like eBay's (EBAY) PayPal unit and Jack Dorsey's buzz-worthy Square.
Great point. And keep in mind that it's not like Visa and MasterCard are sitting on the sidelines in mobile. Visa is an investor in Square. And MasterCard is one of several financial institutions that's part of Google's (GOOG) mobile payment alliance.
It's silly to talk about the looming death of the credit card business since Visa and MasterCard are both taking steps to adapt to a world where smartphones may be our new wallets.
Who's worried about the fiscal cliff? Who isn't. One look at the market's fear gauge, the VIX, and it's pretty clear that investors are among those feeling some agita.
Over the past month, the VIX has surged nearly 30%, hitting its highest level in months. And with mere days left for President Obama and Congress to reach a deal on the fiscal cliff, it's no wonder investors are bracing for MORECatherine Tymkiw - Dec 27, 2012 11:55 AM ET
Remember the VIX? Probably not. Wall Street's measure of volatility has been pretty forgettable in 2012.
Not on Friday. The CBOE Volatility Index (VIX) spiked by as much as 10%. The index itself was particularly volatile Friday, closing up just 1%.
Congress and its inability to come together over the fiscal cliff wasn't the sole trigger of the heightened volatility. Friday was also quadruple witching day -- one of four trading days MOREMaureen Farrell - Dec 21, 2012 2:37 PM ET
Bank stocks have been on a tear in 2012. Monday was no different, as shares of big banks pushed the broader market higher.
Bank of America (BAC), Citigroup (C), Goldman Sachs (GS) and Morgan Stanley (MS) all climbed more than 2%, while Wells Fargo (WFC) rallied more than 3%. AIG (AIG) shares were up after the company said it plans to sell its stake in AIA Group, a Hong Kong-based life insurance MOREHibah Yousuf - Dec 17, 2012 12:59 PM ET
Goldman Sachs (GS) CEO Lloyd Blankfein thinks Washington will resolve the fiscal cliff before the end of the year, but says 2013 will still be a tough year.
"The next 12 months will be tricky," warned Blankfein, speaking at a conference Wednesday hosted by The New York Times' Dealbook. "Any compromise will involve some dose of austerity -- a deflationary policy."
That's a stark contrast to fellow Wall Street titan Jamie MOREHibah Yousuf - Dec 12, 2012 1:18 PM ET
JPMorgan (JPM) CEO Jamie Dimon says the U.S. economy is poised to boom if Washington lawmakers can strike a deal to avoid the fiscal cliff.
But of course, that's a really big "if."
"I don't know the odds," said Dimon, speaking at a conference Wednesday hosted by The New York Times' Dealbook. "We could go off the fiscal cliff, and it may not be as big of a deal as people MOREHibah Yousuf - Dec 12, 2012 10:19 AM ET
Anyone spare a dollar?
Dollar General (DG) is having a rough day after reporting decent earnings but less-than-stellar guidance. Shares slumped nearly 5% Tuesday.
The discount retailer beat earnings-per-share estimates by 3 cents but that's where the good news ends. Revenue was just in line with forecasts, and Dollar General's outlook left investors with little to cheer about.
"Although our performance over the Thanksgiving weekend and start of the holiday season has MORECatherine Tymkiw - Dec 11, 2012 11:55 AM ET
William Shatner's Priceline Negotiator character famously plunged off a cliff in a TV ad earlier this year. Despite fears of his untimely demise, he miraculously survived. But now it looks like shares of Priceline (PCLN) are falling off the fiscal cliff ... and it's not as clear just yet if they'll bounce back as quickly as the Shat.
Priceline's stock lost 5% Monday after Deutsche Bank downgraded it from a "buy" MOREPaul R. La Monica - Dec 10, 2012 12:23 PM ET
Investors continued to pull money out of U.S. stock funds last week, but the pace of outflows slowed considerably.
U.S. stock mutual funds lost just $481 million in the week ended Nov. 28, according to the Investment Company Institute, far less than the previous week's $7.5 billion withdrawal.
In total, investors have yanked more than $14 billion during the three weeks following President Obama's re-election, as they turn their attention to the MOREHibah Yousuf - Dec 7, 2012 10:05 AM ET
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.
Apple (AAPL) has more than $120 billion in cash. Microsoft (MSFT) is sitting on $66.6 billion. And Cisco Systems (CSCO) has $45 billion in "caysh." So will any of these firms join the latest craze that's MOREPaul R. La Monica - Dec 4, 2012 1:25 PM ET
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