Merck & Co., Inc. Posts Lower Q3 Results; EPS Beats View; Revenue Misses (MRK)

Before Monday’s opening bell, Merck & Co., Inc. (MRK) released its third quarter financial results and full year outlook. While EPS beat analysts’ estimates, Q3 revenue fell short of expectations.

MRK’s Earnings in Brief

Merck reported third quarter earnings of $895 million, or 31 cents per share, down from $1.1 billion, or 38 cents per share, a year ago. Non-GAAP earnings dropped from 92 cents to 90 cents per share, but beat analysts’ estimate of 88 cents per share. Revenue for the quarter was $10.56 billion, down from $11.03 billion last year. On average, analysts expected to see revenue of $10.67 billion. Looking forward, MRK expects to see FY2014 GAAP earnings between $4.06 and $4.29 per share and non-GAAP earnings between $3.46 and $3.50 per share. Analysts expect to see Fy2014 earnings of  $3.47 per share. The company expects to see FY2014 revenue between $42.4 billion and $42.8 billion. Analysts expect to see $42.55 billion in revenue.

CEO Commentary

Kenneth C. Frazier, chairman and CEO of Merck, commented: “Last October, we launched a multi-year initiative to transform Merck and build a platform for sustained, future growth. One year later, we delivered solid third-quarter results and are making steady progress in our transformation, including divesting non-core assets, reducing our expense base and investing in our promising new product launches and pipeline.”

MRK’s Dividend

Merck paid its last 44 cent dividend on October 7. We expect the company to declare its next dividend in November.

Stock Performance

Merck shares were up 39 cents, or 0.68%, during pre-market trading Monday. The stock is up 15.1% YTD.

MRK Dividend Snapshot

As of Market Close on October 24, 2014

Click here to see the complete history of MRK dividends.

NYMEX Trader Says Oil Prices Could Fall to $76 a Barrel on Glut

 

NEW YORK (TheStreet) -- West Texas Intermediate crude oil popped $2 per barrel in early Thursday trading, as investors grew optimistic that Saudi Arabia shipped less oil supply in the month of September. 

But the rally seems likely to be short-lived, according to Spartan Commodity Partners' Alan Harry. 

Must Read: Warren Buffett's Top 10 Dividend Stocks He explained to TheStreet's Jill Malandrino that as long as WTI crude oil stays below $82.50 per barrel, he remains a seller of the commodity. So far, the main issue -- which is oversupply -- is still present in the oil market.  It doesn't help that the global economy, and in particular the European economy, isn't strong, and therefore, oil demand is lower.  With the additional oil production coming from North America and OPEC's -- the Organization of the Petroleum Exporting Countries -- refusal to slow oil output, the market's supply is simply overwhelming demand, he explained. 
Energy Select Sector SPDR XLE data by YCharts

WTI crude oil traded up to $93.82 at the beginning of the month, but plummeted to $79.10 in just two weeks. It has since rebounded somewhat, but the Energy Select Sector SPDR ETF (XLE) has still suffered as a result, falling more than 15% since its June highs.   If some of the oil producing countries were to curb production or if the global economy were to pick up steam, then maybe a bull case could be made for crude, he said.  "But too much supply is the overlying issue," Harry concluded, adding that WTI crude oil seems likely to decline to $76 per barrel.  Must Read: 12 Stocks Warren Buffett Loves in 2014 -- Written by Bret Kenwell  Follow @BretKenwell  

Key Takeaways From GlaxoSmithKline's Third-Quarter Earnings

Source: GlaxoSmithKline

Shares of British biopharma GlaxoSmithKline  (NYSE: GSK  )  are up today after the company posted its third-quarter earnings report. Even so, the company reported slightly disappointing sales of $9.42 billion, which missed consensus estimates by 1.7%, and marks a 10% decline from a year ago. Diluted earnings per share came in at $0.137 for the quarter, which can't be directly compared to consensus because certain items were excluded. 

Here's a deeper at Glaxo's mixed bag of a third quarter. 

Respiratory drug revenue continues to drop
Glaxo's pivotal respiratory drug portfolio, headlined by its lung drug Advair, saw revenue drop another 8% in the third quarter, compared to a year ago. Management said the main culprit in the unit's underwhelming performance was pricing and volume issues for Advair that helped to drive sales down by 24% in the U.S.

Nevertheless, a deeper look shows that weak sales of newer respiratory drugs like Anoro and Breo Ellipta played a role as well. Specifically, Breo's global sales only hit $25 million in the third quarter, putting it way behind schedule in terms of replacing declining Advair revenue. As a refresher, Express Scripts decided not to include Breo in its list of medicines eligible for reimbursement earlier this year, meaning that most private payers won't cover the drug. Per today's earnings report, this lack of broad-based coverage appears to be hurting sales in a big way.   

Even more changes coming for the pharma giant
Because of the slow uptake of newer respiratory drugs Anoro and Breo, and a nearly half-billion-dollar fine in China during the quarter due to its bribery scandal, Glaxo is exploring cost-saving measures through a workforce reduction. Keeping with this theme, the company said that the swap of its oncology unit for Novartis'  (NYSE: NVS  )  vaccine unit should also help to save the company about $1.6 billion within three years, presumably due to lower R&D expenses. 

As a way to raise additional capital and unlock shareholder value, Glaxo said it's also open to the possibility of an IPO for its minority stake in the fast-growing HIV business ViiV health care, co-owned with Pfizer  (NYSE: PFE  )  and Shionogi & Co. According to CEO Andrew Witty's comments during the conference call, an IPO won't take place until at least 2016, and it's unclear how much of their stake in ViiV they would consider giving up at this time.  

Revenue and dividend outlook remain steady
In today's release, management stressed that its full-year outlook remains unchanged, and that it doesn't plan a dividend reduction in 2015. Although the dividend won't be increased next year, the company is planning on returning up to $6.4 billion to shareholders via a special B-share transaction, with more details on this special share scheme to come sometime down the road.

Glaxo needs to find a way to generate top-line growth
Like most of its Big Pharma brethren, Glaxo is a company in the midst of a radical transformation due to the ongoing patent cliff. But unlike some of its peers, Glaxo hasn't had much success in bridging the gap with its clinical pipeline, evinced by the weaker than expected performance of its next generation respiratory drugs, as well as the the failure of multiple high profile oncology candidates such as its lung cancer vaccine MAGE-A3.

Viewed in this light, I wouldn't be surprised to see this once mighty pharma go shopping for a high-impact acquisition sooner rather than later. After all, it can't continue to buoy the bottom line forever by cutting jobs and selling some of its best assets, like ViiV healthcare.

Top dividend stocks for the next decade
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US Steel: How Long Can Steel Prices Defy Gravity?

The bear case on steel stocks like US Steel (X) and AK Steel (AKS) has been that lower iron-ore prices would ultimately lead to lower steel prices. That hasn’t happened yet, but JPMorgan’s Michael Gambardella and team haven’t given up hope.

Agence France-Presse/Getty Images

They explain why they favor Steel Dynamics (STLD) and Nucor (NUE) over US Steel and AK Steel:

For the steel companies, we continue to believe that lower raw material costs and increased imports will pressure sheet prices lower. Given this cautious stance, we continue to prefer Nucor and Steel Dynamics (over AK Steel and US Steel) given their variable cost structures and significant leverage to an eventual recovery in non-residential construction.

Count Axiom Capital’s Gordon Johnson among those that agree it’s just a matter of time before steel prices fall and drag down US Steel’s stock with them:

…a very interesting American Metal Market (AMM) article from this morning suggests, in addition to the above, HRC volumes will be weak in C4Q14 (which would weigh negatively on US Steel's margins structure). We believe US Steel's stock is currently discounting HRC prices at ~$670/ton in 2014 & 2015. [The article says steel prices have fallen to $640 a ton. Ed.]

US Steel has dropped 0.9% to $33.33 at 1:35 p.m. today, while AK Steel has gained 1% to $6.36, Nucor has advanced 0.4% to $50.12 and Steel Dynamics is unchanged at $21.06.

Weekly 52-Week Highs Highlight

According to GuruFocus list of 52-week highs; Genuine Parts Co, Morgan Stanley Capital Trust IV, Brookfield Office Properties Inc, UnitedHealth Group Inc, and Crown Castle International Corp have all reached their 52-week highs.

Genuine Parts Co (GPC) Reached the 52-Week High of $88.55

Genuine Parts Company is a Georgia corporation incorporated on May 7, 1928. Genuine Parts Co has a market cap of $13.56 billion; its shares were traded at around $88.55 with a P/E ratio of 20.20 and P/S ratio of 0.93. The dividend yield of Genuine Parts Co stocks is 2.56%. Genuine Parts Co had an annual average earnings growth of 6.60% over the past 10 years. GuruFocus rated Genuine Parts Co the business predictability rank of 5-star.

Genuine Parts has released its second quarter results ended June 30, 2014. Sales during the quarter totaled $7.5 billion, which was 10% higher than in the prior year quarter. Net income for the quarter was $355.2 million compared to $360.7 million last year. Second quarter 2013 net income included a beneficial adjustment of $36 million. Without this adjustment, net income for the second quarter of 2014 was 9% higher than last year.

CEO Thomas Gallagher bought 5,000 shares of GPC stock on 08/13/2014 at the average price of $84.

Morgan Stanley Capital Trust IV (MWG) Reached the 52-Week High of $25.30

Morgan Stanley Capital Trust IV was originally incorporated under the laws of the State of Delaware in 1981, and its predecessor companies date back to 1924. Morgan Stanley Capital Trust Iv has a market cap of $13.33 billion; its shares were traded at around $25.30 with and P/S ratio of 35445.50. The dividend yield of Morgan Stanley Capital Trust Iv stocks is 1.54%.

Brookfield Office Properties Inc (BPO) Reached the 52-Week High of $20.52

Brookfield Office Properties Inc. was formed under the Canada Business Corporations Act on September 5, 1978 to continue the business of Canadian Arena Corporation which was incorporated in 1923 under the Quebec Companies Act, 1920. Brookfield Office Properties Inc has a market cap of $10.41 billion; its shares were traded at around $20.52 with a P/E ratio of 19.50 and P/S ratio of 4.56. The dividend yield of Brookfield Office Properties Inc stocks is 2.73%. Brookfield Office Properties Inc had an annual average earnings growth of 16.70% over the past 10 years.

Brookfield Office Properties Inc. has released its second quarter 2014 results. Net income attributable to shareholders was $768 million for the quarter compared to $441 million in the same quarter of 2013. Commercial property revenue was $597 million versus $569 million last year.

UnitedHealth Group Inc (UNH) Reached the 52-Week High of $88.18

UnitedHealth Group Incorporated is a Minnesota corporation incorporated in January 1977. Unitedhealth Group Inc has a market cap of $85.68 billion; its shares were traded at around $88.18 with a P/E ratio of 16.20 and P/S ratio of 0.70. The dividend yield of Unitedhealth Group Inc stocks is 1.49%. Unitedhealth Group Inc had an annual average earnings growth of 13.70% over the past 10 years. GuruFocus rated Unitedhealth Group Inc the business predictability rank of 4.5-star.

For its third quarter of 2014, the company reported revenues of $32.8 billion, up 7% year-over-year. Operating earnings were up 5% to $2 billion. Third quarter net earnings grew 7% to $1.63 per share. The company also reported cash flows from operations of $3.2 billion, which was double the level of net income for the quarter.

Director Richard T Burke sold 100,000 shares of UNH stock on 09/17/2014 at the average price of $87.03. Director Douglas W Leatherdale sold 15,800 shares of UNH stock on 09/16/2014 at the average price of $87.21.

Crown Castle International Corp (CCI) Reached the 52-Week High of $80.84

Crown Castle International Corp is incorporated in the State of Delaware. Crown Castle International Corp has a market cap of $26.99 billion; its shares were traded at around $80.84 with a P/E ratio of 206.80 and P/S ratio of 7.74. The dividend yield of Crown Castle International Corp stocks is 1.30%. Crown Castle International Corp had an annual average earnings growth of 24.10% over the past 10 years. GuruFocus rated Crown Castle International Corp the business predictability rank of 3.5-star.

The company reported second quarter net income of $23 million, including $45 million loss on redemption of debt, compared to income of $52 million for the same quarter last year.

Check out the complete list of 52-Week Highs.

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Is It Finally Time to Buy a House?

According to the most recent data, foreclosure activity in the U.S. is at its lowest level since July 2006. All foreclosure-related metrics dropped in September, including the number of homes repossessed, the number of properties set for foreclosure auctions, and the number of default notices issued.

Source: flickr user Nick Bastian.

While this is definitely a good sign, it doesn't necessarily mean that home prices are going to continue on their upward trajectory. Rather, it does mean that the housing market is returning to a "healthy" state. But what does that mean to you?

The data looks great
Foreclosure activity in the U.S. is now at an eight-year low. According to RealtyTrac, there were 106,866 foreclosure filings across the country, which is 8.6% less than in August, and represents a year-over-year drop of 18.6%.

In fact, overall foreclosure activity, which includes foreclosure notices, auctions, and repossessions, is now back down to pre-bubble levels, according to the report. The number of lender-repossessed homes in September dropped by 13% from the month before, default notices given to homeowners dropped by nearly 10%, and the number of homes set for foreclosure auctions dropped by 5.5%.

Why home prices may actually cool off now
Despite this good news, home prices aren't necessarily going to continue on their upward trajectory. Since bottoming in early 2012, U.S. home prices have gained nearly 25% in value, and have actually pulled back a little bit recently.

The foreclosure market was one of the big reasons for these gains. Generally, foreclosed homes sell for lower prices than traditionally sold homes. In fact, RealtyTrac also reports that the median sales price for a foreclosed home was 36% less than that of non-distressed sales. As foreclosures have been gradually working their way out of the market, home prices have naturally risen faster than they normally would, simply because there are fewer foreclosures holding the average price down.

There are other factors that could drive home prices a little lower in the short term. A big one is the seasonality of the housing market. Generally, summer is the peak selling time for homes, as kids are out of school, and it's simply more convenient to move. With summer ending, selling activity is probably going to cool off considerably.

Thanks to higher prices, activity may cool off even more this year than in most years. The recent mortgage application data shows purchase applications are actually 4% lower than they were at this time last year. The inventory of existing homes on the market has actually risen by about 24% in 2014 as sellers try to take advantage of higher prices, while the rate of sales has increased by just about 4%. The laws of supply and demand tell us that high inventory plus lower demand means prices are likely to drop a little bit.

What a healthy market looks like, and what it means to homebuyers
In a healthy market, real estate gradually appreciates by a low single-digit percentage. Gains like we saw before the market collapsed and the declines that resulted from the bubble bursting are not healthy.

Take a look at the chart below, which tracks U.S. home prices since 1991. The market of the 1990s was pretty healthy. The market of the past decade or so has not been healthy.

We may see a small drop in price as the market becomes healthy again as prices adjust to normal supply and demand dynamics again. However, without a massive amount of foreclosure activity, there should be much less volatility in the housing market going forward. In other words, if you have been putting off buying a home, you can now buy with a little more confidence.

Smart homebuyers take advantage of all of the tax "loopholes" 
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5 Rocket Stocks for a Tumbling Market

BALTIMORE (Stockpickr) -- Stocks took a tumble last week, as the S&P 500 fell 2.65% between Monday's open and Friday's close. All told, it was the worst single week for stocks going back to the summer of 2012.

>>5 Stocks Poised for Breakouts

That's more of a commentary on the last two years' price action than it is on the last week's price action, however. U.S. equities have gone straight up with very little volatility, which just makes every move lower all the more pronounced.

Zoom out to the bigger picture, and there's no reason to think that we're seeing anything other than another healthy correction. In fact, it even looks a lot less abrupt than the one that sent investors into panic mode back in January. There's still some room to the downside before bulls need to start worrying. Keep the context in mind: We're less than 5% away from all-time highs in the S&P 500 as I write this morning.

So to make the most of that market disconnect, we're turning to a new set of Rocket Stocks worth buying this week.

>>5 Big Trades to Survive a Roller Coaster Market

For the uninitiated, "Rocket Stocks" are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows. In the last 244 weeks, our weekly list of five plays has outperformed the S&P 500 by 80.51%.

Without further ado, here's a look at this week's Rocket Stocks.

Apple

First up is Apple (AAPL), a name that's been absent from our Rocket Stocks list for a while now. Even though tech names have been getting hit harder than most over the course of this correction, Apple's complete lack of momentum during 2013 has helped to spare it from getting sold off. So why buy Apple here?

Apple doesn't need much of an introduction. The firm's offerings include the iPhone, iPad tablet and Mac computer line. It's also the world's largest seller of digital music and media through its iTunes store. The biggest detractor for AAPL right now is the fact that the most recent of those flagship products was released four years ago. Investors are biting at the bit for a new "game changer," and CEO Tim Cook has indicated that Apple will be entering new segments in 2014. Let the speculation machine have at it.

But speculation over Apple's next "killer app" isn't the reason to buy this stock. The valuation is. Apple trades for a measly 9.3 times earnings ex-cash, a multiple that's more fitting for a utility stock than the biggest tech name on earth. At current share prices, the firm could pay for 30% of its outstanding shares with cash on hand.

Earnings next week could be a big catalyst for upside in Apple, but investors should expect the firm's WWDC event in early June to be a bigger one.

EOG Resources

Against all odds, 2014 has been a solid year for shares of EOG Resources (EOG). While the S&P 500 index is down 1.8% since the calendar flipped over to January, EOG has actually managed to rally 17.5% over that same stretch. That's on top of a strong 2013 for investors in this oil and gas exploration and production firm. At the end of last year, EOG boasted proven reserves of 2.2 billion barrels of oil equivalent, 94% of which were located in the U.S.

EOG's positioning as a pure-play E&P stock is attractive. During a time of prolonged triple-digit oil prices and tightening refining margins, EOG has been able to avoid the mess by not owning downstream assets in the first place. The result is net profit margins that consistently hit the mid teens. Recent volatility in natural gas has been a boon to EOG's profitability -- approximately 45% of the firm's production is made up of natgas.

EOG is an expert in unconventional drilling situations, which means that the firm is able to unlock profits that would typically go to specialist oil field servicers -- or be left in the ground. As a result, the firm can buy up cheap projects that are no longer profitable for rivals, and wring cash out of them.

With rising analyst sentiment in shares this week, we're betting on this Rocket Stock.

Texas Instruments

This year hasn't been quite as breakneck for shares of semiconductor giant Texas Instruments (TXN), but this $49 billion analog chipmaker has at least managed to keep its price performance above where it ended 2013. That's more than most companies can say right now.

Even though Texas Instruments is best known to millions of school kids as a calculator maker, consumer calculators only contribute around 5% of sales. The other 95% of revenues are earned in the semiconductor business; TXN is the world's largest maker of analog chips. Analog chips are used to process analog signals (like the human voice) and turn them into digital ones. As a result, TXN has a big role supplying components to the high-demand mobile phone market.

The acquisition of National Semiconductor effectively doubled down TXN's bet on the analog chip business. It also gave the firm huge manufacturing capacity that few rivals can match. The semiconductor business is incredibly cyclical, and the long-term rut that chipmakers have been in for the last several years is finally giving way to increased demand and profitability. That makes Texas Instruments a good low-volatility way to play the trend.

Becton Dickinson

Health care giant Becton Dickinson (BDX) tips the scales as the world's largest medical supply company. The firm manufactures surgical instruments such as needles, syringes and scalpels and distributes them to facilities all over the world. That huge scale gives Becton some big competitive advantages as demographic shifts and policy changes ramp up demand for the firm's medical instruments.

Becton's offerings may be a lot of things, but they're not particularly exciting -- and neither are the margins. To change that, the firm has been at work for years to grow its complex high-margin medical equipment (like oncology and pathology diagnostic devices) into a bigger piece of the revenue pie. Together, those two parts of BDX's work very well together: the instruments business pays the bills and provides downside protection from a bumpy economy, while high-tech devices hold the promise for revenue growth and margin expansion.

Financially, Becton is in solid shape. The firm carries just $1.4 billion in net debt on its balance sheet, a very small amount of leverage for a firm of BDX's scale. With more than $2.5 billion in cash on hand, the firm has more than enough wherewithal to handle any economic hiccups along the way. It also has a long history of paying a solid dividend payout; currently that adds up to a 2% dividend yield.

Johnson & Johnson

Last up is Johnson & Johnson (JNJ), a bigger health care name with an even bigger reach. JNJ is the world's biggest and broadest health care company, with more than $71 billion in annual revenues spread out across pharmaceuticals, medical devices, and consumer products. That diversification makes JNJ the total package when it comes to healthcare sector exposure.

On the consumer side, Johnson & Johnson owns a valuable portfolio of brands that includes names like Band-Aid, Tylenol, Neutrogena and Acuvue. But it's the non-consumer side of the business -- pharmaceuticals and medical devices -- that provide the majority of JNJ's sales. The firm made a big bet on the medical device space with the $20.2 billion acquisition of Synthes in 2012, a move that should expand the high-margin devices business as a share of JNJ's total revenue in the next few years.

JNJ's businesses throw off substantial cash. Even after deploying considerable cash for the Synthes acquisition, the firm currently carries a net cash position of $11 billion. Johnson & Johnson's 2.7% dividend yield makes it a particularly attractive name in this environment, where rate-sensitive stocks are benefitting on fears of a prolonged market drop. So, with rising analyst sentiment in JNJ this week, we're betting on shares.

To see all of this week's Rocket Stocks in action, check out the Rocket Stocks portfolio at Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

>>5 Ways to Profit From a Crowded Short Trade

>>5 Stocks to Sell Before It's Too Late

>>5 Stocks Under $10 Set to Soar

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author was long AAPL.

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

Retail Sales, Producer Prices Raise Red Flags on Economy

Sarah Bentham/AP WASHINGTON -- U.S. retail sales declined in September as consumers pulled back on spending for a range of items, a worrisome economic signal that helped fuel a sell-off on Wall Street. The report Wednesday, along with data showing a drop in producer prices, led investors to bet the Federal Reserve would delay hiking interest rates until late 2015 at the earliest to keep support for the economy in place. Retail sales, which account for about one-third of consumer spending, dropped 0.3 percent last month, the Commerce Department said. It was the first decrease since January. Economists had expected a decline given a slower pace of sales reported by automakers and a fall in gasoline prices that cut into receipts at service stations. But the breadth of the weakness was surprising. Sales were down 0.2 percent even when stripping out automobiles, gasoline, building materials and food services. Economists polled by Reuters had predicted an increase in this reading, which provides a pretty good gauge of overall consumer spending. "Consumers have turned more cautious," said Ted Wieseman, an economist at Morgan Stanley (MS) in New York, who cut his third-quarter economic growth forecast to 3.1 percent from 3.4 percent on the figures. Prices for U.S. stocks tumbled as much as 3 percent during the day, although the Standard & Poor's 500 index (^GPSC) closed down just 0.8 percent. Investors, already spooked by signs of economic weakness overseas, rushed into the safe haven of U.S. government debt, pushing yields down sharply, while the dollar fell against the euro and the yen. Inflation Under Wraps Sales at clothing retailers dropped 1.2 percent and receipts at sporting goods shops edged down 0.1 percent. Overall sales would have fallen further but the release of Apple's iPhone 6 lifted sales at electronics and appliance stores. Receipts at auto dealers fell 0.8 percent, as did sales at service stations. Sounding a less dour note, the Fed said in its so-called Beige Book that the economy continued to expand at a "modest to moderate" pace across much of the nation in recent weeks. Wage growth, however, remained modest in most areas, even as employers bid up wages in some particular industries, it said. With wages under wraps, inflation has failed to gain a toehold, and the Fed said businesses reported little if any change in prices over the past several weeks. In a separate report, the Labor Department said prices received by U.S. producers actually fell 0.1 percent in September, the first decline in more than a year. While Fed officials have been concerned that inflation has been stuck below their 2 percent target, other signs of strength in the economy had left them optimistic they would finally be able to raise benchmark overnight rates from zero by mid-2015. As recently as Tuesday, San Francisco Fed President John Williams told Reuters the central bank should only delay a rate hike if inflation or wages failed to perk up. The reports on Wednesday suggested he may be kept waiting a bit longer. "Little inflation pressure [is] in the pipeline," economists at RBS said in a note to clients.

How to Pay Student Loans Without Going Crazy if You Owe a Six-Figure Amount

Student loan debt has reached epic proportions, topping $1.2 trillion, and that figure is on the rise. Today's grads are stuck trying to pay student loans to the tune of close to $30,000 on average; but for some, the cost is substantially higher.

These so-called "superborrowers" are racking up student loan debt to the tune of $100,000 or more for the sake of an education. While many of them are taking on six figures in loans to earn an MBA or get through law school, others are using the money to fund their undergrad experience at pricey private universities. When you consider that 20-somethings face one of the toughest job markets in history, it's a big gamble to make.

Figuring out how to organize and pay student loans when the amount you owe is the equivalent of a mortgage can be overwhelming, especially if you're struggling to get by on an entry-level salary. Bankruptcy is only an option in extreme cases, but there are some other things you can do to ease the financial burden and boost your motivation to keep chipping away at the debt.

Check into income-driven repayment options
If you owe federal student loans, you may be able to get some temporary relief in the form of an income-driven repayment plan. Unlike the standard plan, which caps the repayment period at 10 years, these plans allow you up to 25 years to pay back what you owe. If you haven't paid off the balance by then, you may be able to have the rest of the debt forgiven.

Income-based repayment limits your monthly payment to 15 percent of your discretionary pay and your payments can go up or down as your income changes. This option is available for students who owe Direct, Stafford, PLUS or consolidation loans. The Pay As You Earn Program calculates your payments as 10 percent of your income and payments are stretched out over 20 years. There are also Income Contingent and Income Sensitive plans that have similar terms.

If you're just starting out in your job and not making the big bucks yet, choosing an income-driven option can make your payments more manageable until you start earning more. The longer you stay on the plan, the more you'll pay in interest for the loans but it's a better alternative than default. Keep in mind that if you end up getting some of your loans forgiven once the repayment period ends, you may have to shell out income tax on the difference.

Streamline private student loan payments
Students often look to private lenders to cover the gap when they've exhausted their federal loan borrowing limits. While doing so can give you the money you need to finish up your degree, it usually comes at a premium since the interest rates tend to be much higher. Private lenders don't offer income-driven repayment plans so if you're struggling to keep up with the payments each month, your balance could quickly balloon even higher.

If you took out multiple private student loans, consolidating them and refinancing to a lower interest rate can create some breathing room in your budget. You make a single payment each month and you can reset the loan term so the amount fits with what you can afford to pay. The amount you can consolidate usually varies by lender, but some offer limits as high as $250,000.

When you're shopping around for a private student loan refinance deal, you want to pay close attention to the terms of the loan. You'll have to decide whether you want a fixed or variable rate for the loan and the one you choose determines how much consolidating or refinancing really costs you in the long run. Fixed rates tend to be higher but your payments stay the same over the life of the loan. Variable rates are usually lower but the amount you pay each month or the number of payments you're required to make may fluctuate.

Keep your head in the game
Being knee-deep in student loan debt has been linked to poor health and an overall decrease in quality of life and there's no doubt that it can take a toll on you emotionally and mentally. The financial pressure caused by trying to pay student loans has many grads putting off major life moves, like buying a home, getting married, or having kids.

If you're staring down six figures in loan debt, it's tempting to give up on ever making any progress but that's not the best mind-set to have. You have to consider what kind of sacrifices you're willing to make to pay those loans off faster. For some, that means moving back home with Mom and Dad or living with multiple roommates. For others, it could be picking up a part-time job or starting a side hustle in addition to their regular 9-5 gig.

Instead of trying to eat the elephant all at once, work on making progress toward smaller goals. Challenge yourself to see how much of the debt you can dump in six months. Treat yourself to a small reward every time you pay off another $5,000. The more you're able to psych yourself up and make your repayment efforts a game, the less it seems like a crippling financial burden.

This article originally appeared on MyBankTracker.

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Why Seadrill Ltd Stock Sank Today...Again

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Once again, Seadrill (NYSE: SDRL  ) stock is getting crushed, falling as much as 8% in today's trading. And, once again, the major drop doesn't correspond with a fall in earnings or any other company-specific news. Instead, it's a move driven by macro events and fear that they'll hurt earnings in the future. Here's how I think you should look at Seadrill now.

What's driving Seadrill lower
Like it or not, what's driving Seadrill in the short term is the price of oil. You can see below that the recent sell-off has corresponded closely with the fall in oil prices.

Brent Crude Oil Spot Price data by YCharts

For traders, the logic isn't completely flawed, it's just very short-sighted. If oil prices remain where they are today, or even fall further, it's likely that demand for offshore drilling rigs will wane, and dayrates and profits will suffer in the future.

But let's be clear that Seadrill's earnings haven't been bad so far in 2014, and there's still plenty to like in the company now and in the future.

Seadrill's offshore jack-up rig Offshore Defender. Image source: Seadrill.

So what should you do about it?
The reason I think the stock's drop recently is overdone is because it's overlooking the fact that Seadrill has one of the newest fleets in the industry and has long-term contracts for most of that fleet. The floaters Seadrill owns have 96% contract coverage for the remainder of this year, 80% next year, and 62% in 2016. In short, short-term oil price movements have little to do with the company's long-term earnings.

With that said, if oil prices remain low for the next few years then there's a lot to be worried about. But I don't think oil will stay low for long because big oil has already started to cut back on capital spending, and smaller shale producers need to have high prices to remain profitable.

The short-term picture looks bleak if you're looking just at oil prices but long-term Seadrill is in a strong strategic position if oil prices recover.

What to do now
The big question is whether you should be a buyer or seller of Seadrill stock today. It may be tough to stomach, but I think this is a time to buy because oil prices will rise long-term, and Seadrill is well positioned for long-term growth in the offshore market.

Even founder John Fredriksen gave investors an indication that he's in for the long haul by recently buying 2 million more shares of the stock.

Days like today can be tough to watch, but it's key to take a long-term approach to stocks like Seadrill. It has a lot going for it as long as oil prices recover in the next year or two. In the meantime, there's high contract coverage for the company's rigs, which will keep revenue coming, and management has flexibility in financing new rigs with its Seadrill Partners subsidiary.

The upside is just too high for Seadrill to be a sell now. There could be further downside, but I think the risk/reward is in investors' favor after the recent drop. But be prepared for volatility, because energy markets are moving dramatically everyday right now and often for no reason. That's unnerving, but it's also when long-term investors can make a fortune.

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It Ain’t Over Yet: Dow Tumbles 270 Points as IMF Spooks Stocks

Blame the IMF.

EPA

Investors were in selloff mode today after the International Monetary Fund cut its global economic growth forecast today. The S&P 500 fell 1.5% to 1,935.08 today, while the Dow Jones Industrial Average dropped 272.58 points, or 1.6%, to 16,719.33. The Nasdaq Composite declined 1.6% to 4,385.20 and the small-company Russell 2000 tumbled 1.7% at 1,076.31.

For a market already suffering from growth fears, the IMF did nobody any favors. It reduced its 2015 global-growth forecast to 3.8% today from 4% in July, and warned of the possibility that the euro area could fall into recession…again. It left its 2015 US growth forecast unchanged at 3.1%.

Gluskin Sheff’s David Rosenberg explains why the stock slump might not be over yet:

There have actually been no fewer than 13 mini-corrections since the bull market began in March 2009. On Average, the S&P 500 declines 8.7% over a 34 day span (the median is -7.2% over 28 days). The forward P/E multiple corrects down by 1.3 point and the trailing by 2.0 point – both the mean and the median are basically in agreement on this. High-Yield bonds spreads widen out an average of 83 basis points (median is 62 basis points). The 1o-year US treasury note yield in these risk-off phases fall 40 basis points (both average and median). Relative strength in the Small-Cap stocks is -300 points on average and -200 basis points on a median basis and equity market sentiment as per Market Vane bullishness has retreated nine percentage points by the time the capitulation low in the S&P 500 is turned in – this is the case whether you look at the history either on an average or median basis.

So far, the S&P 500, even with all the ups and downs since the mid-September peak, has corrected but 2%, even though it may feel worse than that given the volatility. The VIX has only jumped 20%, p less than half what one would like to see at an interim market trough. Both the trailing and forward P/E multiples have corrected by 30-40 basis points – again, a fraction of what we typically see when it comes time to start dipping more toes in the equity pool.

MKM Partners’ Jonathan Krinsky thinks the S&P 500 could be headed for 1,905:

We continue to harp on the market cap issue because we feel it is extremely important at the current juncture…There are many different ways to express this issue, but perhaps one that doesn't get enough attention is a simple ratio of the S&P 500 Equal Weight Index (SPW) vs. the regular market cap weighted SPX. This is the exact same index of course, just weighted differently.

This ratio has generally been in an uptrend for the last two years, during which time the S&P 500 hasn't so much as touched its 200-day moving average, or DMA. In the last few weeks however, this ratio not only broke its 200 DMA, but it has been making multi-month lows….weakness in this ratio has either coincided or preceded weakness in the S&P 500. This makes sense as it shows how money is moving up the market cap scale which is perceived as safer.

As we discussed in a note last week, there were some fairly oversold readings (% of stocks above 20 DMA) on the market which should have led to a relief rally, but we did not think that "THE" low was likely in. Based on the declining slope of the Russell 2k's 200 DMA, as well as the fact that the S&P 400 Mid-cap Index is now below its 200 DMA, we still feel that the August lows of 1905 on the SPX are in play. That would also roughly coincide with the rising 200 DMA (1903) which has not been tested in nearly two years. On an intra-day peak to trough basis that would still be less than a 6% correction off the all-time highs of 2019.

The upshot: The correction ain’t over yet.