- It will take heroic work by the bulls to maintain Friday’s welcome bounce. There is likely disappointment for the stimulus and bank plan as euphoria melts into reality. And, there is always that nagging feeling of not knowing what else can be done if these initiatives don’t work.
- After a week off I caught up with various periodicals. It was with shock that I opened both Business Week and Time Magazine. They are the thinnest ever, very, very little advertising.
- Business Week argued that Exxon was becoming vulnerable. Despite humongous profits over the last three years BW suggests that XOM has allowed their conservative management style get in the way of growth. Further, it suggests that XOM’s reliance on Qatar for natural gas leaves the company open to one-country upheaval. I don’t own the stock but suggested two weeks ago that XOM would make a desirable long-term holding. Still think so.
- IBM received a boost in BW. IBM’s services business continues to insulate the company from diminished hardware purchases. With technology the first out the gate sector in a recovery, IBM may be the firstest of the pack. Am glad ’bout that since I bought more last week.
- Next week brings three IPO’s. Yes, really. The most interesting could be Mead Johnson Nutrition, a spin off Bristol-Myers Squibb. Further down the road is a possible new offering from Dunkin Donuts. After being LBO’d (Leverage Buy Out) Dunkin has presumably prospered; I see lines of cars at most locations. Dunkin, BTW, was Peter Lynch’s famous ten-bagger as he bought the shares after observing the same lines in the the 70’s. Importantly, IPO’s tend to do well in crap markets as the offering companies know that the story must be pretty pristine to be accepted by the market.
- An interesting table on nuclear power generation:
- France 77%
- S. Korea 35%
- Japan 28%
- US 19%
- Russia 15%
- UK 15%
- India 3%
- China 2%
- Part of France’s high nuclear use is the result of smaller natural resources in that country.
- Speaking of China; copper rose over 13% on Friday as the country signaled a long-sought expansion of the the county’s commodity purchases. The Baltic Dry Index, the benchmrk for freight costs for dry bulk commodities such as iron ore, coal and grains jumped 53% based upon a hoped-for revival of Chinese buying. Australia, the recipient of previous China buying, is a commodities-based economy and I bought EWA, the ETF of Aussie stocks and I bought FXA, the Aussie currency ETF.
- How do you suppose Mr Obama is liking his job about now? Whoa, what a mess. And now he is nominating Judd Gregg for Commerce Secretary, a Republican who once voted to abolish the department.
- Also, am wondering when and if the President will pay more than lip service to the growing activism from Russia. Russia is threatening naval base building in the break-away Georgian province, in addition to signing a defense treaty with Belarus, apparently paving the way for anti-missile system to counter our silly intentions of building the same thing in Poland. Perhaps Obama can re-think the Bush-Cheney plan for the missile ring around Poland.
- A recipient of the stimulus package should be roads, bridges and tunnels. The disconcerting protectionist package on steel purchases may benefit a small iron product company, Insteel Industries (IIIN). The company makes re-bar, pre-stressed concrete, concrete pipes, etc. After a couple of quarterly losses consensus earnings expectations are for 0.23 for the May quarter. Full year, ending Sept, has consensus at 0.13 and 2010 at $1.00. Revenues are tagged at an expected $260 mm this year and $277mm in 2010. I bought a starter position just to watch.
- Surgeons deserve their reputations for massive egos. The surgeon who operated on our eldest son last week swaggered out to the waiting room after spending two hours inside Matt’s neck. He told us that everything went along swimmingly, as if he had just decided on what car to buy. Matt had a disc replaced with cadaver bone. The incision was in front, “in a fold so it won’t show.” How the doc got to the back and did what he had to do is a mystery. But, so far, he earned every penny and can strut around for as long as he wishes.
- Watch the Asian markets for a tell on our’s. And watch for the stimulus to be passed and for Geithner’s speech tomorrow. If both are not big hits with traders we could give back a little.
- I’ll be up early tomorrow, trying to preserve some of the gains from last week. I took off the inverse ETF’s (SDS) that had given me downside protection but I left the gold positions. I can quickly re-establish the inverse hedges, if need be.
- Cash is now at 67% of portfolio. Equity positions are: ABT, IBM, GLD, EWZ, SGPprB, FCXprM, EWA, JNK, TIP, NLY and TBT. Starter positions in: TXT, WFC, IIIN and FPL. Any and all of these may be eliminated and/or added to at any time.
Make it a great, great week!
