The Markets
- With almost 170 companies reporting today it is almost impossible to accurately judge the direction of stocks. Early look at futures indicate a down opening.
- Most, if not all, reporting companies are showing lower sales. Some are reporting better than expected earnings but don’t forget that these estimates had already been severely cut.
- Japan reports a breathtaking 45% reduction in exports. They are putting another stimulus package in place.
- UK suggests that housing prices have stabilized, even up a smidgen. A cash for old cars program is in place. And another stimulus package is awaited.
- Seventy percent of managed funds failed to beat the averages over the last five years. Why would anyone pay a mutual fund manager 1%-2% to under-perform the averages? If you want to buy the market, something I would not do, latch on to some SPY. You need to check your plan for fees and, if necessary, switch managers. For more, watch last Sunday’s 60 Minutes.
- Schlumberger (SLB) reports on Friday and some option buyers are amassing calls. The entire oil service sector seems interesting. There are hundreds of rigs out of service and day rates for rigs in service has plummeted. Nevertheless, inventories of oil will fall some day and these rigs will be towed out to promising sites.
- REITs have been showing strength recently. That is one reason I have been trying to buy OHI, the nursing home REIT. To play the general trend look at IYR, the REIT ETF.
- I have remained tolerant of Obama’s economic plan. But one facet bothers me greatly. If true, it seems that the plan expects 4% growth in the US over the next several years. How can that be possible?
- Tax receipts are plummeting for both Federal and state governments. That is requiring even more bonds to be being sold. California is about to offer $7 billion and is expected to pay 3.65% over comparable treasuries. That is a huge premium and speaks volumes about investor’s perception of the state’s credit worthiness.
Golf day again today. I have been walking the links recently. This leads to me hobbling around the house for the next several days, so I am going to take a cart today. My playing partner just turned 79 and he will walk. This after having quadruple bi-pass surgery last year. Hate him.
Make it a great Wednesday.
