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30 April 2007 Daily Comments

Thoughts

The stock markets are going to open a bit higher from our last post on Wednesday last. Oil is a couple of dollars higher in the $66 range and Treasuries are a bit higher in yield.

Overnight in Asia the markets were mostly lower while Europe is mixed. Gold is around $681 and Oil is $66.27.

Last Friday Citi raised it rating on GE saying that the company is worth more split up into four parts. They must be reading our Comments.

We would guess that today will be unchanged to up since it is the last day of the month. The DJIA has been up for 20 of the last 22 days and is due for a pull back. Maybe that will begin tomorrow.
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Personal Income for March was up 0.7%. Personal Spending was up 0.3%. Adjusted for inflation that means Consumer Spending was down 0.2% in the month. The PCE Price Deflator (inflation) year over year was 2.4% but the core rate was 2.1%.
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1473 is the level the S&P 500 ahs to close below for the rally to be over. The S&P 500 is currently well above that level at 1495.
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The Chicago Purchasing Managers’ Index was 53 in April versus 67 in March.
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Oil ended down 80 pennies at $65.68. Gold gained $2 to $683 and Treasuries rallied on the tame inflation number with the two-year at 4.60% and the ten-year at 4.62%.

European stocks closed mixed and many markets around the world are closed tomorrow for May Day.
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We guessed wrong. Traders sold stocks in the last hour to beat the rush tomorrow.

The DJIA closed down 60 points at 13060. The S&P 500 lost 12 points to 1482 and the NAZZ dropped 32 points to 2525.

Breadth was 2/1 negative and volume was light.

There were 395 new highs and 105 new lows.

And the week has just begun.
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25 April 2007 Daily Comments

We will be traveling to Chicago for client and auditor meetings on Thursday and Friday and so the next post will be on Monday April 30.
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Thoughts

We read the following on AOL yesterday. We read a story like this in the early 1990s and it was Washington DC then too. The folks in the story paid $250,000 for their house in 2002 and sold it for a bit less than $400,000 this year and from the tone of the story we ware supposed to feel sorry for them because they couldn’t sell it for $600,000. They only made 60% on their sale while in the same period of time the S&P 500 was up 29%. Obviously greed is still alive.

They Listed at $600,000 and Sold for $400,000 -- What Happened?

Inside Stories From Today's Real Estate Market

by Kate Morgenstern, AOL Real Estate

"The market was hot and we were optimistic." That was the climate when Dave, who asked that we not use his real name, and his wife put their house on the market for $600,000. The house, located in a Washington, D.C. suburb, received no offers. More than a year passed, during which time they painfully pecked away at the price, dropping the listing $10,000 here, 20 grand there. It finally sold for less than $400,000. What on earth went wrong?

Happier Times

Dave bought the three-bedroom, two-and-a-half bath house with his wife for $250,000 in April 2002. He says, "It was a good buy; we were happy. It was in a nice neighborhood on a nice, flat lot at the end of a cul-de-sac. It wasn't a fixer-upper, but it needed some work." Soon after moving in, Dave replaced the carpets on the lower level with wood flooring. He modernized the kitchen with stainless steel appliances and updated the bathrooms. The improvements ran about $10,000.
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Asia was lower overnight except of course Shanghai. European markets are higher as a group of banks raise the bid for ABN AMRO by a mere $6 billion. Gold is up a few dollars and Oil is approaching $65. Treasuries are lower on better than Durable Goods orders.

Amazon reported dynamite numbers last night and is up 15% this morning and has added some juice to traders psyches.
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Boston Scientifics’ coated stent sales are in decline after studies have shown the there is risk to certain patients who have them implanted. BSX announced lower earnings as expected early in the week and the shares are back to where we bought them at the end of last year. We had a profitable trade in them and we are going to try our luck again buying shares at $15.83. At that price the company is selling at 2 times sales which is cheap for a medical device maker. The company overpaid for Guidant last year but at the time the shares were trading at $30. We think Mr. Market has punished the shareholders enough.
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Today’s stock markets are like the zoom zoom car commercial. They were up at the start of the day and have just moved inexorably higher all day. It will be interesting to see how Asia and China react overnight.

The NYT had an article on China’s new billionaires and we noticed that a solar power company was valued at $5 billion in the Chinese market. We immediately thought of Japan in the late 1980s and the dotcom boom here a decade later. Both those markets’ bull moves lasted much longer than we expected and we don’t know how long this world wide bull market will last but we do know it will end badly.
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Oil closed up 1.24 at $65.82. Gold was flat at $688 and Treasuries were lower with the two-year at 4.63% and the ten-year at 4.65%.
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European stocks were buoyed by the U.S. markets and closed higher as did Mexico and Brazil.
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The DJIA closed up 135 points at 13085. The S&P 500 gained 15 points to 1495 and the NAZZ jumped 24 points to 2548.

Breadth was 2/1 positive and volume was active.

There were 590 new highs and 65 new lows.

There are two more trading days this week at the casino. We’ll be absent from our usual perch but watching nonetheless.
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24 April 2007 Daily Comments

Thoughts

The NYT has a short piece on compensation of the highest paid hedge fund managers in today’s issue at http://dealbook.blogs.nytimes.com . A billion dollars for a year’s work seems a bit excessive especially when the clients are taking all the financial risk.

Large returns entail assuming large risks and eventually Mr. Market demands his due. Moreover we wonder whether the outsized returns are blinding folks to the fact that they are taking all the risk for only half the profit. With the leverage being employed odds are that over time they could get close to the same return by buying the S&P 500 with the same degree of leverage.
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Asia was small mixed overnight except India which was up over 1%. European bourses are lower. Gold is unchanged at $695 and Oil is over $66 in the early going in NYC. Stocks are going to open slightly to the better and Treasuries are flat.

Texas Instruments offered positive guidance going forward saying it had worked off its inventory problem and is up 10% in early trading and that has given a small lift to some other tech stocks.
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Existing Home Sales were down 8% in March. And Consumer Confidence dropped to 104 from 108. On the home sales news stocks moved lower and bonds found a bid.
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IBM raised its dividend 33% and increased its stock buyback and the shares are $4 per share higher this morning. Where are all those reporters at the WSJ and other media that predicted its demise in the early 1990s? The $4 gain this morning is worth 30 DJIA points and is the only reason that market measure is not in negative territory.
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Oil traded above $66 early in the day and then pulled pack to $64.58 this afternoon. Some of the reaction is technical in nature from the $66 high. It is silly to be pricing gasoline on what a bunch of NYC traders decide oil is worth at any second. But the oil companies are happy to raise prices as soon as NYC futures jump but a little slower to lower them. It reminds of the shenanigans with electricity in 2000 and 2001.
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European bourses closed down large fractions and Mexico was slightly higher while Brazil was lower.
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Treasuries closed higher with the two-year at 4.60% and the ten-year at 4.62%. Gold was down $7 at $688.
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Since the beginning of 2002 the S&P 500 is up 29% while the value of the dollar versus the euro is off 30%.
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The DJIA gained 30 points o close at 12950. The S&P 500 was down 1 point to 1480 and the NAZZ rose 1 point to 2525.

Breadth was 5/4 negative and volume was moderate.

There were 370 new highs and 95 new lows.

The there are three more days and fund games this week.
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23 April 2007 Daily Comments

Thoughts

Oil is higher this morning at $64.32 on trouble in Nigeria. Asian markets were mixed overnight with most small fractions changed except Shanghai which was up over 3%. European bourses are also mixed and Gold is unchanged as are Treasuries.

Barclay’s is going to buy ABN AMRO for $91 billion and BankAmerica is going to buy LaSalle Bank for $21 billion from ABN. Do we hear $100 billion?
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For those folks who want to worry we present the following which we read at www.minyanville.com.

1887 saw a five-month fourteen percent decline.
1897 saw a two-month twenty percent decline.
1907 was the Rich Man's Panic which saw an eleven-month forty-five percent drop.
1917 saw a six-month thirty-three percent decline.
1927 had a one-month eleven percent decline.
1937 saw a three-month forty percent waterfall.
1947 saw a three-month nine percent decline.
1957 saw a five-month nineteen percent decline.
1967 saw a three-month ten percent decline.
1977 was a bear year, down almost the whole year, down eighteen percent.
1987 saw a twenty percent crash in one month.
1997 saw a two to three month sixteen percent decline.
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CNBC presented statistics this morning suggesting that $1 trillion in shares could be removed from public trading by the end of the year through buybacks and leveraged buyouts. Since there are about $11 trillion in public shares that represents a significant amount of money available for reinvestment in shares.

Of course eventually all the leveraged buyout shares will return to the markets at higher prices when the LBO folks attempt to realize their profits but that is a worry for another day.
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Oil in NYC trading closed higher by $1.68 at $65.89. Gold was down $2 to $693 and Treasuries had a bid with the two-year at 4.63% and the ten-year at 4.65%.

European bourses were lower at the close as were Mexico and Brazil.
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The DJIA dropped 45 points to end at 12915. The S&P 500 was down 4 points at 1480 and the NAZZ lost 4 points to 2522.

Breadth was 5/4 negative at the close and volume was moderate.

There were 475 new highs and 70 new lows.

And the fun has just begun.
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20 April 2007 Daily Comments

Thoughts

Asia rebounded overnight with Shanghai up 3.6% and India up 2.6% and Hong Kong up over 1%. Europe is following that lead at midday with France and Germany and London all up over 1% and U.S. futes are goings to open higher. Caterpillar and Google had better than numbers and today is expiration day and traders are going to move stocks higher this morning.

Gold is up $5 and Oil is up over $1 in early NYC trading. Treasuries are flat.
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As we watch various issues pop $2 or $3 per share on better than earnings reports we are reminded of other Goldilocks periods in the past. We are trying to keep an open mind and for that reason we own stocks but also don’t want to overdue our investments because we believe that the surface positive feeling is masking underlying speculation. The speculation is occurring in the big cap stocks and momentum players are having fun moving CAT and Boeing instead of Microsoft and Yahoo. But momentum remains a game and there are games being played.
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Yahoo had lousy numbers on Wednesday and the stocks dropped from $31 to $27.50 today. We are buying shares in our larger accounts for a trade. Hopefully we got it right this time.
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After an hour of trading the major measures are up about 1% in heavy expiration trading. Breadth is over 3/1 positive. Gold is now up $8 at $596.
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Pfizer had better than earnings but sales of key drugs were lower and the share price is off a few pennies. Going forward the company expects flat sales but better profits form cost cutting which means firing folks. With a yield of 4.3% we are repurchasing in larger accounts. PFE is the one of  few drug stock that hasn’t really rebounded and we are hoping for a rising tide lifts all boats effect. The dividend gives us some security.
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Short interest is at an all time high and represents 7 days of buying. That means that in order to cover all the shares sold short it would take the trading volume of seven days of nothing but short covering to buy back all the shares sold short.  A rising short interest is considered bullish since the shares eventually have to be repurchased.
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This morning a stock technician mentioned the 1982-1987 bull market as somewhat similar to the present market. That comment mirrored what we had been thinking last night on our walk which was that the bull market of the 1980s began in 1982 and ended in 1987 which would mirror the 2002 bottom to a 2007 top. In the spring of 1987 after a correction that was greater than the recent one, stocks took off and kept rising into August. One of Don Yarling’s maxims was that the last leg of a bull market is the most profitable and the most dangerous.  And we do see more to go on the upside but also the risks continue to increase as the markets move up.
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The DJIA has been higher 14 of the last 15 days. It is time for it to rest and with expiration over today next week may be the time.
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Oil ended the day in NYC at $63.38 up $1.55.Gold gained $7 to $695 and Treasuries were weaker as stocks held their gains with the two-year at 4.65% and the ten-year at 4.67%. Several gurus want the Fed to lower rates so that stocks will go higher but as stocks go higher the odds of Fed lowering rates recede.
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European bourses closed strongly higher as did Brazil and Mexico.
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The DJIA gained 155 points to end at 12960. The S&P 500 rose 13 points to 1483 and the NAZZ jumped 20 points to 2525.

Breadth was over 2/1 positive at the close and volume was active.

There were 500 new highs and 60 new lows.

And the casino is closed for playtime.
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19 April 2007 Daily Comments

Thoughts

Shanghai (China) was down 4.5% overnight and the rest of Asia followed suit as have Europe and U.S. futures. So goes the new mantra as China goes so goes the world. China dropped on news that its GDP was up 11% in the first quarter and its inflation grew at 3.5%. We have a feeling that Chinese officials figure their inflation with the same computer that U.S. officials use.

European markets are lower at midday with Germany down over 1%. Gold is down $3 and oil is off 75 pennies in the early going in NYC. Treasuries again have a bid on the down markets around the world.
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Jobless claims were down 4,000 to 339,000 in the latest repeating week.
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Stocks opened lower with breadth 3/1 negative but after three hours of trading the major measures have moved to the plus side and but breadth remains 2/1 negative. Oil is down $1.43 and Treasuries are to the downside.
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It turned into a nice day here and so we went out and played with our horses for the afternoon.

Oil ended down $1.30 at $61.83. Gold lost $5 to $688 and Treasuries closed flat to lower with the two-year at 4.64% and the ten-year at 4.67%.

European bourses lost ground today as did Mexico and Brazil. All eyes will be on Shanghai tonight.
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The DJIA closed up 6 points at 12810. The S&P 500 dropped 2 points to end at 1470 and the NAZZ end 8 points lower at 2502.

Breadth was 2/1 negative and volume was active.

There were 215 new highs and 60 new lows.

And another Friday is around the corner.
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18 April 2007 Daily Comments

Thoughts

Asian markets were mostly higher overnight while European bourses are lower at midday. Treasuries have a bid, Gold is up $1 and oil is back under $63 as the trading day begins.
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CNBC reports that RealtyTrac says that foreclosures were up 7% in March and 47% year over year and that now 1 of every 747 residential mortgages is in foreclosure.
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Lehman lowered its price target on Starbucks to $45. Since the shares are trading at $31 we’ll be delighted to reach the lowered level.
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JP Morgan upped Intel to overweight from neutral. INTC earnings were about as expected.
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Motorola met lowered expectations and predicted flat results for the rest of the year.
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Blackberry users are out of luck today as the Blackberry system suffered a catastrophic failure last night and is out of service to day for all U.S. users.
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Investors Intelligence is now 52% bulls and 25% bears.
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Crude Oil inventories were down 1 million barrels in the latest week and gasoline inventories were down 2.3 million barrels. Oil futures traders are not reacting to the news.
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It’s interesting that the Blackberry system crashed on tax filing day. Also Intuit which makes the popular TurboTax and ProSeries tax software said it expected to hear from the Internal Revenue Service Wednesday whether any taxpayers who used its e-filing system would be penalized for submitting late returns.

A flood of last-minute tax filers swamped the servers of Intuit on Tuesday, causing hours-long delays in getting forms sent in electronically to the government. Intuit is still filing the returns with the government this morning.
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Oil ended the day at $63.13 up 3 pennies and Gold was up $1 and $693. Treasuries gained ground with the two-year at 4.64% and the ten-year at 4.65%.

European markets closed lower on the day. Mexico and Brazil were up.
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The Vet is coming at 3pm to check our horses and so we are leaving early today. At 2:20PM the DJIA was up 50 points at 12825 and the S&P 500 was up 4 points at 1475. The NAZZ was down 2 points at 2515.

Breadth was 5/4 negative on the day and volume was moderate.

There were 325 new highs and 50 new lows.

And there are two more days of trading for the big boys and girls.
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17 April 2007 Daily Comments

Thoughts

Treasuries were lower as were stocks until CPI was released at 7:30am. Core CPI was only 0.1% and so the bond bulls spiked short Treasuries higher and stock futures moved to the plus side before the open in NYC.

Oil is over $64 in the early going and Gold is off $2 at $693.

Asian markets were mostly lower overnight and European bourses are mixed at midday.
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Johnson & Johnson and Coke had good numbers this morning but after opening higher the major measures are mixed to lower on the day.

For the record, CPI was up 0.6% which is certainly not good but since the Fed doesn’t care about what folks pay for food or energy the markets are responding to the lower core number of 0.1%. year over year CPI was up 2.8% while core was up 2.5%.

Housing Starts were up 0.8% and Industrial Production was down 0.2%.
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Intel announces earnings and gives forward guidance after the close tonight. Last quarter INTC moved higher in price into the earnings announcement and then the stock dropped 10% on disappointment in the actual news.
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Yesterday new highs exceeded 600. In the last few months whenever the new highs approached the 700 number there has been at least a mini correction.
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Gold closed down $3 at $692 in NYC. Oil backed off in the afternoon and closed down 51 pennies at $63.10. Treasuries held their gains with the two-year finishing at 4.68% and the ten-year at 4.69%.
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European bourses were lightly mixed at their closes and Mexico and Brazil closed lower.
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The DJIA gained 50 points to 12770. The S&P 500 rose 3 points to 1471 and the NAZZ dropped 2 points to 2516.

Breadth was negative and volume was active.

There were 520 new highs and 60 new lows.

And Triple Witching is Friday.
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16 April 2007 Daily Comments

Thoughts

Sallie Mae, the education loan folks, agreed to be sold to two private-investment funds and JP Morgan and BankAmerica for $25 billion. And the two banks will loan the money for the buyout while each owning 25% of the equity.
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Asia was strongly higher overnight with Japan up 1.5%, and India, Hong Kong and Shanghai all up over 2%. Europe is also up at Midday and gold is at $691 soon to be over $700. Oil touched $64 and stocks are going to open higher.

Only Treasuries are lower as the good news in other markets is dampening hopes for  a rate cut.

Retail Sales were up 0.7% in March and ex autos they were up 0.8%.
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Businesses inventories were up 0.3% in February versus up 0.2% in January.
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Crude has turned lower after a higher opening and stocks are up strongly an hour and one half into the trading day. Breadth is 3/1 positive and the bulls are in control with momentum stocks seeing a lot of action.

It seems the fear of not making money has overcome the fear of losing money. This rally looks a lot the rally that began last August and carried into the end of the year. Our guess is that this one has legs at least into June.
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31 people are dead and 29 injured at Virginia Tech. So sad.
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European bourses closed strongly higher following or leading the U.S. and Asian markets. Mexico was slightly higher and Brazil was up 2%.
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Oil ended at $63.61 down a few pennies and Gold was up $5 to $695. Treasuries caught a bid and the two-year was 4.74% and the ten-year 4.73% at the close.
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The DJIA gained 108 points to 12720. The S&P 500 rose 15 points to 1468 and the NAZZ jumped 26 points to 2518.

Breadth was better than 2/1 positive and volume was moderate.

There were a greatly expanded 650 new highs and 50 new lows.

And there are four more trading days this week with CPI tomorrow morning for the big boys and girls to play off. Friday is Triple Witching Day.
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13 April 2007 Daily Comments

Thoughts

True terror is to wake up one morning and discover that your high school class is running the country.

Kurt Vonnegut

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Happy Friday the 13th.
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Asian markets were lower overnight except for India which was up 2%. European bourses are higher at midday, Treasuries are flat, Gold is up $3 and oil is over $64.
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The Producer Price Index (PPI) for March was up 1% while the core rate was unchanged. Year over year the PPI was up 3.2% while the core rate was up 1.7%. And so if folks don’t need food or energy there is no inflation in their lives.
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Carl Icahn says that if shareholders elect him to the board of directors of Motorola he will serve with an open mind. What a guy!
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GE reported in line earnings and better than revenues.
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The University of Michigan preliminary consumer sentiment survey for April was 85 down from 87 for March. Do we care?  Only day traders care.
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We are beginning to reestablish our Verizon holdings in accounts. We began today by purchasing shares in our larger accounts and will use any pullbacks to add. The shares yield 4.4%.
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Oil ended the day down 38 pennies at $63.45. Gold gained $10 to $690 in NYC. Treasuries gave ground as talk of a rate increase instead of a cut began to surface in media circles with the two-year at 4.76% and the ten-year at 4.76%.
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European stocks closed higher and Brazil and Mexico were also up.
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Merck added thirty points to the DJIA toady as it jumped on news that a judge in Texas had thrown out a Vioxx class action lawsuit.
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The DJIA gained 60 points to finish at 12610. The S&P 500 gained 5 points to 1452 and the NAZZ was up 10 points to 2490. The major measures are at levels from which they corrected a few weeks ago. With the earnings reports next week traders should have some fun.

Breadth was 5/4 positive on the day and volume was moderate.

There were 395 new highs and 65 new lows.

And the casino is closed for the weekend.
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12 April 2007 Daily Comments

Thoughts

Asian markets were lower overnight except for Shanghai which was up over 1%. European bourses are lower at midday and Treasuries are firm at the lower levels of yesterday’s close. Gold is up $1 and Oil is up to $62.75.
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UBS upped Kraft to a buy.
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Jobless claims were 342,000 which were higher than expected but inflation statistics released this morning as expert and import price gains were negative for interest rates.
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Gap same store sales were up 6%. GPS had the advantage of an early Easter and also easier comparisons but we’ll take any positive news.
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Earlier this year we traded Starbucks for a slight loss selling it at $35.75. We are buying a few shares in our larger accounts at $30.46 today. it isn’t cheap but then it never is and it has been basing around this level for the past few months.
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Stocks opened lower today and early on the DJIA was down over 50 points but around noon stocks moved positive and led by the oils the DJIA was up 50 points heading into the last hour of trading.
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Oil ended the day up $1.83 at $63.85. Gold was down $2 at $680 in NYC and Treasuries were weaker with the two-year at 4.73% and the ten-year at 4.74%.

European bourses closed mostly lower while Mexico and Brazil were open when the DJIA rallied and that helped them close higher on the session.
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The DJIA closed up 70 points at 12555. The S&P 500 gained 9 points to 1448 and the NAZZ rose 20 points to 2480.

Breadth was 5/4 positive and volume was moderate.

There were 280 new highs and 95 new lows.

And tomorrow is Friday the 13th.
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11 April 2007 Daily Comments

Thoughts

Yesterday’s close marked the eight day in a row that the DJIA was higher for the trading session. While the last few days saw an anemic rise, the fact that there have been so many higher closes in a row suggests that a pullback might be in order. Moreover, the S&P 500 is approaching 1450 which is the level from which the 5% correction occurred and so it is technically resistance for a move higher.
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Asia was mostly higher overnight as are European bourses at midday. Gold is up $2 and Oil was higher early on trading over $62 but now is in the negative column in early NYC trading. Treasuries are flat.
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Investors Intelligence shows a drop in bulls from 50% to 48% and a rise in bears form 25% to 27%.
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Wachovia upped The Gap to outperform.
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Citigroup, and American institution, is going to fire 17,000 folks and send 7500 jobs to third world countries so executives can keep their jobs and bonuses and it can earn an extra $10 billion over the next three years. It will take a $1.5 billion write down to accompany the firings.
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The minutes of the FOMC are here:
http://www.federalreserve.gov/fomc/minutes/20070321.htm

Stocks sold off after these minutes were released at 1:15pm. That is the exact opposite of what happened when the comments of the meeting were released in March. Treasuries also gave up their gains as chances of a rate cut were dampened by the minutes.
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Oil ended up 19 pennies at $62.09. Gold was basically unchanged in NYC at the close. Treasuries were weaker on the day with the two-year at 4.72% and the ten-year at 4.74%.
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We read in the NYT that well heeled investors are borrowing to increase the bang they get from their hedge fund investments. According to the NYT some investors are borrowing up to 3 times the amount of money they invest in hedge funds. Thus they go to the bank with $25 million and ask the bank to loan $75 million and invest the $100 million in 20 different hedge funds. Of course the hedge funds also buy on margin. The NYT says up to $800 billion has been borrowed for this type of speculating.
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As the US markets sank European bourses reversed course and most closed lower on the day as did Mexico and Brazil.
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The DJIA dropped 85 points to close at 12490. The S&P 500 was down 9 points at 1439 and the NAZZ dropped 18 points to 2060.

Breadth was 2/1 negative and volume was moderate.

There were 280 new highs and 100 new lows.

And tomorrow brings individual retail sales numbers and Friday the thirteenth is just around the corner.
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10 April 2007 Daily Comments

Thoughts

Asian markets were mixed overnight and European bourses which are all open today after the Easter holiday are higher. Treasuries have a bid, Gold is up $5 and oil is also higher trading over $62 per share. Stocks are opening higher but without much conviction.
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The latest rumor is that Dow Chemical will be purchased by Saudi businessmen for $50 billion. The rumor has been denied but it did help DOW add $3 to its share price yesterday.
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European markets closed on their highs.
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Gold closed up $4 at $681 and Oil also gained in NYC to close at $61.89 up 31 pennies. Treasuries had a bid all day with the two-year at 4.70% and the ten-year at 4.72%.
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The DJIA gained 7 points to finish at 12575. The S&P 500 was 4 points at 1449 and the NAZZ jumped 9 points to 2478.

Breadth was 5/4 positive and volume was light.

There were 395 new highs and 70 new lows.

Tomorrow the Fed releases the Beige Book which contains the minutes of the last Fed meeting and we are to get a snow storm. Happy Spring.
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9 April 2007 Daily Comments

Thoughts

The prince and princess are visiting for the week and so our posts will be necessarily light as we visit with them.
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The March Employment numbers were released Friday and they were plus 180,000 jobs, which was much larger than expected. And the February numbers were also adjusted upward. Cine stocks weren’t trading we will have to see today how that number affects the stock markets. The immediate effect of the number was to send bond prices lower and yields higher as there was thin bond trading on Friday after the release. The ten-year jumped form a 4.60% yield to a 4.74% yield and the ten-year moved from a 4.66% yield to a 4.74% yield. This morning those yields are flat.

Most of Europe was closed Friday and many markets in Asia were also closed. Japan was lower Friday but Shanghai was higher.

Overnight Monday in Asia the Asian markets were strong and European bourses are higher in Monday trading.

Gold is down a bit at $678 and Oil is lower at $63.84.
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Oil lost $2.77 to close at $61.51 and Gold also closed lower in NYC at $677 down $2. Treasuries were flat on the day with the two-year at 4.74% and the ten-year at 4.75%.

European bourses that were open were modestly higher and Mexico was up 1% with Brazil fractionally higher.
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The DJIA closed up 8 point at 12568. The S&P 500 rose 1 point to 1444 and the NAZZ was down 2pointsto 2470.

Breadth was 5/4 to the good on the NYSE and 5/4 the other way on the NAZZ. Volume was light.

There were 460 new highs and 82 new lows.

And maybe more folks will be at the casino tomorrow.
*****

 

5 April 2007 Daily Comments

Thoughts

Asian markets were mixed to lower overnight and Europe is mixed at midday. Gold is down $1 in the early going and Oil is off 20 pennies. Treasuries are firm.
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Jobless claims were 321,000 which were a bit more than expected.
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The Employment Report will be released tomorrow morning even though the stock markets and most commodity markets will be closed. The Treasury market will trade for a couple of hours after the report closing at 10:30am. We will not be in the office.
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Yesterday we purchased UPS at $69.90. The delivery company’s share price dropped from the mid $80 range last summer and hasn’t recovered. It was trading at $75 last month but the share price tailed off and when Fed Ex had a punk report last week the share price dropped under $70 and we decided to stick our toes in the water in our larger accounts.
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Micron released disappointing earnings this morning but said that DRAM prices are firming. The stock is back under $12 and we are buying shares for accounts at $11.66. We sold shares in January at $13.93. Micron has almost $4 per share in cash in the company and is leveraged to DRAM prices so when there is an up tick in prices MU will benefit greatly.
*****

We are also repurchasing a portion of the Ford we sold in January. Upon further review we want to own one speculative stock that has potential. Ford seems to have weathered the financial crisis for now. We are not taking a large position.
*****

We have added stocks this month because we think that the trading trends favor the markets into June. We are not taking large positions in any stocks and have concentrated - except for Ford - on value stocks. We are saving room for any blue chips that blow up in the 2nd quarter earnings season that begins in the next few weeks. We also remain long term bearish but that may be just our cynical nature.
*****

The CEO of Ford made $28 million last year and Billy Ford took in $12 million when he left. He did forgo a salary in 2005 but the $12 million repaid him for his efforts which resulted in Ford Motor losing billions last year.

We are bemused when the retort is issued that if a shareholder doesn’t like the CEO’s salary he/she/it should sell the stock. We learned in Money and Banking 101 that shareholders own the company and have the say in how the companies are run. Actually back in the last century that was true but it is no longer true.
*****

Tracinda Corp has offered Daimler $4.5 billion for Chrysler. Daimler Benz paid $38 billion for the company, Ooops.

Mother Merrill says that Ford Motor’s Volvo unit is worth $7 billion which is about 50% of where the entire Ford Motor Company is priced.
*****

Circuit City is firing its 3500 highest paid retail clerks and is going to hire novice sales people to replace them in an effort to cut costs. That is disgusting.
*****

Data shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980. See: http://select.nytimes.com/search/restricted/article?res=F00917FC3B540C7A8EDDAA0894DF404482
*****

Oil ended at $64.28 down 10 pennies in NYC. Gold was up $2 to $679. Treasuries closed weaker with the two-year at 4.62% and the ten-year at 4.68%.

European bourse indexes closed to the plus side across the continent and Mexico and Brazil indexes were also up.
*****

The DJIA gained 25 points to finish at 12555. The S&P 500 gained 4 points to 1443 and the NAZZ was up 12 points to 2470.

Breadth was 3/2 positive on the NYSE and 5/4 on the NAZZ and volume was holiday light.

There were 395 new highs and 65 new lows.

And the casino is closed for an Easter egg hunt.
*****

 

4 April 2007 Daily Comments

Thoughts

Asian market indexes were higher overnight with Japan and Hong Kong and India up over 1%. European bourses are mixed at midday and Oil is down 30 pennies with gold down $1 in early NYC trading. Treasuries are flat.
*****

The Iranians are going to release the sailors and on that news the stock markets have a more positive tone and Oil is now down 60 pennies. Treasuries have a bid on weak economic numbers released this morning that the ISM Non Manufacturing Index was 52 in March versus 54 in February.
*****

Corn plantings will reach levels not seen since WWII. And since that time yields are probably 100% higher per acre planted. And all that corn is going for ethanol which is a zero sum game when it comes to energy in/versus energy out just as most of the gambling done in the financial markets is a zero sum game.
*****

Investors Intelligence has 50% bulls and 25% bears in its latest survey. That’s a move up of 2% in bulls and a drop of 3% in bears.
*****

Dallas Fed President Fisher said on Wednesday "There is symmetry to the (recent Fed) statement that was issued ... (that) inflation is running at too high a rate now. There is no denying that this kind of situation (sub prime mortgage problems) dampens economic growth…. (But) I would like to see inflation lower than it currently is."
*****

Oil ended down 25 pennies at $64.39. Gold popped $7 higher to $678 and Treasuries were a bit better with the two-year at 4.60% and the ten-year at 4.65%.

European stocks closed mixed and Mexico and Brazil were small better.
*****

The DJIA gained 15 points to 12525. The S&P 500 was up 2 points to 1439 and the NAZZ rose 7 points to 2457.

Breadth was flat on the day and volume was light and will be lighter tomorrow.

There were 370 new highs and 50 new lows.

And the casino is open for one more day this week.
*****

 

3 April 2007 Daily Comments

Thoughts

Asian indexes were gangbusters overnight and Europe is also higher at midday. Treasuries are weaker and Oil and Gold are both lower.
*****

We bought Kraft today in accounts that own GE. It has a 3.3% yield and is with 3% of its 12 month low.
*****

Pending home sales were up 0.7% in February after falling 4.2% in January. In the absence of other news and some traders because of the holidays the markets are finding that up is the path of least resistance.
*****

We repurchased shares in Whole Foods in our larger accounts. Whole Foods is buying Wild Oats and the acquisition will be positive for WFMI. After announcing the buyout WFMI ran up to $52 but it is now back at $45 and we want to own a few shares. We sold last month before the takeover announcement because when we bought at year end we purchased for a bounce which didn’t occur. In fact the share price headed south.

We are buying in small amounts because it is volatile and at 30 times earnings it is only cheap in relation to where it sold earlier in the year. Moreover next quarter’s same store sales may disappoint. The same store sales figures disappointed traders this quarter but the company announced the Wild Oats takeover at the same time and that mitigated any share price damage. That won’t be the case next time.
*****

We repurchased Fifth Third Bank at $38.55. FITB yields over 4.3% and is within 10% of the low in for the last three years and down over 40% from it high during the same period.
*****

Gold closed down $2 at $670 and Oil lost $1.50 to close at $64.44 in NYC. Treasuries were weak as the stocks stuff was strong with the two-year going out at 4.62% and the ten-year at 4.67%.

European bourse indexes closed higher.
*****

The DJIA gained 125 points to 12505. The S&P 500 was up 12 points to 1437 and the NAZZ rose 28 points to 2450.

Breadth was over 2/1 positive all day and volume was good for a holiday week.

There were 455 new highs and 80 new lows.

And there are only two more trading days this week.
*****

 

2 April 2007 Daily Comments

Thoughts

April 2007 begins with KKR buying First Data for $28 billion and Altria (Phillip Morris) spinning off Kraft Nabisco. The Nabisco part of Kraft was KKR’s first big time buyout back in 1987 so there is symmetry to the day and activity. We are interested in KFT now that it is not part of the tobacco company.
*****

Last Friday the stock markets were volatile with the DJIA down points at midday before finishing slightly higher. This morning stocks began the day on the upside but moved lower on the ISM data which was lower than expected while the Prices Paid data was higher than expected.
*****

Across the seas Asian indexes were mixed overnight with Japan down 1.5% while India was up and Shanghai was up over 2%. European bourse indexes are to the higher side as our trading day begins.

Gold is off $7 and Oil is also lower at $65.50. Treasuries are flat.
*****

With Passover tonight and Easter on Sunday trading activity is going to be muted for the week. That doesn’t mean there won’t be volatility in fact there may be more. That’s because volume will be holiday light and so the big boys and girls who stay around may be able to create some fun.
*****

The sun is out and it is supposed to snow tomorrow night so we are going to play hookie this afternoon and go for a bike ride.

As we leave the major measures are doodling around break even with breadth flat and volume low. Gold reversed course today and ended $2 higher at $671 and oil was also higher at $66.20 at 1:30pm

There are only three more trading days this week as the markets are closed on Friday but the banks are open.
*****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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