7:32am and the last last jobless claims of the year were 326,000
down from an adjusted 331,000 last week. The four week moving average is off
6,000 at 333,000. That is the main trading number for the day for the boys and
girls who are still around and not in the Caribbean or Mexico
enjoying their year end bonuses.
The Nikkei was up 100 points
overnight and Hong Kong was down 100 points. Europe
is mostly higher and U.S futures are mixed. The ten-year Treasury is at 4.32%,
the five-year is at 3.68% and the two-year at 3.12%. Gold is off a dollar and
oil is down 98 pennies at $42.66 after the bombs in Saudi
Arabia turned out to be not as bad as first
point today we expect the selling pressure to abate and the natural float
upwards to begin.
10:57am and we are
adding more shares of Ciena to some aggressive
accounts at $3.32. This is for a short term trade and not to own for any amount
of time. The stocks has recently jumped $1 off its lows and we think there is
another quick dollar in the stock after year end. But we aren’t going to stay
around and pray to be right.
bought shares of Pfizer for a year
end trade at $26.87 when it traded down this morning on news that Celebrex scripts
writing have dropped 50% in the last month. We don’t know why folks are surprised;
we were surprised that 50% of the business still existed. By the time of the
next announcement we hope have traded out for a profit.
Tellabs has purchased a privately owned
high tech outfit for a consideration of $53 million in cash and restricted
are a bit firmer; oil is down 53 pennies but above $43 per barrel and the major
measures are slightly positive. Breath is 5/4 positive on both the NYSE and
and crude oil closed at $43.45 down 19 pennies. The major measures tried to
rally about an hour ago but couldn’t find the oomph to keep going. Breadth is
approaching 2/1 positive on the NYSE and so once the contra hour ends we expect
an end of selling move up into the close.
and the DJIA lost 30 points at 10800. The S&P 500 was unchanged at 1213 and
the NAZZ rose 2 points to 2178. Breadth was 5/3 positive on the NYSE at the
bell and 5/4 positive on the NAZZ. Treasuries closed the year firmer with the
ten-year ending at 4.26% and the five year at 3.64%.
tomorrow is today and is the last day of the year. Hooray!
30 December 2004 Daily Comment
8:09am and the only number for the boys and girls to trade with is
Existing Home Sales which comes at .
Overnight Asia was mixed and Europe
is lower. U.S.
stocks will open lower and then we’ll see how many folks can stay awake for the
Treasuries are 2 basis points
better this morning with the ten—year at 4.28% and the five-year at 3.56%. The
Treasury two-year is at 3.07% and it is getting interesting to us.
Oil is at $42.20 up 42 pennies
and gold is down $5 at $440.
9:45am and the DJIA is lower while the NAZZ is a bit higher. Crude
oil inventories were down instead of the expected up and so crude is holding up
43 pennies. Volume is light and breadth is slightly positive on the NYSE and the
reverse on the NAZZ. Existing Home sales were up 2.7%.
We are selling more TLB today at $27.47 and are placing some
of that money in an equal share amount of Seibel
We are also buying SBC and Fifth Third Bank for some of our larger accounts.
12:36pm and crude oil surged higher as two bomb blasts in Saudi
Arabia gave the boys and girls a trading opportunity. Oil is up 133 pennies at
$43.10 and stocks are lower in the bargain. The ten-year Treasury is at 4.31%.
The two-year auction came at 3.12% with a bid to cover ratio of 2.
and the DJIA closed
down 22 points at 1832. The S&P 500 gave up 2 points to end at 1212 and the
NAZZ last 1 point to 2176. Breadth was 5/4 positive on the NYSE and slightly
negative on the NAZZ. The ten-year finished at 4.32% and the five-year at
3.68%. Oil closed 187 pennies higher at $43.64.
And tomorrow is today and the day
before the last day of the year. So let the games begin.
And here is the bad news from the Norse game on December 28. Better
luck tonight December 30 we hope.
MICHIGAN DEFEATS NKU, 69-58
nets 26 points as Wildcats hand Norse road setback
- Think it’s cold in the upper
peninsula of Michigan during late December on the outside?
Just check out the first-half shooting performance by Northern
University inside the
Berry Events Center on Tuesday night.
NKU shot just 5-for-26
(19.2 percent) from the field in the first half against Northern
Michigan. The Norse also converted a frigid 33.3 percent
of their free throws
during the first 20 minutes and missed 12 of their 13
attempts from three-point range.
NKU managed just
14 points before halftime and never recovered as Northern
Michigan coasted past the
Michigan, which held a 29-14 halftime advantage, led by as
many as 22 points in the second half and improved to 5-5.
“It wasn’t a case
of bad shots, but it was a case of bad shooting,” NKU
head coach Dave Bezold said. “We had wide-open looks, we
and we had free throws. We didn’t make anything in the first
half, and it is hard to stay in a game when you can’t make
One player who
had little trouble making shots was 6-foot-7 forward Ricky
Volcy, who netted 13 of his game-high 26 points in the first
12-for-14 from the field and also grabbed nine rebounds for
Marco, finished with 10 points and nine rebounds. Northern
Michigan shot 45.9 percent from the field and won the rebounding
battle by a 44-36 margin.
outplayed us in every respect, and there are no excuses,”
said Bezold, whose team dropped its third straight game to
fall to 5-5 on the season.
built a 45-23 lead with 15:04 remaining in the game on a
three-pointer by Randy Alexandre. NKU sliced the deficit
to 55-43 with 6:19 left when Kevin Schappell drained a three-pointer,
but a turnover and a basket by
Ricky Volcy stopped the Norse’s momentum.
“We were within
12 points and had the ball, but then we travel with the ball,
and that really hurt us because we were making a good run,”
Sean Rowland led
NKU with 11 points, and he also grabbed six rebounds.
Mike Kelsey and Schappell each added 10 points for
chipped in with a career-high nine points, three rebounds
and two steals.
“I think we found
six or seven guys who really battled in the second half,
and those are the guys who are going to play Thursday (against
Michigan Tech),” Bezold said. “I thought Hawkins, Rowland
and Schappell really played hard and helped us a great deal.”
NKU finished the
game at 36.4 percent shooting from the field after making
51.7 percent of its shots in the second half. The Norse are
now 2-1 all-time in the series against Northern Michigan.
NKU will face Michigan
Tech at 7 p.m. Thursday at Houghton, Mich., to conclude the
two-game road trip in the upper peninsula. The Norse upset
then-No. 6 Michigan Tech, 55-53, Nov. 19 in the season opener
in Regents Hall.
29 December 2004 Daily Comment
6:53am and the only news for the boys and girls to trade on today
is the Consumer Confidence number at 9am.
We presume it will be another slow day.
The NYT has a story that mentions
slow sales at Tiffany. We have the
two retailers (TLB, TIF) and we want
to trade out of them since many of our other stocks are doing well and we want
to stay with the strongest. At year end retailers are subject to tax loss selling
and ‘get me out’ selling but they are also dependent on holiday sales numbers
that are announced the first week in January. A bad number can blow up a stock
and we don’t want to be there when that occurs.
still digesting the terrible tsunami news and so are we. Japan
and Hong Kong were a tad higher overnight and Europe
is mixed. Oil is up 13 cents at $41.35 and U.S. futures are flat.
9:02am and Consumer Confidence came at 102 for December versus an
expected 95 and a revised November number of 92. The boys and girls like that number
and have taken the major measures to their highs for the day. We sold our TIF holdings at $31 on the news and
would like to get out of TLB but it
needs to rise a bit before we sell. Retailers have always been anchovies to us
and they aren’t acting well so the discipline is to sell. Actually, we made a
couple of dollars per share on the TIF so we are happy with the trade. We are
putting the TIF money in Schwab at
$12.01. As most of our clients know we like the stock and it has done well for
us. We are also going to buy more SEBL
with the funds.
11:02am and we are selling a small amount of HAIN every day as it moves higher. It is a thin trader and we don’t
know how high it is going before year end. We have a nice trading profit and we
are selling it in the tax-free accounts first. We also are trying to unload
some Talbot’s at $27.40 which is a
$1.50 per share loss to reduce the size of that holding in some accounts.
We had a nice profit in TLB and didn’t take it in late November
and we are kicking ourselves now. But that is spilled milk and useless kicking
and since accounts are at their yearly highs we are mainly interested in
positioning them for the New Year. We think TLB is cheap but if their numbers
are bad in January the shares will get cheaper and if the numbers are good the
stock we own will go up in price.
11:33am and as the news continues to surface from Southeast
Asia the calamity caused by the tsunami is becoming more tragic.
Interestingly, because westerners are among the casualties there is much more
interest in Europe and America
that there would be if it were a monsoon or ferry sinking disaster. The amount
of euros lost and the cost in lives is going to place this event as one of the
most disastrous of the last two centuries outside of war.
and breadth is
2/1postive. The major measures remain higher in holiday trading. Treasuries are
weaker with the ten-year at 4.31% and the five-year at 3.67%. For the year the Lehman Intermediate Treasury Index has
a total return of 2.73%.
and oil closed up 45
pennies at $41.77.
and the DJIA closed
up 80 points at 10855. The S&P 500 gained 8 points to end at 1212 and the
NAZZ rose 21 points to 2175. Breadth was 2/1 positive at the close. Volume was
And tomorrow is today so let the
28 December 2004 Daily Comment
8:52am and we have just returned from taking the prince for a ride in the new pony cart. It was a bit chilly but fun.
The major measures are higher but volume is slow as it will be all week. And our posting will also be slow because it is not interesting to write
about paint drying. Crude oil is down $1.75 at $42.45. That is a positive for as long as that lasts. There is supposed to be a warm up this week
at least where we are.
1:06pm and crude oil is now down $2.63 at $41.55. $40 will set off a rally. The paint is drying and the major measures are up and down on
very little volume. We are napping in between to catch up on our sleep so we can keep up with the grand children. Breadth is negative but the
final hour may bring a higher close if oil remains down. Treasuries are weaker with the ten-year at 4.28% up 10 basis points and the five-year is at 3.64%.
3:02pm and crude oil ended at $41.26 down $2.92. Treasuries closed a tad above their lows for the day and the DJIA finished down 40
points at 10785. The S&P 500 dropped 4 points to end at 1206 and the NAZZ lost 6 points to close at 2155.
And tomorrow is today so let the games begin.
27 December 2004 Daily Comment
6:09am and Southeast Asia seems to get the brunt of the bad news. The earthquake and tsunami killed thousands of folks over the week-end.
Shopping news seems to be good for retailers while the weather results were terrible for the airlines and the weather this morning in the
northeast is going to make a slow day even lower.
Oil is down $1.43 with a $43 handle and Asia was lower and Europe slow with London closed for Boxing Day which is England’s gift giving day.
This week the markets will be open all week for last minute selling and buying. We’ll be around, in and out, and doing more watching than trading.
So let the games begin.
Abigail Bezold and Dave Bezold, Lisa Lemley Bezold, Bud Lemley, Katie Lemley, Christine Lemley, and Tyler Bud Bezold (on swing) - 2004
24 December 2004 Daily Comment
6:44am and this is going to be a slow day as folks have many other events on their minds. The markets are closed on the 24th and will
reopen on Monday the 27th.
We continue to wait for our stocks to do their thing as year end approaches. Until then we would like to present our Christmas thoughts.
Thoughts at Christmas
To be happy is to love and be loved.
Love is both a quantity and a quality.
The more people you love and are
loved by, the happier you are.
The concept of love is personal.
It is difficult to conceptualize love,
to talk about love and to relate to love
since love is always limited
by custom and time and strength.
When love becomes personal
in its intensity for the giver
and impersonal in its direction,
love is complete.
In a place where all try to love,
love will be. For with love
as with no other emotion,
to make the effort is to succeed.
Personal love cannot be talked about
in public, in politics, or even in church.
In these places love is a concept and a hope.
The reality and humanity of Christ and Ghandi
was their personal involvement and risk taking,
their personal love given freely and unconditionally.
Change occurs with love, not dialogue.
To do, to help, to love is not for government
or organizations but for people.
To wrestle with who we are and what we are doing
is to begin to love.
To constantly question one's own risk level,
To take small steps instead of rejecting the large,
and to love,
are the requirements of being human.
To be human is the first and only concern.
To be human is to love,
and to love is to be concerned.
To limit love is to destroy love.
To direct love is to weaken love.
To love and beloved is the ultimate end
of freely giving and yet
time and our human relationships usually
prevent this reality.
BL, Christmas 2001/2004
23 December 2004 Daily Comment
6:48am and there has been a shakeup at Fannie Mae with Franklin
Raines out as CEO and KPMG out as accountants. This should be a positive for
the stock and the markets. Also, QualCom had better than numbers and we think
Research in Motion’s numbers and forecasts were better than but we aren’t sure.
Since these last two are momentum favorites, the good reports should add a positive
tone to an already positively toned market.
was up and Hong Kong down and Europe
is up. Oil is lower, the dollar is firmer and U.S.
futures are flat.
BankAmerica has lowered its
outlook for fourth quarter earnings on eight retailers including Ann Taylor and
The Gap and Limited. That should lead to a little selling in those stocks early
today. Only 9 days left to eliminate your losers although The Limited has been
a good stock this year.
7:32am and the trading number for
today has been released. 3rd Quarter GDP was announced as a final up
4% versus 2nd Quarter GDP of 3.3%. The Deflator (inflation) was
1.4%. Business and software spending was strong.
9:26am and the DJIA is up 10
points while the NAZZ is off 1 point. Fannie Mae has opened higher and since it
is a stock with a lot of shorts the contest over what the resignations means is
being fought in the dollar price of the stock. So far the bulls are winning. We
are picking up a few shares of Fifth Third Bank at the $47.50 level for
aggressive accounts and also buying more RFMD at $6.85 for aggressive accounts.
9:48am and stocks are rallying as
crude oil is off 196 pennies at $43.80 on news that crude oil inventories are
up 2 million barrels and gasoline 1.8 million in the latest period.
and entering the contra hour the major measures remain higher as trading slows
significantly. Trading in various stocks is thinning and with the lack of volume
enterprising boys and girls can have some fun if they wish.
Oil remains down 150 pennies at
$44.30. The S&P broke above the 1208 number this morning but has pulled
back below. Drugs are seeing a bit of buying and we are watching the birds eat
at the feeder in the far field that on the Solstice yesterday we filled with
seed for the winter season.
Happy Birthday Puccini!
Bobblehead Night and the Norse basketball game were cancelled due to the snow that grandpa ordered for the prince and
princess of Taylor Mill for Christmas.
3:02pm and the DJIA closed up 60 points at 10820. The S&P 500
gained 5 points to end at 1210 and the NAZZ tacked on 8 points to 2158. Breadth
was 6/4 positive at the close. Oil lost 152 pennies to end at $44.24 and failed
this morning right at its down trend line. Treasuries were a bit weaker with the ten-year
at 4.20% and the five-year at 3.57%.
And tomorrow is today so let the
games begin. It will be a slow one.
22 December 2004 Daily Comment
7:32am and now Naproxen
known better under the trade name Aleve
has been found to increase the risk of heart attacks by 50% in folks who take
it regularly according to one study by NIH. That’s one way to permanently cure
pain. Bayer, BAY, makes Aleve which
is the old Syntex drug. Syntex was a
particular thorn in our side the last time drug stocks were under attack in the
early 1990s and we were trying to make a buck buying down and out drug stocks. The
problem was they kept getting more down and out, especially Syntex which
eventually went to drug stock heaven or drug investor hell. Roche eventually bought Syntex in
Happy Winter Solstice. Tomorrow
(today) there will be more daylight again as we begin the six month frolic to
the Summer solstice.
There is no economic data to be released
today so the boys and girls are going to have to trade on their own whims. Europe
is a bit higher and Asia was mixed. Oil is off a few
pennies, the dollar is infinitesimally better against the euro and yen and Treasuries
Smith Barney on Tuesday initiated
coverage of Qwest Communications with
a "sell" rating and a price target of $3.50.Shares of Q rose 2.6 percent to $4.34 in morning trade on the New York Stock Exchange.
Maybe folks read the recommendation incorrectly. Anyway, we are holding.
Morgan Stanley cut Time Warner’s rating on a valuation
basis and the shares are off a few pennies this morning.
11:01am and the DJIA is 40 points higher with the NAZZ up 12
points. We are selling SGP and BMY
since we have a profit in both and we are never comfortable owning drug stocks.
SGP is on its high for last sixteen months and Bristol Myers is at a 6 month high.
We are in our ‘time to put some cash back in the accounts’
mood and these are our first sales. We are not looking to buy any more stocks.
1:02pm and trading is
slowing as the holiday week-end approaches. The tragedy in Iraq
today hasn’t affected the markets and we would guess that most trading is going
to be on cruise control through year end. We think there may be a pop in HAIN towards year end and if there is
we will take profits since that stock must be sold when there are buyers or
folks tying to mark the share price higher. Andrew is another issue that may climb higher into year end. But in
the main we don’t expect many of our stocks to move till after the New Year
3:02pm and the DJIA closed
up 98 points at 10760. The S&P 500 rose 10 points to 1204 and the NAZZ was
up 22 points to 2150. Breadth was 2/1postive and oil closed up 2 pennies at $45.75.
Treasuries were a bit better with the ten-year at 4.17% and the five-year at
And tomorrow is today so let the
games begin. By the by the Norsemen
play tonight so we will have the results tomorrow.
21 December 2004 Daily Comment
7:06am and The Financial Times is saying that
Nokia has reaffirmed its forecast of
10% cell phone sales growth for its fiscal year. Some analysts had been
questioning that figure and Nokia also says that sales could be better than
that with a good third quarter selling season. Bear Stearns has added Nokia to its focus list. Thank you Bear
There is not a lot of economic
data for traders this week. The markets are closed on Friday and so the big
boys and girls will have to cram all their trading into four days.
This morning we get Leading Indicators
at and then there is nothing till Wednesday
with Thursday being the big info day.
Wednesday has final 3rd Quarter
GDP and the final inflation figure for Quarter 3.
Thursday brings: Durable Goods
Orders, New Home Sales, Jobless Claims, and Personal Income and Personal
Spending. All the numbers will be for November except jobless claims which are
for the prior week.
10:28am and Leading Indicators for November were up 0.2% when 0.1%
was expected. Stocks opened higher with good breadth. They are pulling back a
bit and breadth has turned negative on the NAZZ. Friday’s expiration is being
unwound and after a somnolent hour or two the trend of up for the next week or
two may hopefully emerge.
We are buying a chunk of Seibel for accounts at $9.90 and that
should wrap up our year end buying. Seibel has $2 billion in cash and no debt.
Revenues are $1.3 billion and market cap less the cash is $3 billion.
Siebel Systems, Inc. is principally engaged in the design,
development, marketing and support of Siebel eBusiness Applications, a family
of enterprise applications that help organizations manage their relationships,
including their interactions with customers, partners and employees. A
substantial portion of its business applications is focused on the Customer
Relationship Management market. The Company also provides professional services
and technical support organizations, through its Global Services Organization.
Services include a range of implementation services, training and technical
support to its customers and implementation partners.
11:33am and crude oil is down $1.10 at $45.10.
3:02pm and we didn’t have
much to say today. Since we are fully invested we now await year end and beyond
to see if our crystal ball is working correctly.
At the bell the DJIA was up 12
points at 10662. The S&P 500 was up 1 point at 1195. The NAZZ was down 7
points at 2128. Oil closed down 64 cents at $45.64. The ten-year Treasury ended
at 4.19% and the five-year at 3.58%. Breadth was 2/1 negative on the NAZZ and flat
on the NYSE. Santa Claus and his rally delayed their arrival.
And tomorrow is today so let the
20 December 2004 Daily Comment
6:45am and the winds are howling but we have no snow as we begin the day. There is a toasty fire in the wood stove so all is warm here in the
land of milk and homey.
We would think that today may see a reversal of the negativity of Friday. The Pfizer news is old hat by now and the talking heads are arguing
about whether or not Celebrex should be pulled from the market. Folks who own or work for Pfizer say no: folks who are short Pfizer or
dislike the drug companies say yes. We don’t care because we have no dogs in that hunt.
Oil is lower in the early going. U.S. futures are higher as is Europe. Hong Kong was up big-time and Japan was a bit higher. Treasuries are a
little weaker with the ten-year at a 4.20% versus 4.19% on Friday. The dollar is better against the yen and the euro.
So let the games begin
18 December 2004 Daily Comment
7:32am and CPI (the Consumer Price Index) for November was up 0.2%.
Core CPI was also up 0.2%. Today is the final Quadruple Witching of the year
and there also is rebalancing in many of the major indexes at the close today
so it may be a wild ride for some individual stocks.
was up 150 points while Hong Kong was off 32 points. It’s
interesting that all three major country measures the Hang Seng, the Nikkei,
and the DJIA are floating around the 10,000 level.
lower and the dollar is up a bit against the euro and down a tad versus the
Gold is up $2 at 440 and Oil is
up 22 cents at $44.40. Treasuries are flat with the ten-year at 4.18% and the
five-year at 3.57%.
Alan Questrom, the former CEO of
JC Penney is on CNBC and his quote of the day is that “The mall is not dead; it
will continue to be important in the future.” Wow!!!
And the talking heads at CNBC
managed to spend five minutes discussing that topic.
3Com announced earnings last night and depending on the news
service the report was:
Whatever, the share price is
lower in early trading. We will buy more if it continues to sell off. The news
they announced was expected and we think the fall is much more related to the
large price they are paying for a relatively unknown company. They are betting
a large chunk of money on a process that they hope will get theme some respect
in the router area. The stock is an anchovy with us and we are still interested
in the year end bounce.
Stock futures expire on the open.
The options expire on the close. Year over year the CPI was up 3.5%. year over year Core CPI (inflation) was up 2.2%
8:38am and Pfizer has opened yet
but they are out with a press release saying one new study shows an increased
risk of heart problems with Celebrex while another one doesn’t. The shares are
going to open down about 4 points and that will place the DJIA firmly in
negative territory. Not to worry though, tort reform is on the way just in time
to rescue Merck and Pfizer from the clutches of the awful plaintiffs bar and
those money grubbing folks who suffered heart attacks from taking these drugs.
Haven’t folks heard of Caveat Emptor?
11:30am and stocks are absorbing
the Pfizer news. Crude oil is up
$1.37 at $45.65 and that isn’t helping matters. Treasuries are weaker with the
ten-year at 4.22% up from 4.17%. The DJIA is down 45 points which is mainly
Pfizer (30points of the 45)off over $4 and the NAZZ is
down 5 points. Breadth is 2/1 negative. We have read that there is a sell bias
on the close today but we don’t know whether it is being absorbed during the
We added Hewlett Packard to accounts at $21.05 and we’ve decided to also buy
Seibel at $10.08 in some larger and
aggressive accounts. We have owned SEBL off and on over the years and with $4
per share in cash and no debt we are attracted to this software company. There
have been some acquisitions in the software area recently and while we don’t
think SEBL is a takeover target the acquisitions emphasize what other companies
see as value in this area.
We also added a few shares of Newell Rubbermaid to a few accounts and
we are adding 3Com at the $3.80
level to accounts in which we sold Micron
the other day.
and the DJIA has
been down 50 points for three hours. Oil is now up $2.07 at $46.22 and that is
not helping. The S&P 500 is off 9 points and Treasuries remain off for the
day. Breadth is not improving. We will see what the final hour brings.
Lucent named Andrew Corp
their Supplier of the Year. Way to go ANDW.
and the DJIA closed down
50 points at 10655. The S&P 500 off 9 points at 11195 and the NAZZ lost 10
points to end at 2135. Breadth was 5/4 negative at the close. Oil closed up $2.10
at $46.30 and Treasuries were lower with the ten-year going out at 4.19% and
the five-year at 3.59%. Europe closed lower today with France
both down over 1%.
Pfizer traded 280,000,000 shares today. That single day volume in one
stock PFE is greater than the total share volume for all stocks listed on the
NYSE for any year before 1946.
Martha sold $8 million worth of stock in her company this week. She
probably had to pay her legal bills. She got her money’s worth.
And tomorrow is today which is
Saturday. Enjoy. We will have a new post Monday AM.
17 December 2004 Daily Comment
6:42am and the month of
takeovers continues. Johnson & Johnson
is going to buy Guidant Technology
which will consolidate the makers of heart stents to two. And United Technologies is going to buy Kidde. Finally Symantec will buy Veritas
Software. And those are only today’s announcements. Visions of big fat
sugar plum bonuses must certainly being in the dreams of investment bankers
this holiday season.
In somewhat good news for Qwest and SBC and BellSouth:
In a 3-2 vote along party lines, the Federal Communications
Commission ruled the big carriers, known as the Baby Bells,
should continue to provide discounted rates for rivals to serve
business customers where the agency says competition is
But under new rules for the residential market, the Bells
would no longer have to provide the access to their networks
which has allowed rivals to serve homes at a low price.
The FCC has been trying for eight years to set local
telephone rules to promote competition for services, but three
previous attempts have been struck down by a federal appeals
Democrats on the commission argued that the latest rules
would crush competition for local telephone services and lead
to higher prices while the Republican majority said the
decision had to satisfy the appeals court.
Competitors will have a year to move their existing
business and residential customers to their own facilities, or
face higher rates for access to the Bell networks.
We’ll see how the markets react.
The RBOCs were lower yesterday after this news came out.
lower over night and so was Japan
and Hong Kong. U.S.
futures are slightly lower. Gold is up $1.30 at $443 and OIL is off a bit. The
dollar is better against the yen and lower against the euro. Treasuries are unchanged.
Today is the beginning of
Quadruple Witch and so anything or nothing may happen. Bulls have been carrying
the day for the last six weeks and we presume that trend will continue.
Over the next six weeks
Republicans are going to change the perception if not the reality of the
economic outlook in the U.S.
Since only words and promises will be forthcoming for a while and because the
psychology of the markets is predisposed to like what it hears and act
accordingly we think the up trend will continue at least though the January
Inauguration. We were thinking this morning of a top in March to go with the
2000 top but that might be too cute.
We will ride the rise for a while
more but at some point we are going to start throwing bags of stocks off the
train as it gathers steam.
7:32am and Jobless claims dropped 41,000 to 317,000. Housing starts
were down 13% in November while Housing Permits rose 4.2%. The Current Account
Deficit was a record 165 billion in November. We don’t think any of this means
anything to today’s market action.
9:37am and Treasuries are lower with the ten-year at 4.18% and the
five-year at 3.64%. Crude oil is down 29 cents. The dollar has rallied against
the euro and yen. Stocks are mixed.
Martha Stewart may decide to stay in jail as her stock is up
another $2 today at $32 and near its all time high. She is now once again a very
rich lady. Good for her. All the talk media morons who attacked and vilified her
are stewing in her luck.
We bought a few shares of Nokia at $15.39 and HPQ at $20.85 and Schwab at $11.98 but in the main we are watching and want to get
through witching today and tomorrow.
Rite Aid announced lousy earnings, in fact a loss and warned on
next year. The share price is down 10 cents. Now that earnings have been
announced and that number is out of the way for three months the stock will be
able to move higher after year end.
11:28am and breadth is 5/4 negative. Oil is down 1% and the major
measures are mixed with the DJIA up 27 points and the NAZZ down 4 points. We
are adding Ciena at $2.90 and JDS Uniphase at $3.12 to accounts in
equal amounts to the Micron Tech
that we sold yesterday. Ciena surprised with better sales and less loss last
week and JDSU continues to plod along with $1.2 billion in the bank. We are
buying the two stocks as part of ourSpeculative package which now totals
six stocks in most accounts.
Supposedly there is a shortage of
Apple iPod for the Holiday season. We don’t know how many
folks know that HPQ offers an HPQ branded iPod licensed by Apple. Look for a
push to HPQ share price as folks discover this fact.
HPQ has been waiting patiently to be able to
offer its iPod. The company had originally planned to offer a model this summer
based on Apple's third-generation design. However, the company decided to wait
until September to ship the iPod to use the new "click-wheel" design.
HPQ's version is expected to be similar in price to the Apple models; the 20GB iPod
sells for $299, while the 40GB model sells for $399.
3:02pm and the DJIA closed up 15 points at 10705. The S&P 500
lost 3 points to end at 1203 and the NAZZ dropped 15 points to end at 2145.
Breadth was 2/1 negative at the bell. Treasuries gave ground today with the
ten-year ending at 4.18% and the five-year finishing at 3.67%. Oil closed off 1
cent at $44.18.
And tomorrow is today, so let the
16 December 2004 Daily Comment
6:48am and with yesterday’s close
above 1200 on the S&P 500 our guru is saying the markets are a bit
extended. They can get more extended but if they do, the pullback will be that
much sharper. If we were trading indexes we would take some money off the table
today but since we are trading individual stocks we are going with the flow and
our year end strategy. It’s 10% up or bust with us for the Model Portfolio and
almost that much or much better for individual accounts depending on the risk
profile of the account.
Speaking of sharp, our farrier
John Sharp will be here this morning to prepare the horse and ponies’ hooves
for their annual holiday visit from the prince and princess of Taylor Mill. As
a result we will be in and out this morning.
Most of our Christmas shopping is
finished except for dealing with our one problem stock this year which is 3Com. COMS is either presenting us with
the greatest buying opportunity since ORYX a few years ago, or a great
disappointment. We bethink the strong sell off to a new ten year low on the
announced purchase of TippingPoint is the result of several large mutual fund
holders and institutional investors saying by by to the shares and not caring
for what price they received since they are taking a loss anyway. These sell
offs at the end of the years in low priced speculative stocks, if painful, are
not all that unusual, in fact AT& T Wireless and Sprint PCS did the same
We are going to stay with our
present position but if the stock moves below $3.50 we will be buying another
tranche. Timing is somewhat important since the share price will probably be
under pressure through year end and we don’t want to spend the rest of the
money we will commit until we see the lows. And so we will be watching and waiting
for opportunity. 3Com earnings will be announced tomorrow and they already
predicted disappointment so we hope that is in the price of the stock.
3Com has no debt and will be left
with $800 million cash after the TPT purchase. Even though COMS is losing money
we think the risk/reward justifies playing the odds with the share price at
11:50am and stocks are lower in
moderate trading. Oil is $1.80 per barrel higher in part because of the
bankruptcy of Yukos and in part because the hedge funds are trying to make a
All the gurus are suggesting
stocks are extended and need a rest and we are agnostic. Breadth is positive
and the S&P 500 is holding above 1200 so we will see what the rest of the
Andrew Corp is off again and we bought a few more shares at $13. We
also are adding Newell Rubbermaid to
a few of our larger accounts. NWL has been having problems making money since the
Rubbermaid acquisition more than a few years ago and we are betting that the
payoff is near. The rising price of plastics and oil are not a help and are squeezing
margins but the stock is near its low and if stocks take off next year it is an
economy type stock that should participate. Also just yearend arriving should
remove selling pressure.
Morgan Stanley was nice enough to
lower its rating on Rite Aid to
under perform from market perform because the last six months of same store
sales comparisons have not been good. The stock is off 13 cents per share on
the downgrade. We own enough but the downgrade and resultant selling should
clear the way for a nice bounce after year end. That news is not news.
2:06pm and entering the final
hour stocks are trying to move higher but the $2 plus rise in he price of oil
is a large detriment. We decided to eliminate our holdings in Micron Technology for a scratch at
$11.84. We own a bit too much in tech and while the stock is cheap we would
rather have the cash available than own it and we are more comfortable with our
other tech and telecom names.
and the DJIA closed up 17 points at 10693. The S&P 500 gained 3 points to
end at 1205 and the NAZZ gained 3 points to 2163. Breadth was 2/1 positive at
the bell on the NYSE and 5/4 positive on the NAZZ. Oil finished at $44.19 up
$2.38. Treasuries were firm as the ten-year went out at 4.08% and the five-year
And tomorrow is today so let the games begin.
Special Post 15 December 2004
The commissions on the purchase of QWEST yesterday were billed at 25 cents per share when they should have
been billed at 2.5 cents per share. They are being corrected today.
15 December 2004 Daily Comment
From our website
counter of daily readers we know that for some reason Monday was a slow day on
the website and so many regular readers of the website missed our Monday
comments on the stocks we currently own. We spent most of Sunday afternoon
composing that missive and so we are re-running that post at the end of this post.
5:53am and here we are. We are in
an early to bed, early to rise mode and so all the night clubs in Soldiers
Grove are suffering.
was higher with Hong Kong and Japan
strongly higher. Europe is to the plus side and U.S.
futures are below fair value and at the present indicating a lower opening. The
NYT is suggesting a Symantec acquisition of Veritas so it looks like the investment
bankers are going to be having a good year as companies take advantage of the
laizzez faire attitude of the Republicans to grow though combination.
This morning’s NYT also has a
story about how Motorola is going to
lose all its NexteliDEN business with the merger. That
should pressure the share price again today. If it doesn’t we would guess that
the storm has passed for now at least.
We are considering adding more 3Com to accounts on the share price
drop yesterday that was occasioned by the announcement that COMS was buying
TippingPoint Technologies for $430 million. The net cost will be about $400
million since TPTI has $30 million in cash on the books.
3Com obviously believes that the technology
it is buying will be beneficial to sale of its products and the addition of
front end intrusion prevention systems to its internet connection products does
make sense. At 6% the $400 million would produce $24 million although the risk
free Treasury return would be closer to $15 million. Unfortunately, TPTI is
losing money and so the synergies have to be excellent to justify the merger.
But life is about risk and these guys have been flailing since their hot streak
in the early and mid 1990s so they may as well use the cash to build a new
product that has potential than sit around and watch the cash go down the
issued a news release that suggests that the weeping and gnashing over the
NXTL/FON merger hurting the MOT/NXTL relationship is a bit overblown. We don’t
think this new release is an accident of timing.
Nextel and Motorola Announce Innovation of Direct Talk, the First Off-Network Walkie-Talkie Feature Integrated with a Mobile Phone
RESTON, Va. & PLANTATION, Fla. --(Business Wire)-- Dec. 14, 2004 -- The Rugged Motorola i315 and i325 Provide a Reliable Back-up Communication System for Public Service Workers
Nextel Communications Inc. (NASDAQ:NXTL) and Motorola Inc. (NYSE:MOT) announced the availability of Direct Talk(SM), a unique service that provides a back-up off-network walkie-talkie service for use when customers are outside Nextel network coverage areas. This service, available only on the Motorola i315 and i325 from Nextel, provides a range of up to six miles(1). Nextel is the first national carrier to offer this type of off-network service integrated directly into a cellular handset.
Direct Talk is the first service of its kind to allow digital group and private walkie-talkie calls through 10 channels and 15 privacy codes, allowing for higher voice quality than traditional analog radio communications. The user can easily activate Direct Talk by entering "off-network mode" through the phone's keypad. Direct Talk is also the only service that provides users with an acknowledgement tone, letting them know instantly whether or not someone is available on their channel.
The Motorola i315 and i325 rugged handsets are the first handsets equipped with the off-network walkie-talkie feature. The handsets are designed for use by public sector and field-based workers, as well as people who enjoy rugged outdoor activities, who may require a durable handset with a back-up communications system.
Key features of the Motorola i315 and the i325 include:
-- Nextel Direct Connect(TM) instant walkie-talkie service - Nextel's coast-to-coast and country-to-country digital walkie-talkie service
-- Rain-Resistant - Certified to Military Standard 810 F for blowing rain, humidity, and salt fog
-- Rugged Design - Performs in extreme outdoor conditions and stands up to dusty environments, drops, and exposure to vibration from heavy machinery use and hot/cold climates
Additionally, the Motorola i325 includes these unique features:
-- Emergency Call Button (for Public Sector use only) - Provides priority, preemptive access to network resources during times of heavy congestion
-- Priority Connect (for Public Sector use only) - this feature intelligently applies five levels of priority service to place a Direct Connect(R) call ahead of others in time of network congestion
-- Talkgroup Scan Service Support - Monitor communications on up to four talkgroups simultaneously
-- Fixed antenna for durable and enhanced performance in fringe areas
-- Java(TM) technology-enabled
Pricing for the Motorola i315 is $174.99 with a 2-year contract. The Motorola i325 is available for $399.99 with a 2-year contract.
(1)Direct Talk is an all-digital off-network walkie-talkie service that works between compatible phones in up to a six-mile range under optimal conditions. Terrain, weather, foliage, and usage in or near vehicles and structures (such as buildings), among other things, may decrease performance and result in a significantly shorter range.
About Nextel Communications
Nextel Communications, a FORTUNE 200 company based in Reston, Va., is a leading provider of fully integrated wireless communications services and has built the largest guaranteed all-digital wireless network in the country covering thousands of communities across the United States. Today 95 percent of FORTUNE 500(R) companies are Nextel customers. Nextel and Nextel Partners, Inc. currently serve 297 of the top 300 U.S. markets where approximately 259 million people live or work.
About Motorola's iDEN Subscriber Group
Motorola's iDEN handsets combine the capabilities of a digital wireless phone with "always on" Internet access, text pager, and two-way radio to enable users to instantly communicate with one or many individuals at the push of a button. For further information on iDEN handsets, visit www.motorola.com/iden.
Motorola, Inc. (NYSE:MOT) is a global leader in wireless, broadband and automotive communications technologies that help make life smarter, safer, simpler, synchronized and fun. Sales in 2003 were U.S. $27.1 billion. Motorola creates innovative technological solutions that benefit people at home, at work and on the move. The company also is a progressive corporate citizen dedicated to operating ethically, protecting the environment and supporting the communities in which it does business. For more information: www.motorola.com.
MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. (C) Motorola, Inc. 2004.
The FOMC (Federal Reserve Open Market Committee aka Alan Greenspan and
friends) will make their interest rate announcement today at . The boys and girls may wait till then to
begin to play in earnest.
7:32am and the Trade Deficit was
$55 billion in October. Treasuries are a bit weaker on the news. Oil is up
29cents at $41.29.
From a Business Wire Press
Release: Charles Schwab Corp. the
biggest U.S. discount brokerage, on Tuesday said customer stock trading rose 25
percent during November, reflecting enthusiasm by individual investors and
recent price reductions by the company. Schwab, based in San
Francisco, reported 192,100 daily average revenue
trades for November. The company said it brought in $4.6 billion in new
customer cash in November, bringing its total assets to $1.05 trillion.
For all of you who are going to miss Dave Bezold BOBLEHEAD NIGHTwe present a view of what you are missing.
(Dave is our son-in-law)
Dec. 13, 2004
BOBBLEHEAD DOLL NIGHT ON DEC. 22
NKU to meet UC-Clermont for
Dave Bezold Bobblehead Night
HIGHLAND HEIGHTS, Ky. - The
Northern Kentucky University mens basketball team will
play the University of Cincinnati-Clermont at 7:45 p.m. Dec.
22 in Regents Hall on Dave Bezold Bobblehead Doll
The first 1,000 fans in
attendance for that game will receive a bobblehead doll of
Bezold, who is in his first season as the Norses head
coach. Call (859) 572-6639 for ticket
NKU and UC-Clermont have
never played in mens basketball.
Dave Bezold Bobblehead
The attorney for Gary Winnick, the founder and
former chairman of Global Crossing
Ltd., said Monday he has been told that his client will not be charged or fined
by the Securities and Exchange Commission after a lengthy investigation of the
fiber-optic company's finances.
The SEC's two-year probe of Global Crossing has
focused particularly on its swaps of fiber-optic network capacity with other
Enforcement attorneys at the agency recently
recommended a fine against Winnick as part of a settlement with the SEC. But the SEC commissioners voted 3-2, on
party lines, on Thursday to reject the staff attorneys' recommendation, a
person familiar with the matter said Monday. The person, who spoke on condition
of anonymity, confirmed a report in Monday's editions of The Wall Street
Journal. SEC Chairman William Donaldson
is said to have sided with his fellow Republican commissioners Paul Atkins and
Cynthia Glassman in opposing the sanction at a closed-door meeting.
"We are gratified that after a thorough and
complete investigation with which we fully cooperated, the SEC has determined
that no charges should be brought against Gary Winnick," his attorney,
Gary Naftalis, said in a statement. "We always believed that the evidence
demonstrated that Gary Winnick acted lawfully and properly in connection with
George Bush # 41 made millions of dollars on
Global Crossing options given to him for a speech he made. Terry McAuliffe the
former DNC chairperson also made a fortune on the stock. Gary Winnick by some strange
happenstance realized over $150 million in proceeds of sales of his shares
before the company collapsed.
10:09am and stocks are mixed with crude oil up
39cents at $41.40 and Treasuries a bit weaker. The ten-year is 4.17% and the
five-year is 3.56%. volume is moderate and breadth is flat on the NYSE and 5/4
positive on the NAZZ.
We have decided to add more Qwest at $4.17 to many accounts rather than significantly increase
our COMS holding in smaller accounts. We are going to buy more COMS at $3.93
but only in larger accounts. The drop in the equity value of COMS in the last two days about equals
the $400 million they are going to pay for TPTI. We bought COMS as part of a
package and we are trying to keep the share holdings of each stock relatively
even. That seems to work best with the package approach. COMS will bounce back
and may turn out to be a wash for us but that goes with the territory.
and the FED raised the Fed Funds rate to 2.25%. Their statement:
Open Market Committee decided today to raise its target for the federal funds
rate by 25 basis points to 2-1/4 percent.
Committee believes that, even after this action, the stance of monetary policy
remains accommodative and, coupled with robust underlying growth in
productivity, is providing ongoing support to economic activity. Output appears
to be growing at a moderate pace despite the earlier rise in energy prices, and
labor market conditions continue to improve gradually. Inflation and
longer-term inflation expectations remain well contained.
Committee perceives the upside and downside risks to the attainment of both
sustainable growth and price stability for the next few quarters to be roughly
equal. With underlying inflation expected to be relatively low, the Committee
believes that policy accommodation can be removed at a pace that is likely to
be measured. Nonetheless, the Committee will respond to changes in economic
prospects as needed to fulfill its obligation to maintain price stability.
related action, the Board of Governors unanimously approved a 25 basis point
increase in the discount rate to 3-1/4 percent.
Stocks are mildly higher and Treasuries are firm.
Oil is at $41.75. The S&P 500 has crossed the 1200 mark for the first time
since it was there on the way down three years ago.we have added a few shares of Andrew to accounts at $13.85.
and the DJIA gained 40 points to end at 10680. The S&P 500 was up 5 points
at 1203 and the NAZZ rose 10points to 2160. Breadth was positive at the close.
And tomorrow is today so let the games begin.
Our accounts and the Model Portfolio are invested for Year End and
beyond we thought it would be a good time to review our holdings and the
reasons why we own each.
Speculative Package (12%)
3Com is a low
priced speculative stock that is part of our five stock year end package. We
have been buying out of favor stocks at year end since we began in the business
back in 1966. The package approach allows one or two stocks not to move while
the hope is that one or two will make 50% or better moves as the tax and position
3Com should not be confused with 3M. COMS is the old U.S.
Robotics/Palm combination that sold at ridiculous levels in the late 1990s.
COMS has no debt and cash per share of $2.50.It still makes stuff for computer connecting and such. Sales have been
falling and competition is great but net of cash the company is priced at $500
million with sales of $700 million. 3Com is losing money. This stock is part of
a package of five low priced stocks we own which add up to about 11% of assets.
Lucent is our
second low priced speculative stock. They make everything for the telecom
industry. LU is actually going to earn money this year. Cash on hand is $2
billion with debt of $5 billion. Sales are a bit under $9 billion and the
company has a market cap of $15 billion. We are looking for a 20% move after
Qwest is the
forgotten RBOC. Phillip Anschultz, a very rich man, owns 17% of the common and
he is the reason we keep coming back to the stock. With the new Sprint/Nextel
combination and the spin off of Sprint’s land line business there will be
consolidation in the land line business. Someone is going to buy Qwest once it
gets its legal problems settled. It has a ton of debt but the equity is priced
at $5 billion which coupled with the debt of $15 billion still only values the
$15 billion revenue company at $20. A $25 billion take out price would equal
$10 a share.
By the by, Sprint stole Sprint PCS when it repurchased the
shares last year and now it is going to spin off the land lines which is the
reverse of what it did five six years ago. Investment bankers win again.
Rite Aid is
speculation # 4. The share price reached $6 last year and in any bull run it
could again next year. We would be out of it by then. RAD has sales of $17
billion and new management has reduced debt by $2 billion over the last three
years. RAD has 3300 drug stores in 29 states. The equity in the company is
priced at $2 billion at present prices. RAD earns money.
is our final speculation. We owned the stock in the teens years back and we are
taking another flyer this year under $2 per share. At this level the company is
priced at less than one times sales and has enough cash to survive for as long
as we plan to own it. SGI makes computer stuff also and we own it because of
its price. It is a real anchovy.
We also own Cincinnati
Bell in some large accounts on our consolidation in the telecom industry
thesis. If it gets a bit cheaper we may make it the sixth low priced
speculation in many accounts.
Wireless Telecom Suppliers (18%)
The new watchword has moved from the 1960’s “Plastics my
boy, Plastics” to “Wireless my boy, Wireless.”
Andrew Corp was
in our portfolio last year and we were scared out before we made any money in
the stock. In fact in many accounts we realized a loss. It is a player in the
wireless telecom supplier area.We also
own Motorola and Nokia and RF Micro all of whom are involved in wireless telecom
off on Friday because Nextel uses their products and its system is different
from Sprints. The guessing is that eventually NXTL will convert to Sprint CDMA
but we think that the walkie-talkie feature that NXTL has and which NXTL has
used to sell their service is the kind of ‘add on’ that many folks won’t gladly
surrender. In any case, Motorola has been getting its house in order and just
recently spun off its commodity chip making arm to concentrate on the higher
tech proprietary stuff. Over the years MOT has shown the ability to reinvent
itself as tech fashions changed and advanced from the time of radio and
television, to color television, to satellites, and now on to wireless phones
and infrastructure. With $10 billion in cash we think it is good tech rebound
wireless available to Europe and is the largest wireless
manufacturer of cell phones. Periodically some other manufacturer gains market
share and the institutional boys and girls abandon the Nokia ship since it is
OPM the boys and girls are playing with. NOK has no debt, $4 per share in net
cash, $7 in total cash, and is priced at 1.5 times sales which have grown every
year for the last ten. Sales per share have increased from $1.40 in 1994 to $8
RF Micro makes
chipsets for both MOT and NOK cell phones. Cash equals debt and market cap is
about 1.5 times sales. This former high flyer has been grounded by the
alternate boom and bust cycles in cell phone suppliers. We have owned RFMD
twice in the past and not made any money. This time we own it mainly in larger
accounts and are hoping the third time will be the charm.
We own BellSouth
and SBC for their dividends, their
control of Cingular Wireless and their positions in the telecom industry. Both
of these stocks are fairly priced and will participate in any general market
move higher. Their dividends, even in a rising interest rate environment, are
attractive because of the 15% tax rate and the share prices also offer
appreciation potential. And we think the Republs are going to eliminate
entirely the tax on dividends.
Drug Stocks (10%)
Bristol Myers and
Schering Plough are old line drug companies with patent and new drug
problems that have been working on resolving those issues for the better part
of four years. Again we think the Republican Congress is going to be helpful to
drug companies exempting them from catastrophic lawsuits over FDA approved
drugs and also the strong euro suggests that companies like SGP and BMY would
be candidates for acquisition by European companies.
Chiron is in a
world of its own in that it is lower because its flu vaccine operation was shut
down this year. It will be up and running next year and Wall Street and Washington
will have forgotten about the flu scare and be on to other issues. And Chiron
will be ten points higher. The high for the stock this year was $57 the low is
the present $30. The company is priced at 3 X sales which is cheap, another
buyout candidate. Novartis owns 42% shares, Citigroup 22%.
Hippie Stocks (6%)
Wild Oats Markets
has been in and out of our portfolios for years. It is the only major natural
foods grocery chain outside of the major player in the arena, Whole Foods. At one time years ago we
owned both and made money trading both. Ten year ago Whole Foods was valued at
twice Wild Oats. Now Whole Foods is valued at 30 times Wild Oats even though
WFMI sales are only 4 times OATS sales. OATS has never been able to get its act
together and periodically blows up. We bought it on its autumn blow down to
under $6 per share and hope for a double. We also think there is the potential
for a major grocery chain like Safeway or Kroger to buy it.
markets natural and organic foods. Heinz owns 22% of the shares. HAIN tends to
run between $16 where we own it this time and $25 where we won’t own it if it
makes it close to that price. HNZ is planning on writing down its ownership in
the company if the share price doesn’t rise in the next year. Their cost is a
round the $30 per share level.
is also an in and out of portfolio stock for us. We like what Carli is doing
with the company and if she weren’t a Republican we would love what she is
doing. HPQ comprises every computer company we have ever owned including
Digital Equipment, Tandem Computer, Compaq and probably a few others we can’t
It sells at 1.5 times sales, has a ton of cash and has
shown a remarkable ability to survive.
We have never before owned Micron Technology which makes DRAM chips. Its business is a
commodity business and when it is hot it makes $2 per share and when it is not,
like now, it loses money.
Household Goods (4%)
We have purchased Maytag
almost every time it has tanked over the last twenty years on a bad sales
or earnings announcement. We have made money each time and each time we have
sold too soon. We hope to sell too soon again for a nice profit. We don’t like
holding it for long because it has an onerous debt level.
have $1 trillion in deposits of cash and securities at the firm. Charlie Schwab
isn’t getting any younger and the guy he had running the company quit last
spring. We think that suggests Schwab selling out to a major bank like JP
Morgan that has a CEO who is trying to one up Sandy Weill and Citigroup. We may
not be in the stock when that happens because at $14 we have a 50% gain.
Specialty Retailers (11%)
Talbot’s has run
into sales problems that started with the Florida
hurricanes and have continued. We think it will at least recover a few dollars
per share after year-end and we may sell if our other retailer Tiffany has put on a good run in the
next few weeks. The Sunday NYT has an article about how well high end retailers
are doing. Both TIF and TLB are on their lows.
We have a love hate relationship with Time Warner and we
currently own in larger accounts. For how long we don’t know.
and market voice and data equipment for the telecom markets. It was a high
flyer in the 1990s and has crashed to earth. At its present price net of cash
it sells at a bit over 1.5 times sales. TLAB has no debt and $1.5 billion in
cash. We hope it makes big buck for us.
And that’s it on our
14 December 2004 Daily Comment
7:01am and Asia closed lower overnight while Europe
is higher as is the U.S. Our Saudis friends have told Japan
that they will cut exports to that country by 8% in January. Gold is up $3 at
$348 and oil is off pennies at $40.69.Treasuries are a tad firmer with the ten-year
at 4.13% and the five-year at 5.53%.
The FED meets on Tuesday (today)
and another rate hike is expected. Friday brings CPI and Quadruple/Quintuple
7:32am and Retail Sales were up
0.1%, ex auto up 0.5% for November.
More analyst folks are going to
neutral today on Motorola in the
wake of the NXTL/FON deal because of the supposed switch by Nextel from iDEN
(which provides the walkie-talkie feature) to Sprint’s CDMA. Motorola is the
exclusive iDEN supplier to NXTL. But many are saying that it will be several
years before the changeover will occur. We continue to believe that the
changeover will not happen and that MOT will keep the walkie-talkie feature.
One analyst is suggesting a dual CDMA/iDEN phone. Nextel has used the walkie-talkie
feature in all its advertising and it is a feature folks like. Only dopes would
take it away.
Lucky us. 3Com is going to pay $430 million of its $1.2 billion in cash for Tipping Point Technologies, a company
with $28 million in revenues. Well we really should say lucky Topping Point
On the news COMS is down 35 cents
a share. At least there is no dilution. TippingPoint
Technologies, Inc. is a provider of network-based intrusion prevention
systems that deliver in-depth Application Protection, Infrastructure
Protection, and Performance Protection for corporate enterprises, government
agencies, service providers and academic institutions. Analysts, who have been
critical of 3Com's product portfolio, applauded the TippingPoint deal as a way
for the company to enter the fast-growing market for so-called intrusion
prevention products. They detect problematic network traffic such as viruses
To remind, 3Com which makes routers, switches and other networking gear, has
been battling stiff competition from Cisco Systems Inc. CSCO on the high end
and cheaper competitors such as Dell Inc. DELL on the low end.
11:39am and stocks are higher in
moderate trading. Oil was higher early but is now down 16 cents at $40.55. When
it breaks $40 the markets will break out to the upside and the shorts will
scream. Breadth is positive and the DJIA is up 30 points, the S&P 500 is up
5 points at 1192 and hopefully will break out to the upside today. The NAZZ is
better by 6 points.
We are somnolent although we did
add Time Warner to accounts that own it and we added 500 shares of Nokia to the
Model Portfolio. We are saving our cash for a blow up like what happened in
Motorola last Thursday and Friday.
and the DJIA closed up 99 points at 10642. The S&P 500 rose 11 points to
end at 1198 and the NAZZ gained 20 points to 2148. Oil finished higher up 18 cents
at $41.19. Treasuries were unchanged and breadth was 2/1 positive at the bell.
And tomorrow is today so let the
The Sad news from Norse land:
Dec. 11, 2004
POSTS 65-59 WIN OVER NKU
scores 16 points, blocks six shots as SIUE wins eighth straight game
Ky. - Dan Heimos made his presence known to everyone around
the basket Saturday afternoon in Regents Hall, and the 6-foot-11
center played a pivotal role in Southern Illinois at Edwardsville’s
65-59 win over Northern Kentucky University.
16 points, grabbed nine rebounds and blocked six shots as
SIUE won its eighth straight game. He also made a pair of
key baskets in the second half as the Cougars held off an
NKU rally to escape with the victory.
Joel Jaye added
15 points and five rebounds as SIUE improved to 9-2 overall,
4-0 in the Great Lakes Valley Conference. The Cougars shot
59.1 percent from the field and won for the second straight
season in Regents Hall.
SIUE built an 11-point
lead (42-31) early in the second half, but NKU used a 13-0
run to take a 44-42 advantage on Mike Kelsey’s three-point
shot with 10:21 left in the game. The Cougars, however,
countered with an 11-3 run to gain a 53-47 advantage
on Heimos’ basket with 6:37 left.
After Kelsey cut
the SIUE lead to 53-49, Heimos again answered with another
inside basket to extend the Cougar advantage to 55-49.
NKU freshman center
Travis Rasso, who grabbed a team-leading eight rebounds,
said Heimos’ size
and agility inside was a factor.
“It’s a little different,” Rasso said of guarding
Heimos. “Every now and then in high school I would have
to guard a guy
it was very rare. So, it was a little different to see someone
bigger than me.”
Kelsey drives to the basket
Michael Sams made
five free throws in the final minute to seal the win for
SIUE, which has beaten NKU three straight times. Justin Ward
added 11 points for the Cougars, who are in sole possession
of first place in the GLVC.
led NKU (5-4 overall, 2-4 GLVC) with 18 points, while Derek
added 12 points and five rebounds. The Norse shot just
38.6 percent from the field and were 4-for-15 from three-point
range. Kevin Reinhardt
added 11 points for NKU.
“The close games are going to help us if we learn
how to win them,” NKU head coach Dave Bezold said. “That’s
the most important thing. We’ve
been talking about playing winning basketball, and we did
that for the first four games of the season, and it has been
sporadic and inconsistent since then.
going to have to do everything to evaluate why that is
and work to correct
Kelsey, who scored 12 points in the second half, found several
openings against the SIUE defense during the 13-0 Norse run.
He keyed that spurt in the second half with 10 points.
“It just came in the flow of the game. It took a while,
but I started getting some open looks,” he said. “On offense,
get a flow, and we are just struggling right now.”
NKU will play host to UC-Clermont at 7:45 p.m. on Dec. 22.
That will also be Dave Bezold Bobblehead Doll Night, with
the first 1,000 fans in attendance receiving bobblehead dolls
of the NKU head coach.
13 December 2004 Daily Comment
Sunday Afternoon December 12
With our accounts and the Model
Portfolio invested for Year End and beyond we thought it would be a good time
to review our holdings and the reasons why we own each.
Speculative Package (12%)
3Com is a low priced speculative stock that is part of our five
stock year end package. We have been buying out of favor stocks at year end
since we began in the business back in 1966. The package approach allows one or
two stocks not to move while the hope is that one or two will make 50% or
better moves as the tax and position selling abates.
3Com should not be confused with
3M. COMS is the old U.S. Robotics/Palm combination that sold at ridiculous
levels in the late 1990s. COMS has no debt and cash per share of $2.50. It still makes stuff for computer connecting
and such. Sales have been falling and competition is great but net of cash the company
is priced at $500 million with sales of $700 million. 3Com is losing money. This
stock is part of a package of five low priced stocks we own which add up to
about 11% of assets.
Lucent is our second low priced speculative stock. They make everything
for the telecom industry. LU is actually going to earn money this year. Cash on
hand is $2 billion with debt of $5 billion. Sales are a bit under $9 billion
and the company has a market cap of $15 billion. We are looking for a 20% move
Qwest is the forgotten RBOC. Phillip Anschultz, a very rich man,
owns 17% of the common and he is the reason we keep coming back to the stock. With
the new Sprint/Nextel combination and the spin off of Sprint’s land line
business there will be consolidation in the land line business. Someone is
going to buy Qwest once it gets its legal problems settled. It has a ton of
debt but the equity is priced at $5 billion which coupled with the debt of $15
billion still only values the $15 billion revenue company at $20. A $25 billion
take out price would equal $10 a share.
By the by, Sprint stole Sprint
PCS when it repurchased the shares last year and now it is going to spin off
the land lines which is the reverse of what it did five six years ago. Investment
bankers win again.
Rite Aid is speculation # 4. The share price reached $6 last year
and in any bull run it could again next year. We would be out of it by then. RAD
has sales of $17 billion and new management has reduced debt by $2 billion over
the last three years. RAD has 3300 drug stores in 29 states. The equity in the
company is priced at $2 billion at present prices. RAD earns money.
Silicon Graphics is our final speculation. We owned the stock in
the teens years back and we are taking another flyer this year under $2 per
share. At this level the company is priced at less than one times sales and has
enough cash to survive for as long as we plan to own it. SGI makes computer
stuff also and we own it because of its price. It is a real anchovy.
We also own Cincinnati Bell in some large accounts on our consolidation in the
telecom industry thesis. If it gets a bit cheaper we may make it the sixth low
priced speculation in many accounts.
Wireless Telecom Suppliers (18%)
The new watchword has moved from
the 1960’s “Plastics my boy, Plastics” to “Wireless my boy, Wireless.”
Andrew Corp was in our portfolio last year and we were scared out
before we made any money in the stock. In fact in many accounts we realized a
loss. It is a player in the wireless telecom supplier area. We also own Motorola and Nokia and RF Micro all of whom are involved in wireless
telecom infrastructure stuff.
Motorola sold off on Friday because Nextel uses their products and
its system is different from Sprints. The guessing is that eventually NXTL will
convert to Sprint CDMA but we think that the walkie-talkie feature that NXTL
has and which NXTL has used to sell their service is the kind of ‘add on’ that
many folks won’t gladly surrender. In any case, Motorola has been getting its
house in order and just recently spun off its commodity chip making arm to
concentrate on the higher tech proprietary stuff. Over the years MOT has shown
the ability to reinvent itself as tech fashions changed and advanced from the time
of radio and television, to color television, to satellites, and now on to wireless
phones and infrastructure. With $10 billion in cash we think it is good tech rebound
Nokia made wireless available to Europe and
is the largest wireless manufacturer of cell phones. Periodically some other
manufacturer gains market share and the institutional boys and girls abandon the
Nokia ship since it is OPM the boys and girls are playing with. NOK has no debt,
$4 per share in net cash, $7 in total cash, and is priced at 1.5 times sales
which have grown every year for the last ten. Sales per share have increased
from $1.40 in 1994 to $8 this year.
RF Micro makes chipsets for both MOT and NOK cell phones. Cash
equals debt and market cap is about 1.5 times sales. This former high flyer has
been grounded by the alternate boom and bust cycles in cell phone suppliers. We
have owned RFMD twice in the past and not made any money. This time we own it
mainly in larger accounts and are hoping the third time will be the charm.
We own BellSouth and SBC for
their dividends, their control of Cingular Wireless and their positions in the
telecom industry. Both of these stocks are fairly priced and will participate
in any general market move higher. Their dividends, even in a rising interest
rate environment, are attractive because of the 15% tax rate and the share
prices also offer appreciation potential. And we think the Republs are going to
eliminate entirely the tax on dividends.
Drug Stocks (10%)
Bristol Myers and Schering Plough are old line drug companies with patent
and new drug problems that have been working on resolving those issues for the
better part of four years. Again we think the Republican Congress is going to
be helpful to drug companies exempting them from catastrophic lawsuits over FDA
approved drugs and also the strong euro suggests that companies like SGP and
BMY would be candidates for acquisition by European companies.
Chiron is in a world of its own in that it is lower because its flu
vaccine operation was shut down this year. It will be up and running next year
and Wall Street and Washington
will have forgotten about the flu scare and be on to other issues. And Chiron will
be ten points higher. The high for the stock this year was $57 the low is the
present $30. The company is priced at 3 X sales which is cheap, another buyout
candidate. Novartis owns 42% shares, Citigroup 22%.
Hippie Stocks (6%)
Wild Oats Markets has been in and out of our portfolios for years.
It is the only major natural foods grocery chain outside of the major player in
the arena, Whole Foods. At one time
years ago we owned both and made money trading both. Ten year ago Whole Foods
was valued at twice Wild Oats. Now Whole Foods is valued at 30 times Wild Oats
even though WFMI sales are only 4 times OATS sales. OATS has never been able to
get its act together and periodically blows up. We bought it on its autumn blow
down to under $6 per share and hope for a double. We also think there is the
potential for a major grocery chain like Safeway or Kroger to buy it.
Hain Celestial markets natural and organic foods. Heinz owns 22% of
the shares. HAIN tends to run between $16 where we own it this time and $25
where we won’t own it if it makes it close to that price. HNZ is planning on writing
down its ownership in the company if the share price doesn’t rise in the next
year. Their cost is a round the $30 per share level.
Hewlett Packard is also an in and out of portfolio stock for us. We
like what Carli is doing with the company and if she weren’t a Republican we
would love what she is doing. HPQ comprises every computer company we have ever
owned including Digital Equipment, Tandem Computer, Compaq and probably a few
others we can’t remember.
It sells at 1.5 times sales, has
a ton of cash and has shown a remarkable ability to survive.
We have never before owned Micron Technology which makes DRAM
chips. Its business is a commodity business and when it is hot it makes $2 per share
and when it is not, like now, it loses money.
Household Goods (4%)
We have purchased Maytag almost every time it has tanked
over the last twenty years on a bad sales or earnings announcement. We have
made money each time and each time we have sold too soon. We hope to sell too
soon again for a nice profit. We don’t like holding it for long because it has
an onerous debt level.
Schwab clients have $1 trillion in deposits of cash and securities
at the firm. Charlie Schwab isn’t getting any younger and the guy he had
running the company quit last spring. We think that suggests Schwab selling out
to a major bank like JP Morgan that has a CEO who is trying to one up Sandy
Weill and Citigroup. We may not be in the stock when that happens because at
$14 we have a 50% gain.
Specialty Retailers (11%)
Talbot’s has run into sales problems that started with the Florida
hurricanes and have continued. We think it will at least recover a few dollars per
share after year-end and we may sell if our other retailer Tiffany has put on a good run in the next few weeks. The Sunday NYT
has an article about how well high end retailers are doing. Both TIF and TLB
are on their lows.
We have a love hate relationship
with Time Warner and we currently own in larger accounts. For how long we don’t
Tellabs makes and market voice and data equipment for the telecom
markets. It was a high flyer in the 1990s and has crashed to earth. At its
present price net of cash it sells at a bit over 1.5 times sales. TLAB has no
debt and $1.5 billion in cash. We hope it makes big buck for us.
And that’s it on our portfolio review. This week should be
interesting with witching on Thursday and Friday.
So let the games begin.
11 December 2004 Weekend Comments
7:19am and first
the bad news, the NKU Norsemen lost to Lewis University of Chicago in a
desultory game last night. The Norse Ladies won their game. The sordid details
are available at the end of this daily post.
and Hong Kong headed south overnight while Europe
is a bit higher. All our wonderful OPEC friends led by our best friends the
Saudis are getting together to try and cut production by one million barrels a
day in order to raise oil prices. Thank you very much. The U.S.
election is over and so the Saudis can go back to their old ways. Crude Oil is
up 75 cents at $43.68.
Treasury bonds are better with the ten-year at a 4.13% down
from 4.17% last night. The dollar is doing better against the yen and the euro
In a few minutes we’ll have PPI and then at the Michigan
folks tell us how consumers feel. Those two numbers will, as usual, set the
early tone for the boys and girls to trade.
Our technical guru feels that the S&P 500 need to close
above 1191 today or Monday in order for the rally to resume without a pullback
and so we are on pins and needles and pine cones waiting for the results.
7:32am and PPI,
the Producer Price Index, was up 0.5% which was hugely more than the expected
0.1%. Core PPI was up 0.2% as expected. Year over year the numbers were 5% and 1.9%
respectively. These last numbers represent the rise in inflation over the last
year. Thank the gods for hedonics which are the adjustments to the base PPI number
that reduce the rate of increase in the core
number which is the one the FED considers. The real PPI number suggests
inflation and higher interest rates. Bonds are flat on the news and stocks
futures remain lower at this time.
There is inflation and it is getting worse and eventually
the boys and girls in Washington or
at least on Wall Street will get religion and interest rates will head much
Moreover talk of the two trillion dollars that need to be
borrowed for revamped Social Security Accounts which will be called Retirement Insecurity
Accounts that the Bushies plan to borrow off book- so that the borrowing
doesn’t exist- is going to break the interest rate ceiling that has existed for
the past few years.
8:51am and the Michigan
folks are 95% confident this month which is better than expected. They sure are
great folks to help the markets along today and may they shop till they drop
and borrow till it hurts so that our great economy can grow and grow and grow
and so stocks can resume their rally and we can sell in January with profits
Bloomberg is reporting that as the dollar is rising today
the markets are looking at the biggest weekly gain on the dollar versus the yen
in six years. Don’t cancel the trip to Tokyo
just yet. We presume Soros has made his money and has locked up some gains for
11:43am and we
added more Motorola to accounts at
$16.98. We also repurchased Qwest at
$4.24 in larger accounts which is the price at which we sold it earlier in the week
to buy Rite Aid 20 cents lower than its current price. We have repurchased the
Q and also CBB at $3.75 in only a few large accounts because we think the
Nextel/Sprint merger suggests the emergence of four survivors in the telecom
area with the other smaller telecom companies having to merge or die. Since
merging is preferable to dying we presume that Qwest and CBB are doing
a mating dance or if not them then some enterprising investment banks are.
Stocks are floating along and the last hour today is going
to tell the tale of the week.
Reuters is reporting
that analysts are saying Motorola is
off today because it might lose its exclusive supply contract with Nextel if
the Nextel/Sprint deal goes though. Motorola owns 80 million shares of Nextel.
MOT will figure it out and we are using the sell off to buy stock.
It is interesting that recently Prudential said the
following: “Earlier this week, Motorola announced that
it had been awarded a $450 million contract from Sprint. This represents
the first major EV-DO [evolution data optimized] business from Sprint and could
potentially lead to business with other carriers as well. With the contract
valued at roughly 15% of Sprint's announced spending plan, we believe Motorola
held its market share steady with this customer." Prudential has a $21
price target for Motorola. *****
Goldman Sachs is
suggesting 75% equity exposure for 2005 and no bond exposure. Goldman says that
European companies may use their dollar advantage to go on a buying spree.
Oil is down $1.43 at $41.15 and gold is off 80 cents.
GE raised its dividend and announced a $15 billion buyback. With
oil down $1.60 stocks should be doing better.
2:38pm and the big boys and
girls keep selling Motorola. We
can’t buy all their stock but we have purchased another chunk at $16.25 for
accounts. There is an all out panic in the selling of the shares today and it
may continue on Monday but this is the type of buying opportunity for which we
raised cash. Motorola has been trying to get its house in order for a number of
years and has finally streamlined operations and we think they will be able to
well handle any merger between Sprint and Nextel. We will buy more at lower
3:02pm and after a boring
day of volume action the DJIA closed off 10 points at 10542. The S&P 500 dropped
2 points to end at 1187 and the NAZZ lost 1 point to end at 2128. Breadth was
positive at the close, oil made four month low closing down $1.82 at $40.71 and
the ten-year finished at 4.15% with the five-year at 3.53%.
And tomorrow is today and it’s
the week-end so relax, recharge and enjoy. There will be a post Monday morning.
The sad news on the Norse:
Dec. 9, 2004
FLYERS SHOOT DOWN NKU, 75-68
guard hits eight three-pointers en route to 32 points
Ky. - The last time Northern Kentucky University and Lewis
squared off in Regents Hall, it took three overtimes to decide
But unlike last
February’s 93-90 triple-overtime victory over Lewis,
there were no last-second dramatics available for NKU on
Thursday night. That’s
because the night - and, specifically, the second half -
belonged to Lewis senior guard Anthony Scala, who led the
a 75-68 win over NKU with an amazing long-range shooting
a barrage of three-point shots - many of which were launched
from at least 25 feet while fading away - against NKU and
scored a game-high 32 points to rally the Flyers
victory. Scala finished 8-for-16 from behind the arc, and
he scored 24 points in the second half as Lewis improved
to 4-4 overall, 1-4 in the Great Lakes Valley Conference.
NKU (5-3 overall,
2-3 GLVC) took a 38-30 lead to the locker room at halftime,
and the Norse
it by shooting 58.3 percent from the field. After Derek Smith
gave NKU a 40-30 lead early in the second half, Scala went
He sparked a 14-0
run early in the second half with 11 points as Lewis built
a 50-44 lead with 12:12 left in the game. Lewis eventually
forged a 13-point advantage (65-52) on a layup by Steve
Turner, but NKU battled back with nine straight points and
cut the deficit to 65-61 on a free
with 2:45 remaining.
Smith looks for an opening
halted the comeback when he drained a three-pointer from
25 feet to give the Flyers a 68-61 advantage with 2:31 remaining.
His shooting performance enabled Lewis to snap an 11-game
streak in Regents Hall against NKU.
The Flyers had
not posted a road victory at NKU since a 97-88 win on Feb.
“He was in one of those shooting zones tonight. It’s
the first time he’s done that against us,” NKU head coach
Dave Bezold said of Scala. “He made tough shots. A lot of times
we were in the correct spots
and the kid just hit tough shot after tough shot. And when
we thought we were back in the game, he hit another three.
his credit, he stepped up and made shots in the second half.
They worked harder than we did in the second half to win the
game. We didn’t make the plays. We had seniors who had
the shot, had the opportunity to make plays, and they didn’t
Scala made six
three-point shots in the second half, and he finished 11-for-21
from the field.
“He was in
the zone. He’s a good shooter. I guarded
him most of the game, and obviously I didn’t do a good
enough job,” NKU’s Mike Kelsey said. “Some
of the shots he was hitting were tough shots. You just have
to hand it to him
tough shots, and I have to do a better job on defense. We
as a team need to do better on defense.”
Smith led NKU with
18 points and seven rebounds. Harrison Morton added 14 points,
while Kelsey finished with 13 points.
NKU, however, shot
just 43.5 percent from the field in the second half and made
just one three-pointer in 10 attempts during the final 20
scored 11 points and dished out six assists for Lewis, while
Turner added 10 points.
NKU will play host
to Southern Illinois at Edwardsville at 3:15 p.m. Saturday.
The Cougars lead the GLVC with a 3-0 record and are 8-2 overall.
SIUE owns a seven-game win streak entering Saturday.
SIUE swept NKU
last season, and the Cougars pulled out a 66-65 win over
the Norse in Regents Hall when Calvin Sykes banked in a 40-foot
heave at the buzzer.
NKU vs. Lewis (Dec. 9, 2004)
Head Coach Dave Bezold
On the outcome of the game…
“We didn’t play 40 minutes of basketball. We talked about
that at halftime. We needed to finish the game off, play 20
more hard minutes because they were going to come at us in
the second half. Scala could not go six for seven, eight of
nine in the second half. He’s just going to run around
and shoot, and if he gets hot we are going to be in for a long
night. They are going to get back into this game, and that’s
exactly what happened. They worked harder than we did in the
second half and that’s very disappointing.”
On Anthony Scala…
“He was in one of those shooting zones tonight. It’s the
first time he’s done that against us. He made tough shots.
A lot of times we were in the correct spots defensively and
the kid just hit tough shot after tough shot. And when we thought
we were back in the game, he hit another three. To his credit
he stepped up and made shots in the second half. They worked
harder than we did in the second half to win the game. We didn’t
make the plays. We had seniors who had the shot, had the opportunity
to make plays, and they didn’t do it.”
On improvements for Saturday…
“It’s going to be hard in 24 hours, 48 hours to make the
improvements we need to make. We need to get consistent, that’s
what we need to do. We haven’t been practicing well,
we really haven’t. We’ve been putting in our time
but not really focusing and concentrating on making ourselves
better. So, that’s an area we really need to get much
better at, so we develop better habits.”
On the play of Anthony Scala…
“He was in the zone. He’s a good shooter. I guarded him
most of the game, and obviously I didn’t do a good enough
job. Some of the shots he was hitting were tough shots. You
just have to hand it to him because he made them. He hit tough
shots, and I have to do a better job on defense. We as a team
need to do better on defense.”
On what need to be worked before Saturday…
“Defensively, we are bad so we’re not going to win. I
think [Lewis] was one of the bottom teams in the conference
right now. If we are losing to those kinds of teams with that
kind of defense, we are going to lose all year if we keep playing
10 December 2004 Daily Comment
7:32am and jobless claims
were 357,000 were higher and the week before were revised higher. Import prices were up 0.2% in November and 9%
year over year, export prices up 0.3%.
The jobless claims continue to
rise and are 25,000 per week higher than two months ago.
Asia was lower, Europe is lower and the U.S.
is lower. Japan lost over 1% and Hong Kong just a bit. Oil is up 52 cents
Looks like more pain before any gain.
10:03am and the NAZZ is down 26 points with the DJIA down 65
points. Volume is moderate and while there is no imminent rally, stocks seem to
be getting a little buying at this level. There is probably more downside but
many of the folks who were bullish last week have changed their horns for claws
and are now shorting rather than longing for stocks.
We are adding more Motorola at $17.15 to accounts owning Univision which we plan to sell on any
pop higher. We jumped the gun on MOT earlier this week but we remain convinced
that after year end it will move higher. We are also adding a bit of Nokia at $15.60. NOK never made its
$17.50 resistance sell point for us so now we are holders and buyers into the New
12:27pm an the ten-year
Treasury auction resulted in a 4.15% yield with a 2.68 bid to cover ratio. National Semiconductor announced better
than results and didn’t warn and that news set off a short covering rally that
has the major measures positive or almost positive.
The WSJ and CNBC are also
suggesting the possibility of a Sprint/Nextel
merger which makes sense to us and would be beneficial to the tele-suppliers
that we own. Sprint has excess borrowing power and needs wireless and the
converse is true for NXTL.
1:22pm and we are selling Univision
at $28 which is up 30 cents per share in this short covering rally for a $1
to $2 per share loss to use those funds to buy BellSouth which is off 40 cents per share this afternoon on the
projected Nextel/Sprint deal. We’ve wanted to buy BellSouth for a week and are
using this pullback of $1 per share over the past 24 hours to switch. The BLS
is less volatile than the UVN which is contrary to most of our switches but as
we mentioned above we also bought the Motorola this morning in the UVN
accounts. MOT will give us enough jazz.
and the DJIA rallied in the final hour to close up 55 points at 10550. The
S&P 500 rose 6 points to end at 1188 and the NAZZ jumped 4 points to 2130.
Breadth moved to the positive side on the NYSE but was 5/4 negative on the NAZZ
at the close. Oil closed up 59cents at $42.53 and the ten-year ended at 4.16%
with the five-year finishing at 3.55%.
The Producer Price Index comes on Friday and with the touchiness of the markets may have an influence.
And tomorrow is today so let the games begin.
9 December 2004 Daily Comment
6:29am and the grey and cloudy
morning fits our spirits as we review the Model Portfolio and see than we have
given back 2% in two days. We dislike giving back gains but that goes with the
territory at year end as we construct our accounts for the rally into the New
Year. Yes, we may have already seen the rally but our historical perspective of
thirty-five plus years watching these year end events tells us there is more
upside to come after a shakeout this month. And so we will wait and watch and
adjust and do a little hoping and praying. That’s all part of a days work.
Overnight markets were mixed in Asia
with Japan up
almost 1% and Hong Kong down 2%. Europe
is lower. The ten-year is at 4.26% and the five-year is at 3.61%. Oil is down
another 30 cents at $41.42 and if it breaks $40 to the downside we would expect
a good rally in stocks.
Oil prices are in the hands of
the speculators right now and as the boys and girls trade among each other and
make and loose fortunes the rest of the country pays the price. We haven’t yet
seen a 30% drop in the price of gasoline, heck we haven’t seen a ten percent drop
even though oil is down from $55 to $41. As with all prices, they seem to rise
faster than they come down.
Bear Stearns downgrades Sirius Satellite on a valuation basis. The
company is valued at $12 billion and has revenues of $100 million. Over valued
is not too tough a call although we would bet the stock resumes its speculative
rise after a slight pull back.
Gold is down $6.40 at $447. As soon as the Gold ECN (GLD) began trading Gold the metal has
been selling off. That is often the case that when Wall Street makes a trading
vehicle available for the little guy and gal and intermediate trading top is
“GLD” is streetTRACKS Gold Trust is an investment trust whose shares
strive to reflect the performance of the price of gold bullion, less the Trust’s
expenses. The Trust holds gold, and is expected to issue baskets in exchange
for deposits of gold, and to distribute gold in connection with redemptions of
baskets. The gold held by the trust will only be sold on an as-needed basis to
pay trust expenses, in the event the Trust terminates and liquidates its
assets, or as otherwise required by law or regulation. The Trust is not managed
like an active investment vehicle, and it's not registered as an investment
company under the Investment Company Act of 1940.
Investors Intelligence has 60%
bulls and 21% bears. That’s bearish, hopefully not for a while.
(Speaking of intelligence, the Intelligence
Bill passed by the Republican Congress is a real gem and reflects the
intelligence of the parties involved in writing the bill. That is probably why
no one reports to anyone and no one is responsible. But the name sounds good.)
To continue the bearish theme
from bullish data www.minyanville.com
reports that the Weekly Traders Commitment Report from the CFTC says that there
are currently held 113,000 long S&P 500 contracts representing $33 billion.
The last time that number was this high except last week was back on February 28, 2001. As a point of
reference most of the Minyanville
folks are long term bearish.
We present the bearish case not
to scare but to point out the conflicting voices out there in trader land that
we must decipher and cogitate and lose sleep over.
Lehman upgraded GE to overweight and Goldman cut Wal-Mart to neutral. Merck is having a conference call this morning
and has appointed a special committee to deal with the VIOXX lawsuits. MRK is
guiding lower for next year by a few pennies excluding any lawsuit stuff.
Upcoming Economic Reports for the rest of the week:
10:02am and discretion being the
better part of valor when the Markets rallied this morning on a further drop in
oil we decided to raise a bit of cash by selling some of the mundane stocks we
own to have funds available to reinvest in any further sell off.
We sold JPM, A, VIAB, ANN, CMCSA, KO, and a bit of SBC in larger accounts. All were scratch sales or slightly
profitable and this is not a rally ending call, rather we sold the less
volatile issues to raise cash to place in more volatile issues later this
month. If we are wrong and the markets rally from here we won’t be
These sales get the Model Portfolio and many accounts back
to a 20% cash position.
and yesterday in writing about Fifth
Third Bank we said they had lost a billion dollars trading. We were off by
900 million dollars and regret the error. FITB
is making new lows and we are interested in the shares but we are going to
hold our fire for now.
The major measures are higher but
our stocks continue in the red as today’s up move seems mainly program related.
Breadth is 5/4 positive and volume is brisk.
The five-year Treasury auctioned
today came at a 3.55% yield with a bid to cover ratio of 2.55. That means that
there were bids for 2.55 times the bonds that were sold.
Gold is down $16 and ounce and silver is off 10%.
and the QQQQ (NASDAQ 100) broke a very sharp uptrend line yesterday from
October and has bounced back to touch that line. As a result the final hour
today may be crucial to determining whether there is more to go on the downside
or if the bulls can regain control. The QQQQ and overall NAZZ have been leading
the stock markets higher since the election.
European stocks closed lower. The
advance/decline line has been positive all day and remains 5/4 winners over
losers. Crude oil is back to the upside but remains under $42 while Gold is now
off over $12 per ounce.
Bush has asked Snow to stay on as
Treasury secretary and stocks are selling off. We don’t think there is a
and Sirius Satellite traded 600 million shares today and closed
down $2.25 at $6.75. Easy come easy go.
The DJIA closed up 53 points at
10475. The S&P 500 rose 6 points to 1183 and the NAZZ gained 12 to end at
2126. Treasuries rallied strongly after the five-year auction with the ten-year
going out at 4.13% and the five-year at 3.50%. Gold finished $11 lower and oil
closed at $41.94 up 48cents.
And tomorrow is today so let the games begin.
8 December 2004 Daily Comment
6:02am and the fire in Chicago
was in the LaSalle Bank Building which was called the Field Building in our youth and is
located catty corner across the street from our offices. Happily it seems that
no folks were killed. In order to avoid the turmoil of the area and to test our
systems we are conducting all our business today from our Disaster Recovery Offices
in the Kickapoo Valley
and Oak Brook, Illinois.
The NYT is reporting that
Johnson & Johnson is going to
purchase Guidant the stent and heart
device maker. Current value of Guidant is about $25 billion and it has revenues
of $4 billion and earnings of $600 million.
The dollar is at almost 1.35 to
the euro and the yen is approaching 102 to the dollar. No trips to France
or Japan are in store.
IBM and a Chinese Company plan to create a personal computer
company to make and sell IBM computers. Also, Dell is going to cut prices on corporate computers and servers by
up to 20% in a throwing down of the glove against IBM and HPQ.
Colgate is going to fire 12% of
its work force which is 4400 souls. Happy Holidays. Asia
was lower overnight but Europe is higher and U.S.
futures indicate a higher opening as Oil is off about 40 cents.
The terror attacks on the U.S. Consulates
in Saudi Arabia had no effect on the markets yesterday which fits our theory
that as long as whatever death is occurring is far away the markets and most Americans
plan to have a merry holiday season, except the Colgate workers. Out of sight,
out of mind, which is also the reason the U.S.
health care system is in such bad shape.
Deutsch Bank lowered its rating
on Andrew Corp due to valuation and Bank America
reduced earnings projections for Micron for the quarter and for all of next
year by a few pennies in each case.
12:02pm and after trading lower
the major measures rallied for about an hour but now have turned lower again. Breadth
is 5/4 negative and volume is moderate.
We sold Qwest at $4.27 for a nice
percentage profit and are placing the funds in Rite Aid at $3.33 which is down
30 cents (10%) per share from yesterday’s close on lower same store sales and a
reduction in sales and earnings outlook. But the stock is already a $3 number
and we think it is worth the speculation.
We added a bunch of Motorola to
accounts at $18.50. We would have liked to purchase a bit lower but we missed
the opportunity by horsing around with limit orders yesterday.
and with oil down $1.23 at $41.75 stocks are also lower. This is a disconnect
from the usual action of the last few months. Treasuries are a bit firmer with the
ten-year at 4.23%. Breadth remains negative.
We have no reason for the sell
off except that maybe it is time for some profit taking. We are going to remain
‘all in’ as we await year end.
We should have known. Colgate is going
to fire 4400 folks and take $650 million in write offs over the next few years
and that is just what Wall Street wanted as the share price is up $3 today. What
a warped economic system we have.
and the markets zagged today even as oil moved to a new recent low down $1.52
at $41.46. The DJIA closed off 107 points at 10440. The S&P 500 lost 13
points to finish at 1177 and the NAZZ dropped 36 points to end at 2115. Breadth
was 3/1 negative and volume was brisk although Sirius did about 400 million
shares by itself. The trading in that stock shows that speculation is alive and
well on Wall Street. the volume and strong negative
breadth is and indication that the profit taking may continue for a few days.
And tomorrow is today so let the games begin.
7 December 2004 Daily Comment
6:20am and we had our first snow
of the season last night and the fields and trees are coated with the thick
white crystals. Since temperatures are above freezing the white mantle will not
be here for long but it is calming while it lasts.
Overseas markets are lower and
U.S. futures are also muted with oil up 40 cents at $42.85. With most earnings
reports out of the way warning season will soon be upon us. Traders require a
never ending stream of information on which to trade and the media and brokerages
do their best to try and provide.
Treasuries are at better levels
than they were when we left last week with the ten-year at a 4.25% and the
five-year at 3.60%. The two-year has moved a bit below 3%.
Merrill has downgraded Pfizer and Wyeth just in time to create further year end tax loss selling in
the two. We may buy some Pfizer before year-end. With the Bushies in power there
is no chance of negative legislation and we expect the new Congress to pass
legislation to protect drug companies from lawsuits if the FDA has approved the
drug in question. You get what you pay for and the drug companies have paid a
lot for protection.
Piper Jaffrey has nice things to
say about RF Micro Devices in that they
supply the chips for Motorola as
well as Nokia handsets.
Motorola spun off its chip making operation last week as Freescale Semiconductor (FSL) and the
price of MOT was correspondingly adjusted downward. One advantage of our sale
last month is that we avoided the spin-off. That’s because the spin-off usually
trades lower as folks sell odd lots and the big boys and girls eliminate a
holding they didn’t buy. We may pick up a little Motorola today.
Last week’s late drop in crude
oil caused it to touch its 200 day moving average. The usual response to such a
move is for crude oil to bounce higher.
Citigroup is raising its S&P
500 target for 2005 to 1300 from 1250.
3Com is out with an update on the second quarter which isn’t
pretty. As a result the shares will be heading lower today.
Liberty Media is repurchasing 3 million of its shares from
Comcast for $150 million. By the by,
since we are subscribers we now know that CMCSA is raising cable rates 7% in
January. Onward and upward is the cable companies’ motto when it comes to
This is an interesting report on housing prices by a very bearish
and everything we own is a sea of red this morning as the DJIA is off 56
points. That’s the daily give and take of market action. We are not trying to
catch $1 moves and so we must take the bad days with the good.
We bought a few shares of
Motorola but it has run away to the upside so we will bide our time. COMS has been trading around $4.20 which is 40 cents lower than the
close (10%) but is still better than we expected. They really didn’t have to
pre-announce. We would have been happily out of the stock in January before earnings
came. But we think the stock will trade higher that our cost in the next month
and we are adding to aggressive accounts today. We also added a few shares of
NY Times to accounts under $40 per share.
Fifth Third Bank fessed up to wrong
way bet on interest rates on Friday to the tune of over $1 billion and the
stock has dropped 10% to $46. We are again interested but unfortunately or
fortunately we have little cash left and no stocks we want to sell at his time.
We presume there are other banks and hedge funds out there with the same
problem. Luckily we sold the stock last month to place in other securities. We
are going to buy a few shares back at the $47 level.
and it’s a blah day in the stock markets with the trend trending down. Breadth
is stinky and the only positive is that volume is light. The NAZZ poked its
head to the positive side about and hour ago.
and the DJIA closed down 45 points at 10547. The S&P 500 was up 1 point at
1192 and the NAZZ gained 3 points to finish at 2150. Breadth was 5/4 negative.
The Treasury ten-year closed at 4.23% and the five-year ended at 3.58%. Crude
oil was up 44 cents at $42.98.
And tomorrow is today so let the
6 December 2004 Daily Comment
and we have returned to the land of milk and honey from our city sojourn. The
birthday fete was warm and family oriented and it was good to see all the
grandchildren of our friends from Puerto Rico and to celebrate
Cindy’s 90th birthday.
The stock market was kind to our accounts
last week and we closed out Friday with a 7.3% gain for the year in the Model
Portfolio versus a 1.6 % gain in the DJIA and a 7.1% gain in the S&P 500
and 7.2% rise NASDAQ composite. Past performance
is not an indication of future performance.
Late in the week we added Ann
Taylor to some of our aggressive accounts and added Maytag to many larger and
aggressive accounts to replace the Kroger and Safeway that we sold.
The next three weeks promise to
be interesting as the bulls and bears tug and push. The press and many gurus
are making too much of a fuss over the lousy retail sales numbers for November.
They seem to have forgotten that the first week of the month included a pretty
volatile election process that left half of the population satisfied and half
of the population disappointed. We are not surprised that folks didn’t run out
and shop their heads off. We think that now that the political situation has
had time to mellow that the psychology of the populace has also.
Whatever, this time of year is usually
a sweet spot for being long stock and we continue to look for opportunities for
year end trades.
And yesterday is today, so let the games begin.
For those folks interested in the basketball wars we present the
story of Saturday’s win below. After two unhappy losses NKU got its act together.
It may have been because we were in attendance and making sure the timekeeper
did his job; but the men and women’s teams both won and so enjoyed a happy ride
back to the Ohio RiverValley.
We are going to
skip the story of the loss to Indianapolis
since it’s a downer story.
- Derek Smith and Pat Cary combined for 44
points and 15 rebounds as Northern Kentucky University
held off Saint Joseph’s, 90-77, Saturday at the Scharf Alumni
Smith scored 24 points and grabbed seven rebounds
as NKU improved to 5-2 overall, 2-2 in the Great Lakes Valley
Conference. Cary added 20 points and eight rebounds
for the Norse.
NKU built a 54-32 halftime lead by shooting 75 percent
(21-for-28) from the field. The Norse also shot a blistering
77.8 percent from behind the three-point arc in the first half.
The Norse opened up with their largest lead
(62-38) after two free throws by Cary with 16 minutes
Joseph’s rallied behind the play of Sullivan Sykes (21
points) and cut the NKU lead to
73-64 on a layup by Rashad McSwine with five minutes left
in the game, but key baskets by Smith and Cary helped the Norse
Kevin Reinhardt finished with 12 points for NKU. Harrison
Morton added 10 points for the Norse, who shot 64.2
percent from the field. Jordan Stowers added seven points
and five assists for NKU.
NKU will play host to Lewis at 7:45 p.m. Thursday in Regents
3 December 2004 Daily Comment
and we are heading to Chicago today for a client’s 90th birthday party tomorrow.
With that in mind this post will
be shorter than usual but as heartfelt as the all are. We had a great day yesterday
in all client accounts. We fear today’s will not be as gangbusters since Talbot’s came in with dreary same store
sales numbers that were down a fraction for the month of November although TLB reaffirmed fourth quarter guidance.
We will stay the course since we continue to believe that the effects of the
Florida hurricanes may have affected them more than many of the specialty
Last night we were thinking about
Wal-Mart’s punk sales numbers for November and we had the idea that it may be
that more than a few of the folks who have been shopping there may have moved
up a notch in their shopping habits as the economy and their personal
situations have improved.
We don’t know how to take the
over 10% sales drops at Ford and GM although it is interesting that the announcement
of the drops had no impact on the overall markets. The old saying “As GM
goes so goes the Nation” seems to have dropped by the wayside. Now the
big boys and girls are more interested in how DELL and EBAY perform
when making their Macro market decisions.
was up 1% with Hong Kong a bit less and the rest of Asia
higher following on the U.S.
charge. Europe also is higher.
Oil is under $45 and gold is
lower. Unemployment in Germany
which economy represents a third of the Euro-economy is at a record high of
10.8% or about 4.4 million folks. The jobless claims numbers in this country
rose to 340,000 from 320,000 last week.
Tomorrow (today) brings the employment
report for November and the guru thought is that a number of at least 200,000
jobs added are needed to close the week out with an up day. We will not be
trading the number since we’ll be running around – unless something extreme
We would expect some consolidation
today and then an attempt to get through the 1190 S&P number with more
conviction. If that fails a retreat to 1174 could be in the cards.
And today is tomorrow. Our next
post will be Monday morning.
2 December 2004 Daily Comment
6:30am and we get letters:
as long as you are quoting me in your online news letter, then let me finish what else is on my mind... I don’t see how you
can watch 25 stocks and be on top of all them. Talbot’s had a nice pop yesterday morning and now gave it all back and
then some today. I think you get picture. Again I am beyond my comfort level so now there will be more praying then hoping.
And we respond:
We are happy to know that reaffirming your belief in the Almighty is a positive side effect of our management of your funds.
We bought TLB and TIF for 10 point moves. We may change our mind but for now that is our plan.
The 32 stocks we own are stocks that we have owned off and on over the years. Nokia is new as is Chiron but the others have been part of
portfolios at some time in the past. And we have followed both NOK and CHIR for years.
Moreover there are only nine themes involved in the stocks we own.
Safeway & Kroger & Wild Oats as grocery stores go together and Hain Celestial as an organic food supplier 20% owned by Heinz should be
lumped in with them.
Talbot's is a better quality women’s and kids retailer and fits nicely with high end Tiffany.
Tellab and Andrew manufacture optical switching equipment, Nokia& Motorola do cell phones and RF Micro makes the chips for those phones.
Chiron, Bristol Myers and Schering Plough are drug companies on their lows that should have nothing to fear from a Bush administration and
now need only to get their houses in order to figure out how to continue ripping off the elderly consumer.
Hewlett Packard, Micron and Agilent are computer related with Micron a chip maker that has boom or bust cycles and is currently in between.
Viacom, Comcast, Univision and Time Warner are entertainment and cable.
Lucent, 3Com, Right Aid, Qwest and Silicon Graphics are our low priced package for year end and beyond.
Excel and SBC and JP Morgan are- at the least- dividend plays.
Coke is a cheap blue chip and Scwab is our play on assets under management and fits with JP Morgan.
And so that is our portfolio. We plan on holding and readjusting though year end and then we will see what Santa brings to us. As you know all our
own money is invested in the same stocks that you own and we look at all accounts as we do our own and our families’ accounts. In many like
yours we take less risk but in those that have expressed a desire to ride along aggressively we welcome the company.
Past performance is no indication of future performance but believe me when we tell you that with the Bushies intent on destroying Social Security
and all the social safety nets created in the last 80 years we are intent on ensuring a secure future for our children and grandchildren and the only
way we can do that is to grow the assets we will leave them when we pass to the other side of the river. Our desire to preserve capital is always
foremost but our need to grow capital is a close second.
There are times when we must assume risk to grow principal and also create income for client that take part of their capital each year so that they
are not invading their asset base and this time of year after a settling election seems a good time to take that risk.
7:32am and October personal income was up 0.6% and spending was up 0.7%. The core PCE Deflator (inflation) index was up 1.5%. Overnight
Hong Kong was higher but Japan was down 1% as was most of the rest of Asia. Europe is higher. U.S. futures are suggesting a higher opening. The
dollar has stabilized against the euro and the yen.
8:32am and in the early going the DJIA is higher as oil slips below $49. Treasuries are a bit firmer with the ten-year at 4.33%.
Tellabs today closed its $1.5 billion merger with AFCI, creating a leading global supplier of access, transport and data solutions for telecom service
providers worldwide. "The new Tellabs is a strategic telecom equipment supplier that will lead the industry's shift to reliable broadband services
around the world," said Krish Prabhu, president and chief executive officer of Tellabs. "Together, Tellabs and AFC can help carriers even more as they
seek easier ways to provision new voice, data and video services, to simplify their networks and to sharpen their competitive edge."
In honor of the merger another brokerage lowered its rating on TLAB from buy to neutral. We of course maintain our buy rating on the shares.
This morning we sold Motorola, Safeway and Kroger for scratch to $2 per share gains. We sold the Safeway and the Kroger because there are
rumblings of more trouble with California workers who are unhappy about the cuts in their health insurance and increase in their health insurance costs.
The companies are using the ‘Wal-Mart doesn’t so we can’t’ bugaboo to explain their actions. The last time this occurred Wild Oats benefited from the
disruption and so we are going to invest the number of Kroger shares we sold in OATS and raise a chunk of cash in the process.
We sold Motorola because it has reached the apex of its trading range for the last 12 months and is either going to break out or pull back. Our
inclination is to take the trade since we have never been enamored of Motorola’s management and bought it for a trade when its share price broke
down in October. We own enough Nokia et al to participate in the cell phone industry and would rather redeploy the money to one of our other
stocks, specifically Time Warner and or Maytag.
Even though we don’t own the stock and probably never will we are delighted by the rise in the price of Martha Stewart’s stock MSO. Martha has
tripled her net worth since she went to jail for five months and it couldn’t happen to a more deserving person. We do think the share buyers are
overestimating the potential gains in sales etc. from the Sears K-mart hook up since that deal is real estate not retail sales driven.
Martha will have served time for something she didn’t do, made her faithful shareholders more than whole and still Ken Lay is walking around free
as a bird, but a lot poorer and despised except by the Bushies who are afraid of what he knows which is why he is still free.
Martha is admired by a third to one half the population which does translate into a lot of magazine subscriptions.
9:47am and there is a good rally underway which has brought the S&P 500 back to 1187 and within spitting distance of 1190. Crude oil being
down 4% helps.
12:48pm and Crude Oil is down $3 per barrel as inventories on hand were greater than expected. We added TLAB to some accounts and also
bought Duke Power in our large accounts for the 4% dividend. That may seem counterintuitive to our belief that interest rates are going to rise
but we continue to believe that the Bushies are going to push for and get the elimination of taxes on dividends. There is some justification for that
position since dividends are supposedly taxed at the corporate level. The only problem with the theory is that many of the dividends paying
corporations don’t pay taxes. But consistency is the hobgoblin of Democrats not Republicans and we currently live in Republican Nirvana in the
land of the Brobdingnagian Yahoos.
We are having trouble acquiring the OATS at our price and so we are going to put some of the money we raised this morning to work by
purchasing an amount of Lucent equal to the Kroger shares sold in accounts. That still leaves enough money for the Wild Oats if we can
purchase at our price.
Lucent received a nice contract from Cingular Wireless and at the same time Baird cut LU to neutral from outperform on a valuation basis. For that
reason the stock is unchanged on the day.
The Fed’s beige book coupled with the $3 drop in the price of oil has overcome afternoon weakness in the dollar and led to a continuation of the
rally on very good volume. Treasuries have weakened a bit and breadth is 2/1 positive.
The Summary of the Beige Book stated:
Reports from the twelve Federal Reserve Districts generally paint a picture of continued economic growth from mid-October to mid-November,
with a number of areas improving. Eleven Districts reported expanding economic activity, with New York, Philadelphia, Atlanta, and Dallas noting a
pickup in the pace of expansion since their last reports. Minneapolis indicated that the expansion in that District was broad-based, and San Francisco
described the region's activity as solid. The Richmond, Chicago, and Kansas City Districts saw moderate gains in economic activity while St. Louis
viewed the gains there as modest. Only the Cleveland District reported little change in economic activity.
Overall consumer spending was uneven since the last Beige Book, with only a few Districts reporting stronger retail sales and many noting mixed, flat
or slower sales. Automobile sales were flat to down across most Districts, and several Districts reported higher dealer inventories than
desired. In contrast, manufacturing and service sector activity increased across the country. Residential real estate activity generally
remained at high levels, but continued to show signs of cooling in a number of Districts. Nonresidential activity, while still sluggish in many
areas, appeared to be turning the corner in several Districts. In credit markets, business lending was strengthening, but the pace of consumer
and mortgage lending was mixed across the country. Contacts in the securities industry reported increased inflows into stock mutual funds and
noted a pickup of stock issuance and merger-related activity. Many agricultural producers across the country said they were looking forward to
large or record crop production. Energy-related activities remained strong.
3:02pm and Zowie, Wowie, the DJIA closed up 158 points at 10585. The S&P 500 closed above the important
1190 mark up 17 points at 1191 and the NAZZ rose 40 points to 2036.
And tomorrow is today.
1 December 2004 Daily Comment
6:05am and the dog awoke us early to the wonders of a beautiful moonlit frost shimmering all around and the reflecting soft glowing light was
perfect for finding our way to the barn for chores and our office for work. The stars and planets were bright and the chill just right for
encouraging the fire that now glows in our old cook stove.
And we get notes:
I thought you said you were all done buying... it seems to be that you are going for the homerun here as I don’t remember being this long
for this period of time although I could be wrong.
And we respond:
The Repubs won and control ever thing. The ‘era of good feeling’ has returned to the financial markets at least. The Model Portfolio (our money) is ‘all in’
as they say in poker which is now so popular. There is a new day dawning.
Really though, we think December will be OK and January also. We think there is a good chance to make this year and next years’ 10% returns in the
next few months.
Funny how all the terror scares have disappeared. They were the events worrying the markets.
You are correct in saying we haven't been this long since the last century. Hope we are right. The talk of a falling dollar and rising gold prices are only
distractions from the real problems of rising deficits as far as the eye can see and the intractable price of oil.
We do fear the deficit and we also think the price of oil is going to eventually doom whatever recovery is occurring. But markets are 90% psychological
and we are guessing that folks are glad the elections are through. Bush is a known commodity who is going to change Social Security and run up the
deficit or move a lot of spending ‘off budget.’ We think he will propose eliminating any taxes on dividends and capital gains and we wouldn’t mind if he
lowered the tax rate on short term gains while he is giving money away.
Because we say Bush is going to try to do these things does not mean we agree with his choices. But the realities are that Repubs control and are going
to have their way and so we have to adjust our thinking accordingly. Economies as large as ours do not become Banana Republics over night. It takes
time and many years of deficits to reach that status.
The dollar has been rising and falling for years and it is true that the markets crashed in 1987 when the dollar was under pressure. But more
importantly, the 1987 markets had been in a speculative period for years and had just moved 40% higher on the year (and up 170% over the
previous four years) to an all time highs which they made in April 1987. The major measures then came off those highs and dropped 10% before
resuming their 20% climb to new highs in August,1987 before beginning a 20% decline over 2 months that ended in a further 40% lower three day Crash.
We just don’t have that scenario now.
It is important to remember that portfolio insurance was a new idea back then and the selling of stock futures by a few goliaths set off the collapse.
There are always new ideas and new strategies to prevent loss being created and sold by the big boys and girls. And that is true of the present with
all the hedges and various instruments that folks can trade. But we don’t think the time is ripe for a panic unless of course some currently unknown
billion dollar hedge fund has been leaning too heavily the wrong way.
The day to day movements in the dollar and gold and bonds and even oil are the hedgies playing zero sum games with each other. It is just a big
poker game with about as much financial acumen involved.
Over the short run – which is all that interests us from an trading standpoint – these gyrations may affect the day to day movement of the overall
markets but we think that individual stocks are in their own worlds right now and that there is a fair chance that we will gain 10% or more from this level..
The guru who has been right on the markets for the past few months suggests a move above 1187 on the S&P 500 today will set up a further move to 1200.
Asia was lower overnight as is Europe. Treasuries continue to exhibit weakness although this morning it is only a couple of basis points. Oil is 12
cents higher to $49.88 and gold is also up a bit. The dollar is continuing its stabilization against the euro although it is off a tad against the yen and U.S.
futures are suggesting a slightly lower opening.
7:32am and 3rd Quarter GDP was revised from a first look up 3.7% to a preliminary up 3.9%. The deflator (inflation) remained at 1.3%, and with that
look in the rear view mirror the futures have turned a bit better.
9:02am and Consumer Confidence was reported at 90 versus an expected 95. And so stocks are a bit weaker. It is amazing that folks would
buy or sell stocks based on a number that is as reliable as the exit polls of the last two elections. The exit polls were actually more reliable. The
computers just decided to count the votes differently.
11:20am and the major measures have been rambling below positive for most of the morning. Most have now turned up for the day but there
doesn’t seem to be a lot of conviction in the move. We are buying Bristol Myers for accounts as another down and out drug stock. The dividend
yield is 5% which means the dividend is in jeopardy but if BMY did cut the dividend the share price would probably rise since that uncertainty
would be out of the way. While we don’t expect any move up before year end we do think the large drug stocks will have a pop in the New Year.
12:01pm and crude oil is now 61 cents lower at $49.15. The ten-year Treasury is up in yield down in price at 4.36% and the five-year is at
3.70%. The major measures are again heading lower. The big boys and girls may want to move stocks higher later this afternoon since it is the
last day of the month but they had better wait until 2:30pm to try it. They started too early yesterday and weren’t able to hold the momentum into the close.
We will be able to wait till May and go to cash and go away since the U.S. Securities and Exchange Commission has postponed the planned
Jan. 3 start of a one-year test of relaxed limits on short-selling of some large stocks. Under the delay, the test will begin on May 2, 2005 and
end on April 28, 2006, the SEC said in an order.
3:02pma nd the DJIA closed down 48 points at 10428. The S&P 500 dropped 5 points to 1174 and the NAZZ lost 10 points to end at 2097.
The ten-year closed at 4.36%, the five-year at 3.70%, oil was lower and breadth was negative at the bell.
And tomorrow is today.
FAIR USE NOTICE
This site contains copyrighted material the use of which has not always been specifically
authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental,
political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any
such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107,
the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for
research and educational purposes. For more information go to:
http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use
copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
For those folks who have accounts with us, you may now go to:
and fill out the account information and view your accounts online. If you
have trouble filling out the form, or in getting online, call and we will
help you with the process. NASD regulations require the eview
site to be secure. Thus your password must be changed every ninety days.
You will be prompted to make this change when needed.
For those clients of LY& Co and other
interested persons the Quarterly Report on the routing of customer orders under
Annual offer to present clients of Lemley Yarling Management Co. Under Rule 204-3 of the SEC Advisors Act, we are pleased to offer to send to you
our updated Form ADV, Part II for your perusal. If any present client would like a copy, please don't hesitate to write, e-mail, or call us.
The factual statements herein have been taken from sources we believe to be reliable but such statements
are made without any representation as to accuracy or completeness or otherwise. From time to time the Lemley Letter, or one
or more of its officers or employees, may buy and sell as agent the securities referred to herein or options relating thereto, and may
have a long or short position in such securities or options. This report should not be construed as a solicitation or offer of the purchase
or sale of securities. Prices shown are approximate. Past performance is no indication of future performance.