This is the last trading day of
the year and it closed with a whimper in Asia with
markets fractionally higher and European bourses are also mixed. Gold is up a few
pennies as is oil and Treasuries are down a tick or two in price.
The NYSE and NAZZ
and Federal Reserve are going to close on Tuesday January 2 as a Day of
Mourning for Gerald Ford and to give everyone who works so hard a day off to
shop and relax. Of course all the peons in this country will have to work a
regular day. We are going to close also and take the dogs off perimeter patrol.
The next post will
be Wednesday evening January 3.
The NYT is reporting that Saddam
may be executed on Saturday which is tonight. That may be one more reason for
the Tuesday close to give more time in case there are any untoward incidents.
But closing markets for four days is not a good idea and may induce some
selling today from traders who donít want to be committed for that long a time
period. Yes, four days is a long time for many traders.
Oil closed the day early and at year end is was $61.05.
Gold closed at $638 in NYC.
Treasuries were a bit lower with the two-year at 4.82% and the
ten-year at 4.71%. The close on the ten-year was 30 basis points higher than
where it was when the year began.
The DJIA lost 41 points to finish the year at 12460. The S&P 500 closed down 7 points at
1417 and the NAZZ dropped 10 points
Breadth was 2/1 negative on the day and volume was light.
There were 270 new highs and 50 new
And thatís it folks. Our next post from the big casino will be Wednesday January 3.
We wish all a
Happy New Year.
28 December 2006 Daily Comment
mixed overnight with Hong Kong up another 1%. European
bourses are slightly lower in quiet trading. Gold is up $7 at $636 in the early
going and Oil is up 26 pennies at $60.60.
Jobless claims were up 1,000 to
317,000. There are some numbers coming at
that will determine the course of Treasury trading for the day. Stocks are
going to open lower.
is up 47% for the year while Brazil
is up 33%.
December Consumer Confidence was 109 which was better than expected
and the December Chicago Purchasing Managers
Index was still expansive at 52.4 which also was better than expected. November
Existing Home Sales came at up 0.6% month
to month or a 6.28 million annual rate which was better than expected.
Treasuries are higher in yield on the data with the two-year at 4.80% and the
ten-year at 4.68%. There is an auction of the five-year today.
Royal Dutch Shell PLC said
it hired former U.S. Interior Secretary Gale Norton (who regulated the oil
industry) to serve as a counsel for the Anglo-Dutch oil company. The circle of
back scratching and greed continues.
Goldman Sachs has raised $6.5
billion in a fund to invest in infrastructure around the world. The fund will
buy ports and airports and regulated utilities. The folks investing are pension
funds and insurance companies and banks that are looking for stable income. They
must never have heard of U.S. Treasuries.
Oil ended higher by 19 pennies in NYC today at $60.53. Gold jumped $7 to $636 and Treasuries were higher in yield and lower
in price with the two-year finishing at 4.80% and the ten-year at 4.69%.
European bourses were mostly small percentages lower.
The DJIA lost 10 points to end at 12500. The S&P 500 was down 2 points to 1425 and the NAZZ lost 5 points to 2427.
Breadth was 5/4 negative and volume
There were 360 new highs and 50 new
And the fund games at the big
casino end for the year tomorrow.
27 December 2006 Daily Comment
The Prince and Princess arrived
last night so the posts will be shorter than usual while they are here. Also there
truly isnít a lot happening in the markets this week and trying to make hay when
it is foggy is not a good idea. But if the rally continues for the next three
days we will be tempted to take a chunk of change off the table.
Overnight Asian markets were
strong with Hong Kong up over 2% and Japan up
fractionally and hitting a seven month high. European bourses are catching up to
markets after their holiday yesterday with France
and Germany up
over 1% at and the other markets
Gold is up $4 at $630 in NYC and
Oil is down 20 pennies at $60.90 in the early going. Treasuries are a tad
News organizations are reporting
that the CEOs of Ford and Toyotahad talks in Tokyo.
There is a difference of opinion about whether they just discussed sushi or
something more substantive.
Investors Intelligence had a drop in Bulls to 56% from 58% and a
drop in Bears from 21% to 20%.
Steve Jobs has hired a lawyer to
represent him as the probe into option pricing practices at Apple continues and
that has Apple stock down $3 per share this morning.
The Commerce Department reports
that inventories of new homes have dropped to their lowest level since last
May. That news has weakened Treasuries in thin holiday trading. One guru
suggested that when homes donít sell some become rentals and are removed from
Oil ended lower by 76 pennies at $60.34. Gold gained $3 to $630. Treasuries
were weak with the two-year at 4.78% and the ten-year at 4.65%.
European bourses closed higher across the board.
At the bell the DJIA was up 110 points at 12517. The S&P 500 gained 10 points to end at
1427. The NAZZ jumped 20 points to
Breadth was 3/1 positive on the NYSE and better than 2/1 positive
on the NAZZ and volume remained holiday
There were 430 new highs and 50 new
And there are two more days this
year for mark ups and mark downs and the boys and girls to play their fund
games at the casino.
26 December 2006 Daily Comment
Asian markets were mostly higher overnight
and European markets are closed for Boxing Day (http://en.wikipedia.org/wiki/Boxing_Day
). Oil is up at $62.80 and Gold is $5 higher at $627. Treasuries are a bit better
with the two-year at 4.71% and the ten-year at 4.58%.
Not much occurred in the markets
during the week we were absent and we would expect this week to be quiet also.
Our plan of raising cash into the New Year hasnít worked since there has been a
slight pullback and not the rally we thought might occur. We are going to hold
for now and see how the week develops.
Last week we
bought Circuit City, the electronicsí retailer when its share price
sold off 25% in one day to a yearly low after it announced margin pressure on
its sales. Micron Technology announced
better than earnings and the shares
rallied back to where we initially purchased them and Ford stopped going down in price as several brokerages gave tepid
support to the company shares at current price levels. Palm also announced
better than expected results but Research
in Motion which makes the Blackberry had super results which caused Palm to
remain in the back seat for now.
Saddam is to be hanged within
thirty days. According to the court, from tomorrow any day could be the day of
execution. That is a nice touch.
Joe Biden is going to run for
President. He must be the only one who hears the sound of one hand clapping.
Oil closed down $1.36 at $61.05 in NYC. Gold gained $5 to $627. Treasuries
were better with the two-year at 4.71% and the ten-year at 4.60%
The DJIA gained 70 points to close at 12414. The S&P 500 rose 7 points to 1415 and
the NAZZ was up 12 points to 2398.
Breadth was 2/1 positive and volume
was holiday light.
There were 250 new highs and 60 new
With three more trading days till
year end the big boys and girls are mostly taking a pass on playing fund games
at the casino.
25 December 2006 Special Holiday Comment
Merry Christmas and Happy Holidays
From the Lemley / Bezold clan
Bud Lemley, Lisa Lemley Bezold, Katie Lemley, Christine Lemley, and Dave Bezold
(foreground) Tyler Bud Bezold and Abigail Bezold - 2006
21 December 2006 Daily Comment
Our mother, Odella Baum, died peacefully with her children around her on the evening of December 19, 2006.
In keeping with her wishes there will be no wake or services.
Her ashes will be scattered among her relativesí graves in St. Joseph, Kansas on her 94th birthday May 15, 2007.
Memorials in her name may be made to:
1000 Butterfield Road
Aurora, Illinois 60504
She is now at peace. Amen
18-22 December 2006 Daily Comment
We are in Chicago for the week comforting our mother as she passes to the other side. She is comfortable and in no pain and at
home with all of us. This is as she wishes and for that we are thankful. There will be no wake and her ashes will be scattered in
Kansas on her 94th birthday in May 2007.
For the above reason there will probably no posts this week unless we make a trade. Our interest is to raise cash into the
New Year as share prices allow. We will post trades and also update the Model Portfolio page as actions warrant.
15 December 2006 Daily Comment
Hanukkah, the festival of lights.
More than 2,000 years ago, the Jewish people led
a revolt against oppressors who forbade them to pray, study the Torah, or
observe their religious customs. Led by Judah Maccabee and fueled by their
faith, their small army triumphed over tyranny. When they reclaimed the
desecrated Temple and prepared it
to be purified and re-dedicated, the holy oil that should have lasted only one
day instead burned for eight days. During Hanukkah, Jews around the world honor
this miracle by lighting the menorah, a symbol of hope shining through
Asia was higher overnight as is
Europe at midday following on the heels of yesterdayís big up day in the U.S.
Oil is up another 32 pennies to $52.85 in early NYC trading and Gold is down $2
at $629. Treasuries are flat lining ahead of CPYI at .
CPI For November was unchanged as
was the core rate. Year over year CPI was up 2.0% and the core year over year
rate was 2.6%. Treasuries are rallying on the news as are stock futures.
Bank of America upped Intelís price target from $27 to $28.
We wonder how much thought went into that change.
November Industrial Production
was up 0.2% and Capacity Utilization was 81% down from 82% in October.
Apple delayed filing its quarterly report because of accounting
issues with stock options and Dell
has no quarterly report because of accounting issues on profits and sales in
past years which also would have affected options. Same old same old with a
yawn. And the bonuses for Wall Street are being announced. Where are the
We sold J Crew for
a one day $2 gain.
We are selling
Fifth Third today for a $1 plus gain. We want to continue raising
cash into year end and FITB can only be sold when others are buying. FITB is 40
pennies under its yearly high.
Oil ended up 92 pennies at $63.43 in NYC. Gold dropped $12 to $619. Treasuries
gave up most of their early gains that were the result of the tame CPI to
end slightly better with the two-year at 4.72% and the ten-year at 4.59%.
European bourses closed to the good.
The DJIA ended the day up 28points at 1244. The S&P 500 gained 2 points to 1427 and the NAZZ rose 4 points to 2457.
Breadth was 2/1 positive in the morning but was negative at the close
as traders took profits. Volume was
Quadruple Witching heavy.
There were 475 new highs and 50 new
And tomorrow and the next day the
casino is closed for the big boys and girls to rest.
14 December 2006 Daily Comment
As the trading day begins we see
that most Asian markets were big fractions higher overnight and that European
bourses except for Stockholm are
small fractions higher at .
Gold is flat in early trading in NYC
at $632 while Oil is higher by 88 pennies at $62.25. Treasuries are firm to a
few ticks better after yesterdays drubbing.
Mother Merrill has decided to raise Ford to neutral from sell.
Thank you Mother. Right now weíll take any kind of not negative comment as a
OPEC is going to cut production
by 500,000 barrels a day beginning February 1. This cut suggests that they
donít want oil below $60.
We get mail:
After looking at these positions, all I can say is that Mesirow must
love you...this is the biggest position I have had in a long time...I am
confused and nervous...
What makes Time Warner a sale at $20.86 and a buy at $21.25 only days later?
Now I have to go back to praying.
If your praying is anything like ours -- stop immediatelyóthe ceiling
may fall in.
We usually get this filled up at year end.
We sold TWX at resistance thinking it would come back off but then TWX
broke out and you know how the momentum boys and girls like breakouts. We hopped
back on in a smaller way for the ride.
We were this filled a few years ago and then got killed the first week
in January but we had less quality stocks.
Our hope is for a move into yearend that gives us 4% and then we go
back to cash. We know that is cute but then we are cute sometimes. We have
the feel right now for what that is worth. We are also taking a lot of pills
and cold medicine so that may be giving us the feel but then that is another
Life is a journey. You survived the car crash and you'll survive this. Keep
the peace and let God rest. He doesn't care about our accounts--really. And we will be raising cash if the markets cooperate. *****
Jobless claims for the latest
week were down 20,000 claims to 304,000.
We thought CPI came today but it
comes tomorrow morning so it will make expiration even more interesting.
This morning import prices came
in at up 0.2% and year over year import prices were up 1.2%. Treasuries flat
lined on that news and stock futures improved on the less than expected
inflation number and on the jobless claims number i.e. rosy scenario sweet spot the Fed got it right thinking...
This morning as
the trading day began for our larger/aggressive accounts we bought Tribune,
Williams Sonoma, J Crew, Pier One and JDS Uniphase.
An hour into the trading session Brazil
is up 1% and making new highs for the year. Treasuries are lower in
price/higher in yield and some gurus are positing that the big boys and girls
are selling bonds and buying stocks. 1425 on the S&P is resistance and it
is currently at 1422 up 9 points. The Treasury two-year is at 4.73% and the
ten-year is at 4.59%.
With a new record
on the DJIA and the S&P 500 at 1426 it is time to raise a little cash.
We sold our Gap holdings
at $20.07 for $1 to $1.50 per share two week gains. The shares are
up on takeover speculation and they did this last week also before backing off.
This stock is always an anchovy for us. We sold Sony for a nice $3 per
share two week profits. *****
Oil closed up 114 pennies at $62.51 in NYC. Gold was down $1 at $631.
Treasuries lost ground again today with the two-year at 4.73% and
the ten-year at 4.59%.
European bourses closed higher big fractions to over 1% across the
also gained 1%.
The DJIA gained 98 points to end at 12415. The S&P 500 rose 13 points to 1425 and the NAZZ jumped 22 points to 2453.
Breadth was better than 2/1 positive and volume was active.
There were 506 new highs and 56 new
And tomorrow brings Quadruple Witching and also CPI which means a day of fund games for
the big boys and girls.
13 December 2006 Daily Comment
Asia was again
mixed overnight and European bourses are mixed at .
And oil and gold are flat in the early going in NYC.
Treasuries are lower on
Preliminary November Retail Sales which were reported to be up 1.1% which was
much greater than expected. The two-year is at 4.66% versus a 4.58% close and
the ten-year is 4.55% versus a 4.48% close yesterday.
Investors Intelligence has Bulls still at 59% but Bears have
dropped to 21% from 23%. Those numbers remain worrisome but the reward at this
time of year justifies the risk. Performance anxiety remains.
AG Edwards downgraded Micron
to sell. We are buying more today. MU is priced at
$14 and has $4 per share in cash. †The
analysts are negative because MU has ramped up production to focus on NAND
chips at the expense of DRAM chips. And DRAM chips are now in demand while NAND
are in oversupply. Of course the analysts all said that MU should ramp up
production of NAND chips but that was then. That is the way the chip business goes.
The share price is under pressure as folks donít want to own it at year end in
their portfolios because it has been such a poor performer.
Global sales of microchips rose 11.3
percent to $261.4 billion in 2006, driven by demand for DRAM memory chips and
devices used in mobile phones, researcher Gartner said on Wednesday. Intel kept its leading position in the
market with sales of $31.29 Billion, equivalent to a 12 percent market share, but
its revenue fell 9.5 percent year-on-year, the research firm said in a report. Samsung
Electronics is the world's biggest maker of DRAM and NAND flash memory chips, expanded
its market share to 7.9 percent this year, and its chip sales increased 12.4
percent to $20.6 billion.†† "Strong
growth in DRAM picked up in 2006 where NAND flash left off the year
before," said Jeremey Donovan, research director at Gartner. "Outside
of DRAM, wireless semiconductor sales once again drove strong performance in
the industry." Sales at No. 3 Texas Instruments jumped 17.4 percent to
$11.88 billion or 4.5 percent market share, Gartner said. †Infineon Technologies, which included gains from
Qimonda, ranked fourth in 2006, a jump from its previous 7th place. Its chip
sales gained 29 percent to $10.59 billion. †Toshiba fell to fifth place in 2006, from the
fourth slot a year earlier, with sales growth of 9.9 percent to $9.87 billion.
raised their dividend yesterday and the shares now yield 3.1% and we are buying a position in our large/ aggressive accounts and also in
some income accounts. GEís share price has gone nowhere for the last
few years while earnings quality has improved and we think it may become a
focus in the next few months.
We added shares of
Intel, Yahoo and Ford to accounts today. The short sellers are back
pushing Ford lower today. We are using some caution with Ford purchases since,
with the short sellers having the upper hand and more committed than any buyers
including us, we have no idea where the bottom is. Fordís money needs have been
satisfied for the next year. We donít want to get overly exposed but we want to
own enough to make the round trip worth the angst when it hopefully rallies
sometime in the future. That surely is Fear and Greed at play. *****
According to the bond gurus the
ten-year auction did not go well and oil has moved higher in the weekly report
that there has been inventory drawdown.
Gold finished up $1 at $633 in NYC. Oil was up 38 pennies at $61.40.
European bourses closed mostly better.
Treasuries were lower on the day
with the two-year ending at 4.71% and the ten-year at 4.59%.
to run out early and with five minute to go in the trading day the DJIA was up 10 points at 12325. The S&P 500 was up 2 at 1414 and the NAZZ had a 2 point gain to 2432.
Breadth was positive on the NYSE and negative on the NAZZ and volume was moderate.
There were 375 new highs and 60 new
CPI is announced tomorrow morning and the big boys and girls will
be ready to play their fund games at the big casino on any numbers that deviate
from the expected.
12 December 2006 Daily Comment
Asian markets were mixed overnight
and so are European bourses at .
Gold and Oil are flat as the trading day begins in the U.S.
Treasuries are quiet as the Fed announcement at
is awaited. No action by the Fed is expected and the only suspense is the
wording of the statement.
Texas Instruments lowered guidance for the quarter and the year but
the stock is going to open a bit higher because JP Morgan raised it to overweight saying gross margins are
bottoming in the first quarter of 2007. Several other brokerages cut their price
targets on the shares.
JP Morgan went to neutral on Micron Tech saying it was
concerned with the memory chip maker's growing inventory levels and prospects
for a weaker-than-expected flash memory chips environment in the first half of
In the follow-up to Texas Instruments
comments that low end cell phones are the ones that are selling several
brokerages also lowered their views on
Nokia and Motorola.
The following is the text of the Federal Reserve's
decision on interest rates released Tuesday, Dec. 12.
The Federal Open Market Committee
decided today to keep its target for the federal funds rate at 5-1/4 percent.
Economic growth has slowed over the
course of the year, partly reflecting a substantial cooling
of the housing market. Although recent indicators have been mixed, the economy
seems likely to expand at a moderate pace on balance over coming quarters.
on core inflation have been elevated, and the high level of resource
utilization has the potential to sustain inflation pressures. However,
inflation pressures seem likely to moderate over time, reflecting reduced
impetus from energy prices, contained inflation expectations, and the
cumulative effects of monetary policy actions and other factors restraining
Nonetheless, the Committee judges
that some inflation risks remain. The extent and timing of any additional
firming that may be needed to address these risks will depend on the evolution
of the outlook for both inflation and economic growth, as implied by incoming
(Substantial is a new word added
to this statement. Our emphasis.) *****
Oil ended the day down 20 pennies at $62.04. Gold closed down $3 at $631 in NYC.
Treasuries gained on the Fed inaction with the two-year at 4.62%
and the ten-year at 4.49%.
European markets closed mixed.
The DJIA lost 15 points to 12313. The S&P 500 gave up 2 points to 1411 and the NAZZ dropped 12 points to 2430.
Breadth was 2/1 negative for most of the day and ended that way and
volume was moderate.
There were 371 new highs and 70 new
And there are three more hedge
fund days at the big casino this week.
11 December 2006 Daily Comment
higher overnight and Europe is also fractionally higher
at . Oil is down a few pennies
and Gold is up $1 in NYC in the early going.
The Financial Times reports that
Goldman Sachís $10 billion hedge fund Global Alpha (what a great name for a dog)
is down 12% on the year after begin up 40% last year.
Last week we sold Time Warner as it approached
resistance. This morning on an upgrade from Prudential the shares have broke to
a new high and in the momentum game played on the street that breakout is a buy signal. We are
repurchasing shares on our large/aggressive accountsbut forgoing repurchase
for now in the other accounts where we sold. There may be a pullback in the
markets this week and if there is we would expect TWX to test the resistance
which has now become support.
This morning we also repurchased Micron Tech at $14.42. We have been trading the shares this
year with our last sale occurring at $15.20 last month.
Oil ended down 81 pennies at $61.22. Intimations of too much supply
and thus a desire to cut by some OPEC members were offset by warm weather
throughout the U.S.
affecting the trading mentality of traders.
Gold gained $3.20 to $634.
Treasuries were firm to better at the long end and European bourses ended higher on the
The DJIA gained 20 points to end at 13237. The S&P 500 rose 3 points to 1412 and the NAZZ jumped 6 points to 2443.
Breadth was positive and volume
There were 420 new highs and 60 new
And this week there is a Fed Meeting tomorrow Tuesday and Quadruple Witching at the big casino on
8 December 2006 Daily Comment
There will be no one in the office on Monday.
Kathy has a funeral to attend and we are having a routine colonoscopy.
There will be a Monday post.
Asia was lower
overnight and European bourses are mixed at .
Oil is up 87 pennies to $63.36 in early NYC trading and Gold is down $1 at 635.
The November Employment report said
132,000 new jobs were created. Moreover October and September were revised to
add a net of 42,000 jobs to those reports. The average monthly job creation for
the last twelve months has been 149,000 jobs. Average hourly wages rose 0.2% in
November and 4.5% on a year over year basis.
In the latest month 172,000
service jobs were created and there were a net loss of 29,000 construction jobs
and 15,000 manufacturing jobs.
On that news Treasuries sold off
with the two-year rising to a 4.63% yield and the ten-year moving up to 4.51%.
Mother Merrill followed Goldman
Sachs lead of yesterday and moved Hershey
to neutral. Boo!!!
The University of Michigan preliminary reading on consumer sentiment
fell to 90.2 in December from 92.1 in November. It is pretty strange that this
survey has preliminary and final readings just like GDP. Itís just another
number for the big boys and girls to use to trade. Moreover since Michigan
lost to OhioState
we would expect folks in Michigan
to be a little down at the beginning of the month.
We sold Time
Warner for $1 per share profit. It took a while be we are out of the
stock for now.
Oil ended down 46 pennies at $62.03 in NYC. Gold lost $6 as Treasury Secretary Paulson said the U.S.
supported a strong dollar causing the dollar to rally at the expense of gold
which ended at $631.
And the strong employment report
took its toll on Treasuries as they sold off with the two-year ending at
4.67% and the ten-year at 4.55%.
European markets closed slightly mixed.
The DJIA gained 25 points to end at 12302. The S&P 500 rose 2 points to 1410 and the NAZZ gained 8 points to 2435.
Breadth was flat on the NYSE and 5/4 positive on the NAZZ and volume was moderate.
There were 335 new highs and 50 new lows.
And the casino is closed for the
7 December 2006 Daily Comment
Today is Pearl Harbor Day. While we were born a few years after, we do
remember and thank our uncles and aunts and all those who served and saved the
mixed overnight and Europe is fractionally higher at . As U.S.
trading begins Gold is flat and Oil is up a few pennies. Treasuries are firm.
Jobless Claims were 328,000 which were down from last week.
The big number is tomorrowís November Employment report.
Ford sold $4.5 billion in convertible debentures with a 4.25%
coupon and a conversion rate of $9.20 which equals a potential issuance of
about 486 million shares. Too bad Ford didnít keep the 420 billion that was burning
a hole in their pockets back in the 1990s.
It must be December as our out of
favor stock holdings receive their final downgrades of the year. TLAB was downgraded by JP Morgan today
to underweight because the delay in the AT&T/ BellSouth merger will lessen
orders fro TLAB equipment. And Hershey was
downgraded by Goldman Sachs to neutral.
same store pharmacy sales were up 2.3%. We donít think that is any great shakes
and we own enough low priced stocks so we are selling our
final shares at $5.15.
We added Symantec
to more accounts this morning at $19.85. It is our guess that the
shares will be marked up to $23 or more at year end. We know this type of
activity never occurs but we think that there may be mysterious buying pressure
on the shares at that time. If not SYMC still has value given the coming Vista
induced computer buying spree that should occur next year.
We are also adding
shares of TLAB to accounts that sold Rite Aid yesterday and today. While the near term outlook may be
muted for the shares we think that longer term either more business or a
takeover is in its future. Moreover the stock is a candidate for a post year
The European Central bank raised
its key interest rate 25 basis points today.
The FDA panel was unanimous that
the benefits of drug coated stents outweigh the risks when used as directed. Boston Scientific popped then plopped
as buyers realized that traders expected that outcome.
Normal trading volume in Ford is about 40 million shares a day. Yesterday
over 170 million shares traded and
today over 300 million shares have
traded as the big boys and girls short Ford shares, buy puts, sell calls and do
all manner of trading strategies in relation to the offering of $5 billion in
debentures. The volume should return to normal with the selling pressure
abating by the end of next week. With next week being Quadruple Witching Friday
the share price should be pinned to $7.50.
Oil closed up 30 pennies at $62.49. Gold ended up $1 at $637. Treasuries
ended flat with the two-year at 4.57% and ten-year at 4.49%.
European bourses closed higher.
The DJIA dropped 35 points to end at 12275. The S&P 500 dropped 6 points to 1406 and the NAZZ lost 17 points to 2428.
Breadth was 3/2 negative and volume
There were 450 new highs and 50 new
And there is one more day for the
girls and boys to play their fund games at the big casino.
6 December 2006 Daily Comment
Asian exchanges were fractionally
higher overnight and European bourses are mixed at . Gold is down $7 in the early going in NYC and Oil
is softer at $62.22 down 22 pennies. Treasuries are weaker.
UBS raised Cott
to a buy and since we have only owned it for 12 hourswe are selling
for a 7% gain.
Investors Intelligence has 59% Bulls up from 57% last week and 24%
Bears. The correction camp is down to 16%. If it were any other time of
year we would be raising cash with those numbers but we are comfortable though
year end to hold and increase the stocks we own.
Ford is offering $4.5 billion in convertible debentures tonight.
That is the reason the common shares have been selling off. The big boys and girls
who buy the convertible debentures have complicated formulas to limit their
risk (and also their appreciation) that involves selling shares of Ford common
stock short. The number of shares shorted is less than, equal to, or greater
than the number of shares they would receive if they converted the debentures.
That way if Ford goes broke they make money on the shorted shares as protection
against any losses they would suffer owning the debentures.
Now one may ask why make an
investment that you think may result in bankruptcy. But that is not the
question. The correct question is,who thought of this strategy? And for
that we have all our business school to thank. These schools have turned out
thousands of bright young boys and girls who love computers and computer
programs and who love to think up complicated strategies for speculating. That phenomenon
creates thousands of big paying jobs that never existed and the bright boys and
girls play zero sum games of financial poker (for every winner there is an equal
loser) with each other to see who will wind up the richest when the casino
We sold our SGP holdings
for a $1.25 gain. We added more Ford and Qwest
to our larger accounts and VECO and SYMC to
some accounts. We bought YHOO in our larger/aggressive
Rite Aid is
up 20 pennies and we are selling shares in our
larger accounts for a scalping trade. We donít know why it is up and
hope to repurchase lower. Our other accounts have a smaller number of shares
and we are holding for more $$$.
Treasuries lost ground today with the two-year ending at 4.57% and
the ten-year at 4.48%.
Oil was down 24 pennies at $62.19 and Gold lost $12 to $635.
European bourses were mixed at their close.
The DJIA dropped 20 points to close at 12311. The S&P 500 was off 2 points at 1413 and the NAZZ ended down 7 points at 2445.
Breadth was 5/4 negative and volume
There were 490 new highs and 50 new
And there are two more casino
days left this week.
5 December 2006 Daily Comment
Overseas markets were and are
mixed as the day begins and Gold is down $1 to $649 with Oil at $63.08 up 64
pennies. Treasuries are firm.
Yesterdayís market action was
pleasing to the Bulls and difficult for the Bears who late last week sensed they
might have gained the upper hand. But one day does not a market make, and
follow though today will give a better idea if the trend is again to the
UBS raised Starbucks to a buy.
3rd Quarter Productivity was up 0.2%
while Unit Labor Costs in the Quarter we up 2.3%.
Treasuries liked those numbers.
It looks like the SEC is going to
eliminate the shorting on downticks rule. From todayís WSJ:
The second proposal would scrap SEC and
market rules in place since the 1930s that allow short sales only when a stock
price is rising. An SEC experiment that temporarily lifted such restrictions
for some stocks, begun in 2005, found the limits aren't needed to prevent
market manipulation, SEC officials said.
SEC will seek public comment on both proposals. Final adoption requires a
second vote by the five-member commission, which would likely happen next year.
changes to crack down on short selling are in the works. Erik Sirri, the SEC's market-regulation-division director, said
the SEC staff hopes to offer recommendations in January to amend a broad
package of rules on short selling, specifically by eliminating exceptions for
market makers and so-called grandfathered securities.
exceptions have been controversial, and some critics say they undercut efforts
to prevent abuses like "naked" short sales, where sellers don't
borrow the shares they sell.
The reality is that there hasnít been
a panic sells off since the change in the rule experiment was instituted last
year. This rule has worked for 80 years and markets are less liquid now than
ever because of the huge buying and selling power of the hedge funds. We will
be saying we told you so sometime
within the next few years.
Some technicians are excluding bond
funds and exchange traded funds from the new high list for the NYSE. We would
rather use the raw numbers because in every market there are issues that maybe
shouldnít be counted but have been. We are thinking of all the preferred stocks
that used to trade on the NYSE as an example. We have always used the raw
number and will continue to do so. Of course we are short term bullish so the
raw numbers help our case. Some of the folks who want to winnow the number are
short term bearish and that is why they want to use the numbers excluding
The November ISM Services Index came in at 58.9 which remains
expansionary and Treasuries are a bit weaker on the news.
The drug-coated heart stents on the U.S. market are associated with a small but significant
risk of blood clots months after they are implanted, U.S. Food and Drug Administration staff said in
documents released on Tuesday. †FDA
reviewers said there was uncertainty about whether the devices, sold by Boston Scientific and Johnson &
Johnson, were linked to a long-term increase in deaths
or heart attacks. The analysis was released ahead of a two-day advisory panel
meeting that starts Thursday on the safety of the devices.
The markets are taking that press
release as good news not bad news as BSX is up 50 pennies per share this
Walgreen jumped $2
in the last day on the good same store sales numbers. We were betting those
numbers would be good and so we are going to sell the news
and take our $2.50 per share three day profit.
that the richest 2% of folks in the world control 50% of the wealth. And the
poorest 50% in the world control 1% of its wealth.
We bought a beginning potion is Cott Beverages in our larger/aggressive
accounts. We traded these shares a few years ago and subsequently they ran up
to a ridiculous price but have come back down to trading range again. Cott
engages in the production, packaging, and distribution of retailer branded
bottled and canned soft drinks in North America, the United
Kingdom, Europe, Mexico,
and Asia. The companyís product line comprises flavored
beverages, juice-based products, bottled water, energy drinks, ready-to-drink
flavored teas, and iced teas. Its customers include national and regional
grocery, mass-merchandise, drugstores, and wholesale and convenience store
The share price is down from a high
of $18 this year and $28 two years ago. We are buying for a year end trade.
Oil closed down 1 penny at $62.44. Gold also was lower in NYC down $3 at $647. Treasuries were flat.
European bourses were mostly higher with Germany and France both up over 1%. Brazil is tacking on better than 1% again today. *****
The DJIA ended up 45points at 12332. The S&P 500 gained 6 points to 1414 and the NAZZ rose 4 points to 2452.
Breadth was positive and volume
There were 700 new highs and 50 new lows.
And with three more fund games
days left at the casino this week the big boys and girls have their hands full
trying to keep the rally going.
4 December 2006 Daily Comment
Asia and European
markets were slightly higher overnight and Oil is down 80 pennies to $62.81 as
the day begins in NYC. Gold is unchanged at $651 and Treasuries are a tad
weaker after Fridayís big run.
Pfizer is calling off a drug test
that was big time for it with the results that the share price is down 15% this
morning. And Bank of New York is buying Mellon bank on the takeover front.
One thought we had over the
weekend is that merger activity is going to become feverish in the next three
months as investment bankers raise the possibility of Dem takeover of the
executive branch and thus the Justice Department which rules on mergers. Companies
that want to merge are going to have an extra incentive to get it going so that
the usual one year and more waiting periods occur during the present very
We are going to
pick up some Pfizer while it†
is on sale today. PFE has a 4% yield and given the lowering of interest
rates we are comfortable placing it in portfolios. What can go wrong has gone
wrong at Pfizer and hopefully this may be the last bit of bad news for a while.
The drop in Pfizer this morning is worth 30 points on the DJIA.
Walgreen announced same store sales were up over 9% for November
with Pharmacy sales up 11.4%. both numbers were better than expected. With the
Medicare insurance plan it is logical that sales would be higher and it will
take another year for the Wal-Mart $4 prescription plan to show up in WAGís
numbers, if they will.
Lehman and a bunch of other
brokers downgraded Pfizer. BankAmerica maintained its buy rating.
Stock markets that are storing
and higher all day going into the final hour tend to close that way. The DJIA
is up 100 points at 1:55pm.
We have added GPS, BSX and ALU to accounts today.
Oil ended at $62.44 down 99 pennies. Gold was unched at $651. Treasuries
firmed late in the day. with the two-year ending at 4.52% and the ten-year
European bourses were higher at their close and Brazil was up 2.9% on the day into new high territory for 2006. *****
On Friday the DJIA rallied in the last hour to cut a 125 points loss to
a 30 points loss. Today the markets pulled back in the last hour to shave a 125
points gain to a 90 points gain.
The DJIA ended up 90 points at 12280. The S&P 500 was up 12 points at 1408. the NAZZ gained 35 points to 2447.
Breadth was better than 2/1 better and volume was active.
New highs expanded
to 654 and there and 40 new
And there are four more fund days
for the big boys and girls to play in the casino.
For a little fun
we present the following:
In the beginning, God created the
Heavens and the Earth and populated the Earth with broccoli, cauliflower and
spinach, green and yellow and red vegetables of all kinds, so Man and Woman
would live long and healthy lives. Then using God's great gifts, Satan created
Ben and Jerry's Ice Cream and Krispy Creme Donuts. And Satan said, "You
want chocolate with that?" And Man said, "Yes!" and Woman said,
"and as long as you're at it, add some sprinkles." And they gained 10
pound s. And Satan smiled.
And God created the healthful
yogurt that Woman might keep the figure that Man found so fair. And Satan
brought forth white flour from the wheat, and sugar from the cane and combined
them. And Woman went from size 6 to size 14. So God said, "Try my fresh
green salad." And Satan presented Thousand-Island Dressing, buttery
croutons and garlic toast on the side. And Man and Woman unfastened their belts
following the repast.
God then said, "I have sent
you heart healthy vegetables and olive oil in which to cook them." And
Satan brought forth deep fried fish and chicken-fried steak so big it needed
its own platter. And Man gained more weight and his cholesterol went through
the roof. God then created a light, fluffy white cake, named it "Angel
Food Cake," and said, "It is good." Satan then created chocolate
cake and named it "Devil's Food."
God then brought forth running
shoes so that His children might lose those extra pounds. And Satan gave cable
TV with a remote control so Man would not have to toil changing the channels.
And Man and Woman laughed and cried before the flickering blue light and gained
Then God brought forth the
potato, naturally low in fat and brimming with nutrition. And Satan peeled off
the healthful skin and sliced the starchy center into chips and deep-fried
them. And Man gained 10 pounds.
God then gave lean beef so that
Man might consume fewer calories and still satisfy his appetite. And Satan
created McDonald's and its 99-cent double cheeseburger. Then said, "You
want fries with that?" And Man replied, "Yes! And super size
them!" And Satan said, "It is good." And Man went into cardiac
arrest. God sighed and created quadruple bypass surgery.
Then Satan created HMOs.
1 December 2006 Daily Comment
Kerkorian has sold his entire GM stake so it is back to abnormal
for GM. And there are rumors that Texas
Pacific and KKR are looking at Home Depot which would be a $100 billion
leveraged buyout. Supposedly the buyout boys and girls are interested in
retail. As the saying goes, make no mall plans. And
as we have said before, leveraged buyouts of retailers with thin margins are
risky because they are based on rosy assumptions. But with cheap money (low
interest rates) supplied by the Fed and 20% performance fees to the deal makers
the buyout binge will continue to its ultimate conclusion. See the late 1960s
to early 1970s and late 1980s for the eventual results. Remember: Greed is good until it is foolish.
was mixed with Hong Kong down 1.4% and Japan
up fractionally. Europe is higher across the continent
at and US futures suggest a lower
opening. Treasuries are slightly lower. Gold is down $2 to $650 and Oils is off
70 pennies to $62.40.
said on Friday that it has completed its acquisition of Harbor Florida
Bancshares Inc., the holding company for Harbor Federal Savings Bank.† In March, Harbor Federal's 42-branch network
will begin operating under the National City
City expects to complete its pending acquisition of
West Palm Beach, Florida-based Fidelity Bankshares Inc., in January 2007.
From www.minyanville.com we learn that this
year the S&P 500 has finished higher in 10 out of the first 11 months. That
has occurred only three times (1936, 1958, and 1996) before in the history of
the S&P 500. And on two of the three times the S&P closed lower in December
than it began the month. So only one time in its history has the S&P 500 registered
a gain in December after being higher in 11 out of 12 months and that year was
1958. That year was our first year of high school.
ISM Manufacturing Index was 49 which indicates a contracting economy.
That has the Treasury two-year rallying to 4.55% and stocks selling off.
merger has been completed and we are buying shares in accounts that own
Walgreen. With revenues approaching $25 billion from the combined company we
think they can give Cisco a run. The new Alcatel- Lucent is priced at about one
times sales or $26 billion. Cisco with $30 billion sales is priced at $150
billion net of cash. We bought shares of ALU in many
We also added shares of The Gap and Boston Scientific to these same accounts.
Hershey is off
$2.50 to $50.55 today on a Prudential downgrade and we are buying shares in accounts.
We are gong to
take our $2 profit in Williams Sonoma. It is up the
$2 in the last two days on thin volume and if the correction in retail
continues we are guessing we can get it back at $30. If not, it is an anchovy
and weíll enjoy the gain.
We are selling our
Treasuries to profit from the move over the last two days.
Gold ended down $2.30 at $650.60 in NYC.† Oil
was up 30 pennies at $63.43. Treasuries
were on fire with the two-year closing at 4.52% and the ten-year at 4.43%.
European markets were off close to 1% or more across the continent.
After being down 125 points the
DJIA rallied in the last hour and at the bell the DJIA was down 30 points at 12191. The S&P 500 lost 5 points to 1396 and the NAZZ dropped 19 points to 2430.
Breadth improved from over 3/1 negative to 2/1 negative at the close
and volume was active.
There were 390 new highs and 60 new
And the first day of December was a downer. If every trading day is
this bad the DJIA will be at 10000 by year end. We donít think so. Short term
to next month we think the risk is acceptable in stocks and beyond that we have
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