higher overnight and European bourses are mostly higher at . Treasuries are flat, Oil is down to $58 and Gold
is off $6 at $602in the early going in NYC.
Ford is cutting production 12% in the first quarter of 2007. F cut production 21% in this fourth quarter
The Employment Cost Index was up
1% last month. We have no idea what the Index measures nor do we care.
The Chicago Purchasing Managers
Index of Economic Activity was 53 in October versus 68 in September.
The Conference Board’s Consumer Confidence
Index was basically unchanged at 105 and change.
littlest Baby Bell still surviving, dropped 5% in price this morning when it
announced earnings. We used the price reduction as an opportunity to pick up
shares at $8.59 for accounts that own Ford. We have tepidly traded Q over the last few years but it now has
its house in order and is worth a longer hold. We think.
Credit Suisse began coverage of
the cardiology sector with an underweight
rating and judged Boston Scientific
as outperform and St Jude as underperforms.
Consumer debt has risen 77% since
the end of 2000 according to CNBC.
A couple of years ago Pier One was the darling of the retail industry. But the
company has fallen out of fashion and its CEO is retiring/ being pushed in
February of 2007. With $1.7 billion in sales and $150 million in debt and free
cash flow of about $170 million the stock is attractively priced as a speculation
at $6.70 which works out to just under $600 million for the whole company.
There have been buyout rumors but nothing is in the fire. We are taking a small
position in our large/aggressive accounts ahead of Thursday’s same store sales
numbers which will probably be dreadful and earnings in a couple of weeks which
will also be dreadful.
We bought Alcoaafter
it dropped on an earnings disappointment and we thought it would bounce more
than it has. But we have a $1 per share plus profit and we are going to take
We may be too cute but we think SYMC is being marked up for month end and we are going to sell it and look to reenter during the correction in
November. If we miss that opportunity we will miss that opportunity. We are
getting out with a scratch profit.
Treasuries are strong today and
Oil has moved to the upside. Stocks are under pressure with 90 minutes of
Oil ended up at $58.75 and Gold
was $607. Treasuries closed firm
with the two-year at 4.70% and the ten-year at 4.61%.
European bourses closed mixed.
Some of the big boys and girls tried
to close the major measures higher but they began their buy programs too soon and
couldn’t quite hold the major measures in positive territory. The DJIA closed down 8points at 12078. The S&P 500 lost 1 point to 1377 and
the NAZZ gained 3 points to 2366.
Breadth was 5/4 negative and volume
There were 370 new highs and 72 new
And so October ends with no
correction. The casino is open for business as usual tomorrow.
30 October 2006 Daily Comment
mixed overnight with Japan
and Taiwan both
down over 1%. Europe is also lower at . Gold is higher at $604 and Oil is down
almost $1 at $59.76 in the early going in NYC.
Mother Merrill upgraded Yahooto buy this morning. On that upgrade we are going to sell and take our one week $3 per share
Personal Income for September was up 0.5% and Personal Spending was
up 0.1%. The PCE price index (inflation) was down 0.3% while the core PCE was
up 0.2%. Year over year core PCE was up 2.4%.
Fed member Lacker, who is the only member who wants to continue
raising rates, said in Baltimore today that the economy is in a period of
transition (for sure), the labor market is firm (enough folks are getting fired
that they keep up demand for jobs to replace the ones they lost), and housing
is returning to a more sustainable level (dropping in price and sales). Lacker
also commented that capital spending will remain the key to growth (Nobel prize
thought) and that he is uncomfortable with the level of inflation (aren’t we
all?). He thinks that economy is resilient and can withstand Fed tightening and
he personally would like to see a Fed inflation target.
Wal-Mart had a 0.5% increase in same store sales for October.
Citigroup is suggesting that the
year end rally has occurred and that stocks may stall out for the rest of the
With the market rise slowing we want to lock in the trading profit in Hershey and we sold
it at $52.15 for a nice one week $2.50 per share gain.
Oil closed down over $2 in NYC at $58.36. Gold was higher at $607 and Treasuries
slipped with the two-year at 4.76% and the ten-year at 4.68%.
The DJIA lost 5 points to end the day at12085. The S&P 500 rose 1 point to 13278 and the NAZZ was up 12 points at 2363.
Breadth managed to close 5/4 positive and volume was Monday moderate.
There were 280 new highs and 60 new
And the big boys and girls are
focused on same store retail sales on Thursday, the Employment Report on Friday
and the elections a week from tomorrow. And of course everyone is focused on Halloween
27 October 2006 Daily Comment
mixed overnight with Japan
and Hong Kong both lower to end their trading week. Europe
is mixed at . Treasuries are
continuing to rally on the back of a benign and less than expected 3rd Quarter
Advance GDP number of 1.6% when over 2% was expected.
Oil is higher in NYC at $60.67.
Gold is off $3 at $596.
Microsoft had good numbers last night and trade lower after hours but
is higher this morning. The major measures are trading lower in the early going
as Friday, exhaustion, the tepid GDP numbers and profits taking arise.
We are trading out of the Treasury five-year at a 4.66% and
purchasing the Treasury two-year at a 4.78% yield. We bought the five-year
Treasury notes for our largest accounts at 4.60% and watched them drop 1% in value
in a week. They have rallied back to where the loss is acceptable and we want
to shorten up but maintain the investment in Treasuries. We are selling a 4.5%
coupon and buying a 4.625% coupon. When one shortens the maturity it involves paying
more money but we are reducing the investment risk over the term of the holding.
And the slight 1/8% increase in coupon will recover the loss on the sale over
the two year term as we earn 4.625% instead of 4.5% if we hold to maturity which is about as likely as the sun not rising
Coalition naval forces have been
placed on alert in the Persian Gulf. Why are we not
Royal Navy said forces had been deployed to protect Saudi
Arabia's oil installations against a
Our thoughts are that the markets
have priced in Dems taking control of the House. If they fail to do so stocks
will probably rally after the election. If the Dems gain both houses, the sell
off will ensue followed by a December rally.
Goldman Sachs cut its forecast
for computer motherboard shipment growth to 8.8% for the next quarter from this
quarter. That is a drop from previous forecasts of 10.8% growth. On that news
chip and chip related stocks are selling off. Also it is Friday after a few
good weeks of strong gains in stocks and some folks are taking profits.
Oil ended at $60.78 in NYC and Gold
finished at $601. Treasuries held their gains into the close with the two-year
at 4.75% and the ten-year at 4.65%.
European bourses ended mostly lower.
The DJIA closed down 80 points at 12083. The S&P 500 lost 12 points to 1376 and the NAZZ dropped 30 points to 2350.
Breadth was 2/1 negative and volume
New highs contracted to 425 and new lows were 50.
And the casino is closed for the weekend
so the big boys and girls can concentrate on football spreads.
26 October 2006 Daily Comment
Jobless claims moved back above
the 300,000 level in the latest reporting period. Durable goods orders in
September were up 7.8%. Ex defense the orders were up 6.8%. Ex transportation
orders were up 0.1%. And on that last number Treasuries rallied.
Overseas Hong Kong
saw some buying with the Hang Seng up over 1%. Japan
was up large fraction and the rest of Asia was mixed.
Oil is off a bit after its large pop
yesterday and is at $61.13 in early NYC trading with Gold higher at $593.
Bristol Myers reported slight better
than earnings and is worth another look now that earnings are out and CEO
Dolan is gone.
Sprint’s numbers weren’t great but subscribers remain at about 51.8
million which is the number that interests us. Average bill was still above $60
and the churn rate moved to 2.4% from 2.1%. That we think has to do with the
New home sales were up a bit in
September and up 5.5% month over month but median prices were down 9.7%.
CNBC is running a banner at the bottom of the screen that says the Wall StreetRally for Real. So it must be time for the correction.
We sold Washington
Mutual for a $1 plus gain in our large/trading accounts.
We bought Bristol Myers at $24.27 in accounts that own CAT. We bought to own
for the longer term which is longer than two weeks and less than eternity.
We also took a position
in Fifth Third Bank in our larger accounts. If it moves lower we
will buy more around. It has gone nowhere but down in the last two years and we
have tried trading it before without much luck. But with a $4% plus dividend
yield and third quarter earnings released we think it is worth a hold through
year end and beyond.
We added JDS
Uniphase (see October 25 post) to accounts that own Caterpillar in
The WSJ had a story about Wild Oats today and we bought a few shares in the company
for our larger/aggressive accounts. We have traded the stock for years.
Recently they ousted their CEO and last year Ron Burkle, who made his fortune
buying and selling food stores, took a 15 % position in the company. That 15% position
is chump change to Burkle. He placed his man on the board and something may
happen. But it has been a soap opera for us over the years and so we are not
Symantec is down
$1.50 today at $19.30 and we are buying sharesfor a trade in
accounts that own CAT. Fidelity owns a very large chunk of this stock and we
think they might want it marked up for month end or at least by year end. We
guessed wrong on last quarter’s earnings which surprised to the upside and the share
price was up $3 before we could blink or reestablish our position.
According to CNBC there are 9228
hedge funds with $1.6 trillion in
assets. There are 6544 distinct mutual funds with $6.3 trillion in assets.
With a modest for hedge funds 4/1
leverage the assets of hedge funds equal the market moving power of all the
Mother Merrill placed a sell on GM. *****
In the big Ouch department Renovis dropped from $14 to $3 today
because its experimental stroke medicine licensed to AstraZeneca failed to meet
its goal in a late stage trial.AstraZeneca also announced that it was discontinuing further development
of the drug NXY-059, dealing a significant blow to Renovis which has no other
products in clinical testing phases.
Oil ended at $60.36 in NYC and Gold
was $600. Treasuries closed strongly
with the two-year at 4.79%, the five-year at 4.69% and the ten-year at 4.72%.
European bourses also closed higher
The DJIA closed up 28 points at 12163. The S&P 500 gained 7 points to 1389 and the NAZZ jumped 23 points
Breadth was 2/1 positive and volume
There were over 600 new highs and 60
Microsoft earnings are announced after the close and those earnings
will set the tone for trading tomorrow morning.
And the casino is open for one
more day of fund games this week.
25 October 2006 Daily Comment
We are back from our trip to Chicago.
Not much occurred in our absence as stocks moved a bit higher and Treasuries remained
under pressure. With the Fed concluding its two day meeting today with the announcement today some of the uncertainty
with regard to interest rates may be resolved. And then the big boys and girls
can concentrate on marking stocks up into the October 31 fiscal year end for
many mutual funds.
Asia have also been quietly higher over the last few
days. The world stocks markets are at levels where a pause seems justified.
Also just regrouping after the nice rise is in order. But any news event could
Oil was $59.63 and Gold $586 in
the early going in NYC.
We don’t know whether the markets
have priced in a Democratic victory but we presume that a Republican victory
would give a little push to stocks. And given how wrong the polls were in the
2004 election our gut is telling us that Dem victory is anything but assured.
Polls on a state by state and district by district basis are much closer and
non predicative that the national polls.
While we were away Tellabs reported earnings that were
fine but revenues in key areas were less than the street wanted and the stock dropped a bit. TLAB didn’t drop
enough to add to but we will under $10.
We also bought CAT in more accounts last Friday to go
with our Hershey position of big cap stocks that missed.
Existing home sales in September
were down 1.9% to 6.16 million annual rate and housing inventories also fell to
a 7.3 months supply. Median home prices were down 2.2% from one year ago to
We are taking a
small position in JDS Uniphase for our larger accounts. JDSUD just completed a 1 for 8 reverse
spit and the shares are trading on their low. We would guess the shares will be
under pressure for a while as small odd lots that resulted for the reverse are
worked off. Back in the tech boom JDSU was the stock to trade (it traded at a high
of $750 if the share reversal is considered). The share price has fallen hard
but the reverse split makes it an interesting trade. With a market cap of $2
billion and $1.2 billion in cash offset by $900 million in long term
convertible debt they are going to earn money this year and may earn 80 pennies
per share next year. We own for a trade. We would buy more around but earnings
are on November 2 and we will wait for those.
JDS Uniphase Corporation provides
communications test and measurement solutions, and optical products. The
company operates in three segments: Optical Communications, Communications Test
and Measurement, and Advanced Optical Technologies. The Optical Communications
segment provides components, modules, and subsystems used by communications
equipment providers for telecommunications, data communications, and cable
television networks. Its products include transmitters, receivers, amplifiers,
multiplexers and demultiplexers, add/drop modules, switches, optical
performance monitors and couplers, splitters, and circulators that enable the
transmission of video, audio, and text data over fiber optic cables. The
Communications Test and Measurement segment provides a portfolio of equipment,
systems, and services used to enable the design, deployment, and maintenance of
communication equipment and networks. It offers test tools and platforms for
optical transport networks, digital subscriber line services, data networks,
cable networks, digital video broadcast, and fiber characterization services.
The Advanced Optical Technologies segment provides coated optics document
authentication, brand protection, and product differentiation solutions for a
range of public and private sector markets. Its specific product applications
include computer monitors and flat panel displays, projection systems,
photocopiers, facsimile machines, scanners, security products, and decorative
surface treatments. The company markets its products primarily to service and
cable providers, network equipment manufacturers, original equipment
manufacturers, distributors, and strategic partners in North America,
Europe, and Asia-Pacific.
A drop in crude oil inventories
and gasoline inventories has oil higher at $61.80. The elections are over in
ten days so it will be time to raise prices soon.
Maybe the eighteenth time will be
the charm. We keep dreaming of the home run plus we missed on Citigroup in the
1990s when we think of Ford. With the addition of Mullalay as CEO and now that
Billy Ford is not making the decisions we are going to dip our toes in the
water one more time and buy Ford at $8.45. We
are taking a modest position in the stock in most accounts with a longer term time frame. And by that we mean more than a few weeks
but less than eternity. *****
We present below the Fed
statement. Hope you are sitting down it
is so exciting.
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
cooling of the housing market. Going forward, the economy seems likely to
expand at a moderate pace. Readings
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
aggregate demand. 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 information.
The major measures rallied
immediately after the minutes were released with the DJIA moving to the plus
side but by they reversed and
began moving lower as profit taking and other selling appeared. Treasuries were
a few basis points lower in yield across the board.
Oil ended at $61.50 in NYC and Gold
was $590. Treasuries gained with
the two-year at 4.85%, the five year at 4.75% and the ten-year at 4.77%.
European bourses were mostly higher.
The DJIA ended the day up 6 points at 12132. The S&P 500 gained 5 points to 1382 and the NAZZ rose 10 points to 2355.
Breadth was 2/1 positive on the NYSE and 5/4 on the NAZZ and volume was active.
New highs were 460 and new
lows were 50.
And there are two more casino
days remaining this week for the big boys and girls to spin the wheels of
20 October 2006 Daily Comment
We will be
traveling on Monday and Tuesday and so our next post will be on Wednesday
Birthday to our sister Barbara. You made it. *****
Google reported great numbers and Mother Merrill raised its share
price forecast to $530. With that GOOG is off to the races early this morning.
On the other side of the coin Caterpillar blew the quarter and
lowered guidance for the fourth quarter and next year and is off 10% in the
was higher and European bourses are higher at .
Gold is flat at $802 and Oil is up a bit at $58.75. OPEC set production cuts at
1.2 million barrels a day.
Treasuries are unched as the day
begins. Today is Triple Witch but GOOG and CAT are the main movers today.
The DJIA is down 30 pints in the
first five minutes as CAT’s drop of $7 computes to a minus 60 Dow points.
The street and most analysts have
Google eating Yahoofor lunch with no chance for
Yahoo to recover. That would suggest that most of the bad news is being
included in the price of the stock. We are going to repurchase a
portion of the Yahoo shares in our large/trading accounts that we
sold a few weeks ago before earnings. Yahoo shares had stabilized after
earnings but now are making new lows as the great Google quarter is encouraging
some big boys and girls to yell Yahoo as they abandon the YHOO ship.
Today Bear Stearns raised Hershey to outperform.
announced higher earnings today for the third quarter in a row. They finally
seem to have turned the corner and we are going to buy shares in large/trading
accounts. If there is a pullback in the market and this stock we
will ad more around.
Oil is not paying attention to
OPEC as it is now down $1.20 at $57.25 in NYC at .
The Fed meets next Wednesday.
We bought small amounts of CAT down 15% today and Molex down 10% in our
very large accounts. These are buy the good companies
down on earnings day trades.
Oil ended down at $56.82 and Gold
finished at $596 in NYC. Treasuries were
European bourses ended higher on the day.
The DJIA lost 12 points to close at 12000. The S&P 500 rose 1 point to 1368 and the NAZZ rose 2 points to 2342.
Breadth was 5/4 negative and volume
was tepid for a witching day.
New highs contracted to 320 and new lows were 50.
And the casino is
closed for the week and we are off to Chicago to visit clients until our return on Wednesday in time for the Fed
meeting with a post that night October 27. *****
19 October 2006 Daily Comment
Asian markets were mostly lower
overnight and European bourse indexes are lower at on the continent. Treasuries are a tad weaker in
price as the day begins. Oil has bounced tepidly to $57.89 and Gold in unched
at $592 in early NYC trading.
OPEC meets today to cut
Weekly jobless claims hit the
299,000 mark last week which is the lowest number for a while.
Boston Scientific has good numbers last night and the shares are up
50 pennies in early trading.
St JudeMedical had its
ratings lowered to neutral from buy by Piper Jaffrey which is the brokerage in its
home town. That has sent the share price lower but we are not buying more at
Apple Computer blew the number away and is up $4 on the day.
Hershey disappointed and the shares are off $3.50 to $49.60. Under $50 has been a good price
at which to buy the last few years and we are repurchasing the shares
we sold at $53
a few weeks ago.
Hershey said profit rose to
$183.7 million, or 77 cents a share, in the third quarter from $114.2 million,
or 46 cents a share, a year earlier. Excluding one-time charges, earnings were
78 cents a share. Analysts had forecast 81 cents a share. Hershey has cut jobs
and taken other measures to cut costs. Sales rose 3.3 percent to $1.41 billion.
“We experienced a slowdown in consumer take-away and thus, a loss of market
share," Richard Lenny, CEO said.
Around Reuters reported that Credit Suisse raised its
rating on Hershey Co. to "outperform" from "neutral.
We are selling our
Time Warner and Palm for nice $2 plus gains. We are also selling the pop in Boston Scientific today for a 60
pennies profit since we want to own only one medical device maker and we
think St Jude is the better company. The major measures are having troubles at
these levels and we are comfortable rotating to better quality names. Several
times in the last ten years there has been a November sell off after mutual
fund year end on October 31 that presented a good buying opportunity into late December.
We are first of all traders and have taken losses when we though it made sense
and we think banking a few profits right now is a good
strategy. All the stocks we own are anchovies.
National City has
now set the share ratios for the takeover of the Harbor Bank and Fidelity
Bankshares. Since the deals have been approved by the Fed, the merger share
exchanges now become a pure arbitrage situation until the deal closes. That is
the reason NCC has dropped $1 in the last two days since arbs are shorting NCC
shares and buying harbor shares. If they force the shares below $35.50 we will
be adding more shares to accounts.
Washington Mutual is off $1.60 today and goes x-dividend 50 pennies on
October 27. It yields 5% at its current price. It is down because earnings
disappointed. We are buying shares in our large/aggressive trading accounts.
Oil ended up at $58.50 in NYC. Gold
was up $10 at $602. Treasuries were
lower with the two-year t 4.86%, the five-year at 4.75% and the ten-year at
European bourses closed mixed.
The DJIA gained 15 points to final at 12008. The S&P 500 was up 1 point to 1367 and the NAZZ was up 3 points to 2340.
Breadth was 5/4 positive and volume
New highs were 40and new
lows were 50.
Triple Witching begins tonight and all the big boys and girls will
be having hedge fun games tomorrow on the last day of the trading week.
18 October 2006 Daily Comment
higher overnight and Europe is higher at . The CPI was down 0.5% which was more than expected but most of the
other numbers were in line. The DJIA briefly exceeded 12000 in early trading
before the inevitable pullback occurred.
Oil is higher in the early going
at $59.40 and Treasuries are weaker.
Intel had better than expected numbers as did IBM.
Motorola disappointed and is off $1 today.
St JudeMedical is off
$1 after announcing earnings that were better than expected at 41 pennies
versus 37 pennies. The CEO of STJ said: "Our third
quarter results reinforce our optimism that we are well positioned to return to
stronger growth in 2007 and beyond.We
believe that we continued to gain market share in ICDs, pacemakers and atrial
We are buying shares
in both MOT and STJ in many accounts. That is in keeping with buying
drops after earnings are reported in stocks in which we have an interest.
We are also buyingUrban Outfitters is small amounts in many accounts. This
trendy retailer is at $19 down from a high of $33 this year and it bottomed (we
hope) at $14 a month ago. We are buying ahead of November earnings because this
one could have an upside surprise. URBN does not release monthly same store
sales number so we get the whole enchilada with the earnings announcement on
Finally we added some shares of Micron at $14.53 to accounts that already own
Crude oil supplies were up 5 million barrels while gasoline and
heating oil stocks dropped by 4 million barrels each as refiners shut down refineries
to create shortages and thus raise
prices back to confiscatory price levels. Well that is not quite how
refiners explain the drop in heating oil and gasoline inventories. They say
they have closed refineries for scheduled maintenance.
Investors’ Intelligence is at 52% Bulls, 30% Bears for the weak.
The Compensation Committee at Verizon is worried that CEO Ivan Seidenberg
does not have enough financial incentives to run the company well. Their
thought is that VZ needs to make a lot of capital improvements which may hurt earnings
and thus the stock price. And if the stock price doesn’t rise then Ivan doesn’t
get to make millions on his options. Of course investors don’t make any money
The WSJ describes how a VZ
official explains Ivan’s quandary: Other
companies don't want to make the investment in rolling out fiber all the way to
their customers' homes and they are applauded by Wall Street and they reward
their executives more," said spokesman Eric Rabe.
"If Mr. Seidenberg's compensation were based solely on the stock
performance, he would have a disincentive to make the investment that we
believe is necessary" for the fiber project. "This is not a provision
to make up for poor stock performance, it's a
provision to make sure we do the right thing for the long-term health of the
Since Ivan is indispensable (unless
he dies in which case another bozo who will work for $8 million a year will
surely be available) the committee has decided that Ivan should be compensated for
spending to improve the capital structure even if that hurts earnings and the
share price doesn’t rise. Current investors will just have to be long long long
term investors if they want to benefit.
By the way Mr. Seidenberg was
paid $2.1 million in salary last year, plus a bonus of $4.1 million and $1.8
million in other compensation, for a total of $8 million, not including the
long-term incentive grant. In 2004, he was paid $13 million, which included a
long-term award of $6.3 million.
Crude Oil ended at $57.65 down over $1 in NYC. Gold finished at $592. Treasuries were flat with the two-year at
4.86%, the five-year at 4.73% and the ten-year at 4.76%.
European bourse indexes finished higher.
The DJIA closed higher on the day
with the help of a $3 jump in IBM. At the bell the DJIA was up 32 points to 11982. The S&P 500 gained 2 points to 1366 and the NAZZ was down 10 points
Breadth was flat and volume
There were 500 new highs and 50 new lows.
And there are two more hedge fun
days at the casino this week.
17 October 2006 Daily Comment
lower overnight and European bourse indexes are also fractionally lower at . Treasuries are better and Gold is $600
with Oil also higher at $60.50 in NYC.
Ahead of PPI in a few minutes at U.S.
futures are lower.
Goldman downgraded Intel to neutral from buy ahead of earnings
after the bell tonight. The share price is down 30 pennies in early trading.
National City Bank had great numbers and should open higher.
We have been thinking for the
past few days about recent developments with Sprint and about the way stocks are reacting to negative news in the
bullish environment. Our first mantra is not to avoid extensive risk. We want
to own Sprint for the long term but we do think that over the short term the
easy path for the share price is lower rather than higher. Given the recent management
changes, the cell phone deals being offered and the general dislike of the company
by the street our guess is that lousy
earnings and retention numbers and new subscriber additions are going to be
greeted negatively even though the street expects them. Earnings are to be
announced on October 26 and today we are going sell half our position in most
accounts. This will again involve a scratch loss in some accounts. But with a
$2 downside risk versus limited short term upside potential we have decided to
take some money off the table. The run-up in the share price last week to
$18.50 was on takeover speculation but some of the folks propounding that potential
in the press and on CNBC don’t even own a share of stock in their public
portfolios. We think those who bought last week will head for the hills on any
bad news causing selling pressure and we want to have room in accounts to add
more shares at lower prices. Moreover, very few takeovers occur when stocks are
on their lows and having earnings and other difficulties. For some reason
related to job survival CEOs are more comfortable buying companies that are
hitting on all cylinders even at higher prices.
The Chicago Mercantile exchange
is going to buy the Chicago Board of Trade for $8 billion. They trade Stocks
futures at the CME and Bonds and commodities at the CBOT.
PPI was down 1.3% month over
month. Core was up 0.6 % ex food and energy. Year over year was up 0.9% while
the core was up 1.2%.
National City Bank opened lower and we bought shares in the same
accounts where we purchased Alcoa
We reestablished small trading positions in URBN and TIF in our larger accounts.
companies due to report after the bell are: Yahoo! (YHOO), Intel
(INTC), Motorola (MOT), IBM (IBM), Novellus (NVLS) and Linear
Oil ended at $58.93 down $1.01 in NYC. Gold was off closing at 593.50.
Treasuries surrendered their early gains to close unchanged on the day.
European bourses closed lower on the day by 1% or more as they
ended their trading day when the DJIA was at its worst level.
The DJIA slogged all the way back from down 80 points to almost even
but backed off to close down 25points at 11955. The S&P 500 ended down 5 points at 1364 after being down 12 points
at . The NAZZ dropped 19 points to 2344.
Breadth was 2/1 negative and volume was active
New highs contracted to 305 but new lows remained under 50.
And September CPI visits the
casino tomorrow for fund games for the big boys and girls.
16 October 2006 Daily Comment
Asian markets were a better
overnight and European markets are mixed as we begin the day and week. Gold is
up at $596 and Oil is also higher at $58.78. Treasuries are unchanged.
The S&P 500 is up 70% since May
of 2003 (900 trading days) without a 10% correction. That has only occurred 5
times in the last 50 years. The corrections that follow such a move can occur
swiftly but they will eventually occur. On one of the other occasions from October
1990 to May of 1996 the S&P 500 rose 131% over 1400 days. The current
rise/without is the second longest of the five moves.
The 1990 low was a painful low
and washout as was the 2003 low so this advance may have more to go.
The word is that Intel has been hinting that this
quarter is going well for the Company. Intel announces earnings after the close
tomorrow as does Yahoo.
Second quarter earnings continue
to flow this week which is also includes a Triple witching day on Friday.
PPI for September is announced
tomorrow and CPI for September is announced on Wednesday.
The Empire State Manufacturing
Index was much stronger today at 22 then the 11 expected
The Fed meets next week but no
change in interest rate policy is expected till the spring of next year at the
European bourses closed higher on
Prudential raised Alcoa to accumulate this morning. We traded AA for a scratch last week in
our larger trading accounts after is dropped $2 on record earnings that still
disappointed the street. But we think
the Prudential upgrade suggests the
street may come back to the stock which is at 9 times earnings and so today
we are going to buy it in accounts that owned Yahoo. We think stocks have more
time to move higher. AA is the type of stock that the big boys and girls will latch
on to catch a market breakout above 1370. And it is currently within 10% of its
Oil popped higher at the end of the trading day in NYC and closed
at $59.95. Gold was also higher at
$598.50. Treasuries were slightly better
with the two-year at 4.85%, the five-year at 4.74% and the ten-year at 4.79%.
We are heading out fifteen
minutes early to try and get a bike ride in before it rains. At the DJIA was up 25 points at 11985. The S&P 500 was up 4 points to 1368 and the NAZZ had gained 8 points to 2365.
Breadth was 2/1 positive and volume
New highs were 590 and new
lows were 40.
There are four more days of
casino hedge fund this week. And the football Bears are on Monday night
football. The last time the football Bears won it all was 1986. In 1987 the
market bears won it all after a big scare through August.
14 October 2006 Special Comment
Our good friend Dick Wagner was buried today in Beatrice, Nebraska.
Following are some words from an essay by Steven Dietz, the author of the play Lonely Planet
that we spoke at his funeral and an article from the Kentucky Post about his career. We will miss him very much.
In the midst of a world that is too big and too fast, a world where information rules like a dictator and news travels like a virus,
it is easy to be overcome by the hopelessness of the world and the helplessness of we, its keepers. What impact can we
hope to have? What traces will we leave behind?
History is not the story of grand acts and masterpieces. History, instead, is the inexorable accumulation of tiny events -
footsteps and glances, hands in soil, broken promises, bursts of laughter, weapons and wounds, hands touching hair,
the art of conversation, the rage of loss. Historians may focus on the famous familiar names - but history itself is made,
day after day, by all those whose names are never known, all those who never made a proclamation or held an office,
all those who were a handed a place on earth and quietly made a life out of it.
So what do we affect during our time on earth? What ultimately is our legacy? Our legacy is our friends, we write our
history onto them, and they walk with us through our days like time capsules, filled with our mutual past, the fragments
of our hearts and minds. Our friends get our uncensored questions and our yet to be reasoned opinions. Our friends
grant us the chance to make our grand, embarrassing, contradictory pronouncements about the world. They get the
best, and are stuck with the absolute worst, we have to offer. Our friends get our rough drafts. Over time, they both
open our eyes and break our hearts.
Emerson wrote: “Make yourself necessary to someone.” In a chaotic world, friendship is the most elegant, the most
lasting way to be useful. We are, each of us, a testament to our friends’ compassion and tolerance, humor and
wisdom, patience and grit. Friendship, not technology, is the only thing capable of showing us the breadth of the world we live in.
From the Kentucky Post:
Dick Wagner, known to Reds fans as the man who fired Sparky Anderson and let Pete Rose get away, has died.
Wagner, president and chief executive officer of the Cincinnati Reds from 1978 to 1983 and a lightning rod for criticism from fans, died Thursday at St. Joseph's Hospital in Phoenix, Ariz., from injuries sustained in a 1999 car crash, his wife, Gloria, said Friday. He was 78.
Among the moves he helped engineer with the Reds were the acquisition of pitcher Tom Seaver from the New York Mets in 1977, the firing of Anderson in 1979 and the trade of outfielder George Foster to the Mets in 1982. Wagner also dealt Seaver back to the Mets after the 1982 season.
It was on his watch that Rose, later to become baseball's all-time hits leader, became a free agent and signed with the Philadelphia Phillies in 1978. Rose returned to the Reds in 1984 after stints with the Phillies and Montreal Expos.
Anderson, fired by Wagner in a California hotel room in 1978, had nothing but good words about his former boss when informed of his death Friday night in a telephone call from The Post.
"I'll put it to you this way - just a real nice person," Anderson said from his home in Thousand Oaks, Calif. "No one understands that when you sign a contract, you sign it to be fired - you don't sign it to be hired. We have never lost our friendship, and that's what it's all about."
Anderson said he remained close to the Wagners, particularly after the 1999 crash that left Wagner with a broken ankle, six broken ribs, a punctured and collapsed lung, head injuries and a fractured cervical vertebra after his car was broadsided by another vehicle in Phoenix.
"I talked to him every week after that time," he said. "And Gloria, she's my girl. I called her 'Glo-worm.' "
"Dick Wagner dedicated his life to the game of baseball," commissioner Bud Selig said. "Baseball has lost another of its true gentlemen."
Born Oct. 19, 1927, in Central City, Neb., Wagner began his baseball career in 1946 when he left the U.S. Navy and was hired by the Detroit Tigers as general manager of their Thomasville farm team in the Georgia-Florida League. With the Tigers and Pittsburgh Pirates, he worked for teams in Flint, Mich., and Lincoln, Neb., and he was selected minor league executive of the year by the Sporting News in the late 1950s.
After leaving baseball for jobs with the Ice Capades and radio station KSAL in Salinas, Kan., he became general manager of the Forum in Inglewood, Calif.
He returned to baseball in 1964 as promotions director of the St. Louis Cardinals under Bob Howsam, and when Howsam moved to the Reds, Wagner followed him as his deputy in 1967.
Wagner helped build the Big Red Machine into a team that won consecutive World Series titles in 1975 and 1976, then took over from Howsam as team president in February 1978, a position he held until he was fired by then-owners James R. Williams and William J. Williams in July 1983.
An opponent of free agency, he allowed many of the Reds stars of the '70s - including Rose and Joe Morgan - to leave for higher salaries elsewhere. After putting together baseball's best record in the strike-interrupted 1981 season, the Reds wound up with the NL's worst record in 1982. When Marge Schott was a limited partner of the Reds, before she became controlling owner, she hired an airplane to pull banners over Riverfront Stadium urging the team to fire Wagner.
Wagner became the Houston Astros' president and general manager in September 1983, then resigned after the 1987 season when he lost a power struggle with manager Hal Lanier.
Two months later, he became a special assistant in the commissioner's office and worked closely with AL president Bobby Brown.
In February 1993, five months after Selig led the group of owners that forced commissioner Fay Vincent to resign, Selig hired Wagner to run the staff in New York. Wagner held the position until January 1994.
Wagner is his survived by his wife, the former Gloria Larsen; son Randy Wagner of Vancouver, Wash.; daughter Cynthia Weick of Stockton, Calif.; three grandchildren; and sister Kaye Wagner of Tarzana, Calif.
12 October 2006 Daily Comment
There will not be
a post tomorrow Friday the 13th. We are driving to Nebraska for a memorial service for a dear friend. Our next post will be
Monday October 16. The Model Portfolio will be updated as usual on Friday
Oil is trading lower today at
$57.38. Gold is higher at $579 and Treasuries have a bit of a bid in them as
the day begins.
higher overnight as is Europe at .
Matrix Advisors upped Palm to a strong buy. Thanks much, we
can use the boost.
The budget deficit for the fiscal
year ended September 2006 came in at $250 billion for instead of that was
forecast. The non hosanna reaction is similar to a parent when the child tells the
parent they only charged $2000 on the credit card instead of $3000.
Jobless claims for the last week
Stocks are higher out of the gate
as the S&P 500 tested and held the 1350 level yesterday and is now above it
today. Other tech gurus are using the 1340 level as support.
leu reached a new three-week high against the euro on Thursday.
inventories rose 2.4 million barrel in the week ended Oct. 6, compared with
forecasts for a gain of 1.5 million. Distillates fell 1.5 million compared with
forecasts for a small decline. Gasoline inventories rose 300,000 barrels
compared with forecasts for a decrease if 450,000. *****
The indexes of European bourses
ended large fractions higher for the day.
The Fed Beige Book released at today was middle of the road in regards to
interest rates. The Fed doesn’t see wage pressures but does see a tight labor
market and increased consumer spending in four of the seven districts. The
service sector is tight. There are few signs of pricing pressure and auto and
home sales are sluggish while commercial construction is gaining. Treasuries
have given up today’s gains on the news but most major stock measures are
government posted a $56.03 billion budget surplus in September as record outlays
were more than offset by record tax receipts. That makes dad happy but it only
occurs four times a year while eight months a year he is sad.
CEO Ed Colligan said Palm is not pursuing a sale of the
company. Answering speculation that Palm, maker of the Treo smart phone, was a
takeover target, Colligan said that chatter likely comes because the company's
stock price and cash position have created a perception that it is a ‘good
value’. “The company is not for sale. We have not been out pursuing (a deal).
Our strategy is to execute against our plan."
DJIA hit an all time high today.
The Lemley Model Portfolio is also at an all time high and 60% higher than the
DJIA was the last time the DJIA hit an all time high in 2000. the DJIA is 2% higher than its all time high made in 2000.
Gold closed up at $580 in NYC and Oil ended at $57.86. Treasuries
finished better but below their best levels with the two-year at 4.84%, the
five year at 4.74% and the ten-year at 4.75%.
The DJIA gained 97 points 11948. The S&P 500 was up 13 points to 1363 and the NAZZ jumped 38 points to 2346.
Proctor & Gamble, CitiGroup, 3M, Coke, Disney and Johnson & Johnson were down on the
Breadth was 3/1 positive and
volume was brisk.
There were 375 new highs and 40 new
lows. The low number of new highs is the only negative for the bulls today.
Tomorrow is Friday the 13th so be careful. The casino
will be open but we’ll be away.
11 October 2006 Daily Comment
The WSJ has a front page story on the woes of Sprint/Nextel. The executive Chairman, who was the CEO at Nextel, has
resigned effective January and according to the WSJ that is a large negative. The reality is that when two
companies merge one of the CEOs has to go for the merger to work.
The WSJ also lists a myriad of problems with integration of the Sprint
and Nextel workforces and equipment. Again that is not news and the sharp drop
in the share price over the last year is evidence that the difficulties are known.
But the story is interesting as a
listing of all the things Sprint need to fix. And we are guessing they will.
That is why CEO types make the big bucks- or so we are told.
was mixed and at the indexes
of most European bourses are lower. Treasuries have a slight bid after the
slaughter of the last two trading days and Oil is down at $58.49 even though
OPEC has agreed to cut production by 1 million barrels a day. Gold is also
slightly lower at $575.
In the first large company earnings
reports of the quarter Alcoa disappointed and is trading $2 lower in early
trading and Genentech had good numbers and is also a couple of dollars lower.
Of course earnings are a matter of
perception. Take Alcoa as an
example. From the reaction this morning one would guess that AA had a loss. Au contraire friends:
Alcoa Inc. posted sharply higher earnings Tuesday on strong demand from
aircraft, truck and train producers, overcoming weak prices and a seasonal
downturn. But the aluminum maker's 86 percent profit rise disappointed
analysts. AA earned $537 million, or 61 cents per share, during the three
months ended Sept. 30 versus $289 million, or 33 cents per share, a year ago.
Revenue jumped 19 percent to $7.63 billion from $6.40 billion.
McAfee, the internet security folks, said CEO and Chairman George
Samenuk plans to retire and President Kevin Weiss was terminated from the
company in the wake of findings of its stock-options probe. The software maker
named Dale Fuller as interim chief executive officer and president. The CEO of
CNET also resigned.
Mortgage applications fell 5.5%
in the latest period and were down 13% compared to the same week one year ago.
BankAmerica says it is going to offer 30 free trades a month with a
$25,000 deposit at the bank. Soon some outfit will be paying folks to trade. By
the by those trades aren’t free and some authority should call BankAmerica on
the advertising, but they won’t.
Yahoo has traded lower the last two days on news of Google’s buy of YouTube and their
difficulty buying Facebook. Both YouTube
and Facebook are websites that have tremendous viewership and participation. We
have visited YouTube a few times but never Facebook which is oriented to
college folks. We don’t know the value of either but we do know that the
celebration by Google holders and
the sell off in Yahoo shares are symptomatic of markets that are getting frothy
in the hands of momentum players with the big boys and girls swept up in the
frenzy. That doesn’t mean the end of the rally is at hand. It just means that
more newbie money is coming in and that the momentum folks are abandoning
Yahoo is going to overpay for
Facebook but then in our book anything over $100 million would be overpaying
and the final price is probably going to be north of $1 billion.
Before last night we were comfortable holding YHOO
through their earnings announcement. But with the way Genentech acted on a
slight revenue miss and very good earnings we have changed our minds. With Yahoo
earnings coming on October 17 we are
going to trade out of the stock and look to reenter after earnings. The Facebook talk just makes us nervous and reminds of the-to
us- excessive valuations on these internet companies. Our other stocks are
doing well and are more understandable from a valuation basis. This again is a
stock we had to live with few days to decide we didn’t want to continue owning
Investors Intelligence bullish
sentiment is now over 50% while bearish sentiment has dropped to 30%.
The Fed minutes say the Fed is
still concerned about inflation. Inflation is expected to decline in the spring
and this decision to do nothing was easier than the last decision.
At the same time Fed Member
Lacker was giving a speech in which he was more hawkish than the Fed minutes
and so the double hawk talk whammy
stock markets are moving lower.
Short term Treasuries are getting
mashed again after the Fed Minutes release. The two-year is now at 4.87% and
the five-year is at 4.75%. There must be a few hedge funds that are in deep
pain from this latest move.
Oil ended at $57.70 in NYC (election anyone?) and Gold closed at
$576. Treasuries were weaker with the two-year finishing in Chicago
at 4.87%, the five-year at 4.74% and the ten-year at 4.75%, Ouch!
European bourse indexes ended fractionally
better but they closed before the Fed minutes came out.
About a small plane crashed into a building in NYC which
gave a pause to stocks and a push to bonds. As the story unfolds it seems to be
an accident but the memories triggered in New Yorkers must be substantial.
Stocks have rallied back a bit from the initial sell off but remain under water.
The way the major measures hung
in there today was impressive but they all still closed lower. At the bell the DJIA was down 15 points at 11853. The S&P 500 lost 3 points to 1350 and
the NAZZ dropped 7 points to 2308.
Breadth was 5/4 negative at the bell and volume was brisk.
New highs contracted to 290 and new lows were 55.
And there are two more days left
for the big boys and girls to play their fund games.
10 October 2006 Daily Comment
mixed and boring as is Europe at . Treasuries are taking it on the chin again today
as the markets await the latest Fed minutes to be released tomorrow afternoon.
Google is buying YouTube
for $1.65 billion in stock. YouTube has 67 employees and 72 million viewers.
Synergy is the new old word.
Many gurus are predicting a
decent correction from these levels. Some think such an event is necessary to
breathe new life into the turning stale rally. And others believe it will be
the first leg of a large down move.
We are agnostic on the subject.
There seems to be latent buying interest that is more determined that the
selling interest. The bears are licking their wounds and the bulls who have
been long for this move are in a greedy frame of mind.
Upon reflection last night while
pondering the markets we decided that we were being too aggressive buying Sony and Quest Diagnostics ahead of their earnings
later this month. The last time we bought Sony at this price ahead of earnings
we were blindsided by a $5 share price drop that eventually became a $10 drop.
Given that the markets could use a rest even if they are going higher we are going
to take a 60 pennies loss in DGX and a 30 pennies loss in SNE and await a
hopefully lower re-entry point later in the month. We are doing this because
these stocks are anchovy trades, unlike Sprint
and Time Warner and a few others.
We also sold Tiffany for a $1.30 gain, Lowe’s for a $1.40 gain and St. Jude for a $2.50 gain in the same trading
Dallas Fed President Richard Fisher said on Tuesday "I'm very comfortable with the policy of
where we are today …..(but) if it appears that we haven't done enough to quell inflation,
then obviously I would be in favor of additional measures."
We are buying Rite Aid again in many accounts. We have traded this stock
in many accounts over the past few years. RAD is buying a slew of drug stores
which will place them on a footing with CVS and Walgreen when it comes to floor
space. RAD has way too much debt but it has been able to manage the debt and
survive thanks in part to Fed fostered low interest
rates. RAD survived the past year’s tightening cycle in interest rates. We are
buying to own for a while.
Oil has trended back down to the
$59 level in afternoon trading. Shares of oil companies are higher. Treasuries
continue under pressure. One guru opined that the big boys and girls are
selling Treasuries to place more money to work in stocks.
Most European exchanges closed
better by more than ½%.
The U.S. is moving the Eisenhower aircraft carrier group to the waters off Iran. This task force will meet up with other
minesweepers and destroyers. The group is supposed to replace the Enterprise carrier group which is due for rotation
back to port. If that rotation is delayed by a few weeks there will be a lot of
firepower in the area. The Eisenhower group will be in place by the end of next
week. that is one reason we are taking some profits.
There are rumors floating around
that Anheuser Busch (BUD) is going
to be taken private in a leveraged buyout. That would be a $50 billion plus
deal. The fat lady may not be singing on
LBOs but she surely is beginning to hum. *****
Oil closed at $58.52 in NYC and Gold was also lower at $576. Treasuries
ended on their lows for the day with the two-year
at 4.81%, the five-year at 4.70%
and the ten-year at 4.75%. *****
The DJIA closed up 10 points at 11868. The S&P 500 gained 3 points to 1353 and the NAZZ was up 5 points at 2314.
Breadth was flat and volume
There were 375 new highs and 70 new
And the Casino is open for three
more days of fund games.
9 October 2006 Daily Comment
lower overnight with Hong Kong off over 1% and Japan
down small. European bourses are mixed small fractions at . Gold is up at $582 and Oil is also higher at
$60.50. Treasuries are closed today for Columbus Day celebrated.
Google buying You-Tube,
the Dolan family taking Cablevision private and PNC Financial buying Mercantile Bancshares are the big deals
of the week-end.
The nuclear test by North
Korea is supposedly affecting market sentiment
Trading is slow today and the
only action is in oil related stocks which are seeing some buying after their
recent sell off.
We are adding Walgreen, Timken, Quest Diagnostics and
Sony to our larger aggressive accounts.
The first two are down 15% from recent 12 month highs on bad earnings reports
this quarter. Quest, which does
diagnostic testing for hospitals and HMOs, is off 20% because it lost a large
contract with United Health. And Sony
is having trouble competing with its computer games and quarterly earnings will
also suffer because of the portable computer battery recalls. All are
institutional stocks and so all are part of the fall house cleaning that usually
occurs among disappointing stocks at this time of year.
Oil traded as high at $61.30 today but closed at $59.90 in NYC. Gold finished at $582.
European bourses were mostly one half per cent or less higher at
the close and Brazil
gained 1.5% while Mexico
was up 0.5%.
The DJIA closed up 11 points at 11860. The NAZZ rose 12 points to 2311 and the S&P 500 was up 1 at 1350. Our tech guru thinks that the break
of 1355 on Friday was a negative.
Breadth was 5/4 positive and volume
New highs were 330 and new
lows were 60.
6 October 2006 Daily Comment
Asia was fractionally
lower overnight and Europe is relatively unchanged at . Gold is flat and oil is trying to stay
above $60 as the trading day begins in NYC.
The Employment Report this morning showed a large drop in jobs
added. Only 51,000 were added in September when 121,000 were expected. That
should cause Treasuries to rise in price but instead they sold off. That’s
because the prior month was adjusted upwards by 60,000 to 180,000 which negates
the negativity of this month’s number. And year over year wages rose by 4% which
is good for workers but bad for bonds. Finally the unemployment rate fell to
4.6% from 4.7% not because of more jobs but because 400,000 plus folks quit
looking for jobs.
On the pop up in yields we added five-year Treasuries to our
very large accounts. The Note has a 4.5% coupon and we are locking in that rate
with the cash we don’t plan on investing in stocks unless there is a market
collapse. We think rates are going to move lower over the next year.
Sprint has begun to act better and we are selling our Hershey holding for a slight profit and reinvesting part of the funds in S
which we think will give us more bangs for the buck. We want to build a
significant position in Sprint over the next few months.
We added shares of Yahoo at $25.35 to accounts that didn’t
own it and also repurchased Tellabs
in some of our larger accounts.
Micron Technology is down over $2 per share today on disappointing earnings
and we are adding shares at $15.36 to our larger/aggressive accounts. This is
an example of the buy the bad earnings scenario we have been mentioning. We are
leaving room to buy more.
We are taking the rest of the afternoon off. As we leave at the DJIA is down 35 points and the S&P
500 is off 5 points with the NAZZ down 10 points. Breadth is negative and volume
is brisk. With the weekend approaching we would guess that traders are going to
lock in some profits and take a new look on Monday.
Treasuries are on their lows in
the throws of a nasty two day sell off with the two-year at 4.75% and the
five-year at 4.65% (we bought at a 4.60% yield). Oil is under $60 and Gold is $573.
And our casino is closed for us
for the weekend.
5 October 2006 Daily Comment
higher overnight with Japan
up over 2% and Hong Kong over 1% better. European
bourses are joining the party and Gold is up to $576.
Oil is over $60 on the closing of
a Valero refinery in Texas and
words from OPEC that they cut production by 1 million barrels a day and more to
come in December if needed. That is the first time since 2004 that OPEC ahs cut
production. Treasuries are a tad weaker.
Jobless claims for last week were down too 302,000.
Same store sales for specialty
retailers are in line to better and those stocks are off a bit in early morning
trade after large percentage gains yesterday.
The European Central Bank raised
its key interest rate to 3.25% today while the Bank of England left its key
rate unchanged at 4.75%.
Fed Vice Chairman Donald Kohn spoke
last night and suggested that no rate cut is in the cards anytime soon. He
suggested that inflation remains the major worry and that the slowdown in
housing will reduce economic activity to a more sustainable pace. His speech is
the reason Treasuries are backing off from a very strong run the last two days.
He said in part, "I am surprised at how little market participants seem to
share my sense that the uncertainties around these paths and their implications
for the stance of policy are fairly sizeable at this point….In the current
circumstances, the upside risks to inflation are of greater concern." *****
Tomorrow brings the Monthly Employment Report and that is going to
set the tone for stock and bond trading for the next few days.
Gold ended at $575 and Oil
was up at $60.05. Treasuries gave ground
in the face of tow Fed governors talking up inflation fighting. The two-year
ended at 4.65% and the ten-year at 4.61%.
The DJIA closed up 16 points at 11866. The S&P 500 gained 3 points to 1353 and the NAZZ rose 15 points at 2306.
Breadth was 2/1 positive and volume
New highs expanded again today to 450 and new lows contracted to 76.
And tomorrow is the last casino
day for the week.
4 October 2006 Daily Comment
Today is the old stockbroker’s 102nd birthday. We are continually reminded of
all he taught us even 22 years after he crossed the river.
mixed overnight with Japan
down almost 1% and the Hang Seng in Hong Kong a small fraction
higher. European bourses are mostly higher and Oil is up a bit at $59.15 with
Gold at $584.
Treasuries are better.
Crude oil inventories were up 3.5
million barrels versus and expected decline of 1.1 million. Oil is lower now on
the news at $57.88.
The Institute for Supply Management's non-manufacturing index, which
measures the services sector, fell to 52.9 in September from August's 57.0. It
was the lowest reading since April 2003.
Stocks are taking this as positive
that the Fed won’t raise rates and Treasuries are also rallying on the news on
the notion that the Fed will cut rates next year. Eventually this tandem
rallying will have to diverge.
We sold Deutsch Telecom for a scratch loss because, upon reflection,
we would rather use the funds elsewhere later this month.
We will continue fine tuning our
portfolios as we build them this month and through year end. We don’t know how
the month or year will work out but we have added stocks recently because the
major measures don’t seem to want to do their usual September /October swoon.
The fact that the major stock
measures have not yet had a significant correction of 10% or more over the last
three years is causing us to move cautiously at what usually is a good time of
year to pick up bargains. But the fact that the major measures have not
corrected does not mean that individual stocks have not. In fact all the stocks
that we bought recently are down much more than 20% from their highs over the last
But so far many of the stocks
that have blown up on earnings or revenue misses have just gone from being way
over priced to overpriced and that isn’t yet enough to tempt us. We would
rather have cash and certainty that own a falling knife.
Oil ended the day in NYC up at $59.41 and Gold was down again today at $566. Treasuries rallied with the two-year at 4.58% and the ten-year at
The bears were routed today.
The DJIA closed up 123 points at 11850. The S&P 500 gained 16 points to 1350 and the NAZZ rose 40 points to 2285.
Breadth was better than 2/1 positive and volume was very active.
New highs expanded to 340 and there were150 new lows.
And there are two more days at
the casino before the bifurcated Columbus Day week-end when on Monday the Feds
and banks are closed and stocks are open for play.
As the old stockbroker used to yell on day’s like today, “Buy’em now boys for they go lower!” *****
3 October 2006 Daily Comment
Asia was fractionally
higher overnight on most exchanges and Europe is the opposite
at mid-day. Treasuries are weaker and Oil in NYC is down to$60.36 with Gold at
Mother Merrill upped St. Jude and downed Boston Scientific so that is good and
bad news for us. But BSX has been in the doghouse and we think this is just one
more switch of analysts’ sentiment that will help the stock make a low from
which to bounce.
Oil is almost $2 lower at $59.06
and that is giving some legs to stocks at .
Most European bourses closed
We took a few hours off to go
bike riding on a gorgeous fall day. We also wanted to keep our powder dry by
holding what we own and not buying more and we thought getting out of the
office would do the trick, which it did.
Urban Outfitters didn’t participate in today’s rally and we decided
to take our 50 pennies loss in our large/trading accounts and look at the
stocks after November 9 earnings unless it sell off before.
Oil closed down over $2 in NYC at $58.68. Gold also closed lower by $20 at $581 and Treasuries were a teeny weenie weaker with the two-year t 4.66% and
the ten-year at 4.61%.
The DJIA gained 57 points to finish at 11727.The S&P 500 rose 3 points to 1334 and the NAZZ gained 6 points to 2243.
Breadth turned positive in the last three hours on the NYSE but was negative
on the NAZZ at the close. Volume was
New highs contracted to 200 and new lows expanded to 121. That is
not a good sign for the bulls.
And there are three more casino
days left for fund games.
2 October 2006 Daily Comment
Asia was fractionally
higher overnight with Hong Kong closed for holiday. European
bourses are trading small fractions higher and lower. As trading begins Gold is
higher at $607 and oil is off a bit at $62.49. Treasuries are flat to a bit
With today being Yom Kippur and
the uncertainty of recent market action the stocks markets may not do much since
the trading will be light. Or maybe the big boys and girls who are working may
decide to have some fun. Amaranth Hedge fund may have finished unwinding a good
portion of the positions it needed to raise cash and coupled with the
completion of the third quarter window dressing a truer trend for the stock
markets may be come evident.
We saw a couple of investor sentiment
readings which showed a good number of bulls and that have us nervous. We are
expecting a down October but not a collapse. Time will tell.
The Institute of Supply Managements Manufacturing Index for September
was 52.9 when 53.6 were expected; ISM Prices
PaidIndex was 67 versus 61 expected.
Some of the internal ISM numbers were
under 50 which mean contraction. And the bond markets are focusing on them
as Treasuries are rallying.
Pending home sales, a predictor of future
existing-home sales based on contract signings (sales are based on closings)
rose 4.3% in August, the largest increase since March 2004 and a sign that
sales picked up in August. Recent data on mortgage applications support these
data, with applications for purchasing having increased of late. If sales have
picked up, inventory levels might be peaking, especially now that sale offering
prices are being lowered and spec activity has simmered down.
Also important was the gain in construction
spending. It rose 0.3% in August, six-tenths more than expected, and the prior
month was revised upward by 0.2%. The story here was that nonresidential
construction spending increased by more than the decrease in residential
construction. This continues a pattern that has thus far helped to ward off
decreases in construction jobs.
at $61.88 in NYC and Gold was $603. Treasuries were firm into the close
with the two-year at 4.65% and the ten-year at 4.60%.
The DJIA closed down 9 points at 11670. The S&P 500 lost 5 points to 1331 and the NAZZ dropped 20 points to 2237.
Breadth was negative all day and trading was moderate.
New highs were 240 and new
lows were 95.
And tomorrow all the boys and
girls will be back at the tables in the big casino.
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.
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.