Bud's Poem Page
          Sunni/Shiite/Iraq/Iran
New Address:
Lemley Yarling Management Co
309 W Johnson Street Apt 544
Madison, WI 53703
Toll free phone numbers:
Bud: 312-925-5248
Kathy: 630-323-8422

28 September 2007 Daily Comments

Hopefully our phones are now working. Call Bud at the above number.

We will be traveling until Wednesday so there will be no posts on Monday or Tuesday. The Model Portfolio will be updated if there are any trades. If there are trades the date of the portfolio will change to reflect the update.

Our next post will be October 3.
*****

Thoughts

Asian markets were mixed overnight but Shanghai recovered its losses of the last two days closing up 2.4%. European bourses are mixed at midday. Gold is up another $4 in the early going in NYC while Oil is a bit lower. Treasuries are flat.

Goldman and Greenspan made negative comments about the U.S. economy overnight and both suggested that the sub prime mess might be negative for the world economy.

Traders are saying that their comments are responsible for the negative opening that is coming this morning.

Inflation numbers released this morning were benign.
*****

Alcatel-Lucent gained overnight on reports of pressure on CEO Patricia Russo to present a restructuring plan quickly. The company said Friday it was trying to speed up its efforts to combine French Alcatel with New Jersey-based Lucent, which combined in November. A Financial Times report said board members gave Russo one month deadline to present a restructuring plan that spells out where to focus research and sales efforts.

We are going to sell our ALU position in the hopes of buying back later at the lower level it traded to last month. Restructuring news lasts a few days and then the bears usually begin pressing their bets again. We may be too cute in this but

We do expect a lower market in October and a chance to deploy more of our cash.
*****

We are redeploying the ALU money into Palm. PALM announced a new $99 smart phone yesterday called the Centro. An analyst we follow liked the phone and thinks that a $99 phone is a sweet spot for younger and overseas markets. We traded PALM over year end last year and took a loss at lower levels. We bought it then for a year end pop which was a sag instead. This time we are buying to hold for a while to see how the Centro goes. With $5 per share in cash and no debt and selling at one times revenues we are comfortable with the risk/reward.
*****

The dollar is tanking again today. It is the only commodity that the big boys and girls can trade in size and with huge leverage and so they are playing their games. The action in the dollar reminds of when the euro began trading and began tanking ultimately reaching the level that the dollar currently holds versus the euro. Back then, we can’t remember the year, the talk was that the euro would never recover blah blah blah.

The pendulum swings, it always has and it always will as the universe, world, economy, politics, and we as individuals are always seeking equilibrium.
*****

Gold closed at a 27 year high up $10 at $750. If the Hunt Bros could have held they would finally be even. The pendulum swings.

Oil lost $1.26 to finish at $81.64. Treasuries were a tad weaker with the two-year at 3.96% and the ten-year at 4.58%.

European bourse indexes closed mixed and Mexico and Brazil were fractionally lower.
*****

The DJIA closed 20 points lower at 13895. The S&P 500 lost 5 points to 1526 and the NAZZ dropped 8 points to 2701.

Breadth was 5/4 negative and volume was light.

There were 170 new highs and 80 new lows.

The bears won the day but the bulls won the week, the month and the quarter.
*****

 

27 September 2007 Daily Comments

Thoughts

Asian markets were all up1% or more overnight and European bourse indexes are higher at midday. Treasuries are flat; gold is up the $3 it lost yesterday and Oil has an $81 handle on it.
*****

U.S. markets opened higher on a follow through from yesterday but after two hours of light trading the major measures have pulled back to even. Jobless claims were under 300,000 this morning and Final GDP for the Quarter Two was 3.8%.
*****

Investors Intelligence had bulls at 55% in the latest week and that is an improvement of 10 per cent in the last 4 weeks. Rising markets make folks more bullish.
*****

According to reports the Fed added $38 billion to the system today. That is the most since the crunch in August. Suggestions are that there are quarter end needs and that this is not to increase liquidity. Time will tell.

The ECB loaned $3.8 billion overnight to borrowing banks at a penalty interest rate which is the most in five years. That is unusual activity for each.
*****

Sales of new homes in August dropped 8%.
*****

Rite Aid announced sales and earnings today and the shares sold off. We bought RAD in our larger accounts that already owned shares. We also added some Time Warner to accounts that didn’t own it and purchased J Crew in our large accounts where we have been trading it.
*****

Soybeans traded over $10 today and wheat traded at $9. What a wonderful way to celebrate the harvest moon unless you’re a beef finisher. And isn’t it great that with oil having an $82 handle and beans and wheat at 28 year highs that the economic gurus tell us there isn’t any inflation.
*****

Oil closed up $2.58 at $82.88. Gold was up $4 to $739. Treasuries were better with the two-year at 3.94% and the ten-year at 4.56%.

European bourse indexes closed mostly high fractions higher as did Mexico with Brazil better by 1.7%.
*****

The DJIA gained 35 points to 13913. The S&P 500 rose 7 points to 1532 and the NAZZ closed at 2710 up 10 points. What worry?

Breadth was 3/2 positive on the NYSE and volume was moderate.

There were 180 new highs and 80 new lows on the NYSE.

The bulls won the day and on their way to win the week and the month and the quarter and the first nine months of the year.
*****

 

26 September 2007 Daily Comments

Thoughts

Happy Harvest Moon.
*****

In the -we should have left well enough alone department -we learned today that AT&T has messed up our 1-800-BLEMLEY number. As of now if you call that number you may or may not get Kathy. AT&T is once again The Telephone Company that doesn’t’ care about land lines and toll free numbers. And so we will let you know when the problem is corrected. For now if you need to reach Bud call 312-925-5248.
*****

Asian markets were mostly lower overnight with Shanghai down 1.6%. European bourses are higher at midday. Oil is up $1 with an $80 handle in the early trade and Gold is flat.

Durable Goods orders were down 4.9% in August but that just reverses a large up in July. Ex Transportation orders were down 1.8%. Treasuries are lower in price.

GM and the UAW came to terms overnight and that has given a boost to stocks in the early going. The DJAI opened up 70 points and the major measures are holding most of their early gains after and hour of trading.
*****

We sold CMCSA, INTC, Whole Foods and J Crew for trading gains this morning in our large/aggressive accounts.
*****

The major measures are on their highs for the day at 10 am but many of the go to momentum stocks like Crocs, Amazon, Baidu, Under Armor and Apple are lower.
*****

We are buying Fifth Third Bank in more accounts today. The shares are on a five year low and yield 4.8%. The other income stocks that we own are the SPDR Large Bank Trust with a 5.2% yield, National City 6.4%, Marsh McLennan 3%, Huntington Bank 6.1%, Bristol, Myers 3.8%, Pfizer 4.8% and New York Times 4.7%. Even Talbot’s yields almost 3%. Hopefully the banks will maintain their dividends as the dividends give support to the share price. The unknown write-downs that will be announced next month by most banks are a worry but to some extent the share prices reflect those unknowns. The extents to which the share prices reflect the unknowns are unknown since the unknowns are unknown.
*****

European bourses closed higher as did Mexico and Brazil. Gold lost $3 to $735 while Oil traded lower during the day but rallied into the close to end at $80.30 up 77 pennies.

Treasuries were firm with the two-year at 3.99% after a well bid two year auction that came at 4%. The ten-year ended at 4.63%.
*****

The DJIA gained 100 points to end at 13878. The S&P 500 rose 8 points to 1525 and the NAZZ jumped 16 points to 2700.

Breadth was 2/1 positive on the NYSE and volume was moderate.

There were 154 new highs and 91 new lows on the NYSE.

The bulls won the day although many momentum stocks finished lower as Quarter end shenanigans began.
*****

 

25 September 2007 Daily Comments

Thoughts

Target and Lowe’s announced overnight that sales are going to be less than expected. Since those two stocks have been the stalwarts and darlings of Wall Street analysts the major market measures are lower.

And British Petroleum announced that third quarter revenues are going to be dreadful. That news is probably company specific. But it still causes wonderment as to how a huge oil company can be having problems with its underlying commodity at all time highs.

Treasuries are higher in price, lower in yield, on the Target and Lowe’s news. Gold is down $2 and Oil is down $1.50 with a $79 handle in the early going.

Asian markets were lower with Shanghai down 1% and European bourse are lower at midday.
*****

Consumer Confidence was announced at 99 for September which is weaker than expected.
*****

Existing Home sales dropped in August to a five year low. Home re-sales fell to a 5.5 million annual rate, a 4.3% decline from July. The S&P/Case-Shiller index showed the decline in U.S. home prices accelerated nationwide in July, posting the steepest drop in 16 years.
*****

We’ve been doing a bit of trading today in our large/aggressive accounts. We traded the SPDR Financial (XLF) for a negative scratch and bought J Crew in accounts in which we traded them last week for a nice gains.  We also bought Comcast, which is trading on its yearly low at $23.30 and sold NYX (except PV) for a nice gain, BSX for a $1 per share gain, and JDSU and IACI for a plus scratch in those same accounts.
*****

We sold S for a small gain and YHOO and Dell for nice one week trading gains.
*****

The volume today is extremely thin for a Tuesday in September during a quarter ending week. Maybe the big boys and girls just want it to be over.
*****

European markets closed lower across the continent with some down over 1%. Mexico and Brazil were also lower.
*****

Gold lost $1 to $738 and Oil dropped $1.42 to $79.53 in NYC trading. Treasuries closed higher with the two-year at 3.99% and the ten-year at 4.62% as by their actions bond traders are predicting another Fed cut at the October meeting.
*****

The dollar closed at a 40 year trading low versus foreign currencies.
*****

The DJIA gained 25 points to 13785. The S&P 500 was unched at 1518 and the NAZZ rose 17 points to 2685.

Breadth was 3/2 negative and volume was light.

There were 135 new lows and 72 new highs on the NYSE.

The reversal to new lows exceeding new highs is a negative sign and coupled with negative breadth gives the day to the bears.
*****

 

24 September 2007 Daily Comments

Thoughts

Last week while we were away Goldman Sachs reported better than profits and Bear Stearns reported lousy results. Both events were expected and the major measures took more positive vibes from the Goldman Sachs earnings than negative vibes from Bear Stearns. That is because Bear Stearns sub prime mortgage troubles were evident.

The markets seem to be in a sweet spot and with this week marking the end of the third quarter there may be some attempted mark ups toward week end. Stocks that have done well will continue to be purchased and stocks that have done poorly will continue to be sold.

Since we usually buy the latter we don’t expect portfolios to do much this week but we may find some more stocks to add.

The DJIA has rallied 10% in the last five weeks and so it is due for a rest and pull back. But there is enough performance anxiety money on the sidelines to prevent another major down draft unless circumstances extraneous to the stock markets intervene.

Overnight Asian markets were mostly higher and Hong Kong and India and Shanghai traded at new record highs. Japan was lower. European bourses are mixed at midday and Gold continues its climb up $4 at $743. Oil has an $81 handle and Treasuries are weaker as the trading day begins.
*****

We added the SPDR Major Bank Index to many accounts. The KRE has a 5% yield and its top ten holdings are:

TOP 10 HOLDINGS ( 59.78% OF TOTAL ASSETS)

 

Company

Symbol

% Assets

BK OF AMERICA CPBAC    7.81
BANK OF NY MELLON CPBK    5.02
CITIGROUP INCC    7.48
JP MORGAN CHASE COJPM    8.41
P N C FIN SVCS GRPNC    4.53
STATE STREET CPSTT    5.32
SUNTRUST BANKSSTI    4.42
US BANCORPWFC    7.80
WACHOVIA CP WB     4.68
WELLS FARGO & CO NEWWFC    7.80

*****

We are also buying Sears Holdings at $131 in our large/aggressive accounts. The share price is down from $180 at year end and a $196 high this year. Eddie Lampert is being called the next Warren Buffet. We think there is only one Warren Buffet a century and we aren’t sure Eddie is that person.

But we do know that Eddie’s year end bonus is determined to a great degree by the price of Sears Holding and we are guessing that Eddie will want it to be higher than $180 by then. He has been buying back SHLD shares for the company for his hedge fund and currently owns over 40% of SHLD. Some timely buying later in the year will get the share price higher. Moreover the Sears/K Mart combine could probably do better if Lampert weren’t trying to run it himself. But his ego is involved for now. When his pocketbook begins to suffer later this year his master of the universe syndrome may move to the back seat.
*****

We added shares of CC, MU, AMD, NCC, TLB, and COT to accounts.
*****

Oil closed down 67 pennies at $80.95. Gold closed unched at $739. Treasuries were a bit weaker with the two-year ending at 4.05% and the ten-year at 4.62%.

European bourses closed mixed and Mexico was down while Brazil was higher.
*****

The DJIA lost 60 points to finish at 13760. The S&P 500 closed down 8 points to 1518 and the NAZZ dropped 5 points to 2668.

Breadth was 2/1negative in the NYSE and volume was light.

There were 135 new highs and 85 new lows on the NYSE.

The bears won the day but are well behind for the month.
*****

 

18 September 2007 Daily Comments

We will be traveling the next few days and so this is our last post until Monday September 24. We are off to Chicago to see a few clients and also to visit with a fine gentleman who was our college roommate at Georgetown 42 years ago.

Thoughts

Lehman Brothers reported a 3.2% drop in fiscal third-quarter net income, kicking off an intensely anticipated earnings season for brokerage firms navigating turbulent mortgage and credit markets. The results topped Wall Street forecasts, and Lehman shares rose before the opening bell. Those results also gave a pump to the markets because the thinking is that since Lehman didn’t pre-announce and had good results that Goldman and the other large brokers haven’t pre-announced and so their results should be n line with analyst forecasts. We would guess that the Fed and SEC have given the green light for some lenient interpretations of valuations and marking to the market (setting a price) on quality mortgages that don’t have good bids.
*****

The Fed announces its meeting results in a statement at 1:15pm today and all the trading for the past week has been pointed towards that event. Producer Prices (PPI) for August released this morning was a negative 1.4% on lower energy prices and the year over year core rate was 2.2% which is still mild enough to allow the Fed to cut. The guessing is that the cut will be 25 bps.
*****

Japan was down 2% overnight and India was up 1%. The rest of Asia was mixed small and European bourses are also mixed. Gold is up $4 at $728 and Oil has an $80 handle. The price on oil will affect PPI negatively (pushing it up) next month. To paraphrase Uncle Alan in his new book, it’s all about the oil.
*****

A total of 243,947 foreclosure filings were reported in August, up 115 percent from 113,300 in the same month a year ago, Irvine, Calif.-based RealtyTrac Inc. said Tuesday. There were 179,599 foreclosure filings reported in July.
*****

We have been adding stocks to accounts today to bring invested levels in most accounts up to 40% to 40%. Some of our very small accounts are at 60% as are a few of our very aggressive accounts. It’s that time of year when we think the risk/reward in the broken down stocks we buy warrants taking positions with the idea of buying more if there is more of a correction in the individual names into the end of  the year. Unlike past years we are taking smaller positions in many stocks to mitigate the risk while hopefully not hampering the reward.
*****

In our larger/aggressive accounts we bought shares of Marsh & McLennan. It is an insurance brokering and consulting/risk management enterprise that has been around for 150 years. The share price is at a 9 year low on news that the CEO of the March unit has been fired. It is a quality stock having troubles and selling at 16 times earnings. Earnings have disappointed the last few quarters which is probably why the CEO of the unit is gone.
*****

European markets closed higher with France up 2% and London and Germany up over 1.5%.
*****

The DJIA is up 75 points and the NYSE is up 10 points two minutes before the Fed announcement. The two-year treasury is at a 4.14 % and the ten-year is 4.50%.
*****

In somewhat of a surprise the Fed lowered the Fed Funds rate 50 bps to 4.75% and the Discount rate 50 bps to 5.25%% and said "Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time."

"Developments in financial markets since the Committee's last regular meeting have increased the uncertainty surrounding the economic outlook. The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth."

Fifteen minutes after the Fed announcement the DJIA was up 175 points and the S&P 500 was up 25 points. The two-year was 4.03% and the ten-year was 4.52%.
*****

Going into the final hour of trading with the DJIA up 250 points it will be interesting to see if the bears can make a stand. We remain cautious, as always, but we are obviously glad we put a good chunk of money to work over the past few weeks in our kind of out of favor stocks. Many of those stocks are rallying. We would rather be on the same side of the trade as the central banks, at least for a while. They have a lot more ammo than the bears. And we also think that underperforming hedge funds that have lowered their leverage will migrate back to stocks –and increase their leverage to do so-as the only game in town where they can create performance over the short term. They don’t want to give up their 2% management and 20% performance fees. After all they have high priced homes in the Hamptons to support.
*****

Because we think tech stocks will eventually get major attention-even the dogs we now own- we are adding JDSU to our large/aggressive accounts. We also increased or Chico’s position in many of those accounts.
*****

T Bills rose a few bps today. Short Treasuries closed lower in yield on the day with the two-year at 3.97%. That price is too low a yield with a 4.75% Fed Funds rate. The ten-year ended at 4.50% which was lower in price and 7 bps higher in yield on the day.
*****

Oil hit $81.25 up 94 pennies and Gold jumped $11.50 to close at $735. Brazil was up 4% and Mexico gained 3%.
*****

The DJIA rose 336 points to close at 13740. The S&P 500 rose 43 points to 1520 and the NAZZ jumped 70 points to 2651. All is well in la la land, at least for tonight.<

Breadth was 9/1 positive on the NYSE and volume increased.

And new highs were 145 versus new lows at 95 on the NYSE. New highs also exceeded new lows on the NAZZ.

The bulls won big time.
*****

 

17 September 2007 Daily Comments

Thoughts

Asian markets were mixed overnight with Shanghai of course up 2% while Japan was up almost 2% and Hong Kong was down 1%. European bourses indexes are lower by 1% and more across the board at midday as there is more fall out in England from the Northern Rock Bank special borrowing from the Bank of England. Oil is lower with a $78 handle in the early going and Gold is up a bit at $720. Treasuries are weaker.
*****

The talk of the morning is Uncle Alan Greenspan’s 60 Minutes interview last night. We didn’t watch it since he isn’t in power anymore and for the life of us we can’t figure why folks will pay $100,000 to listen to his obfuscation.
*****

GM and the UAW are on serious talks and the press is saying the confab is not going well. A strike is a day to day possibility but that is always the case in these negotiations.
*****

We bought a small amount of NYSE Euronext, Chico’s and Sears Holding in our very large accounts.
*****

Greenspan says he sees inflation ratcheting up and the ten-year Treasury at 8%. He is giving these interviews before the Fed meets tomorrow and is doing a disservice to the current Fed. But then ……
*****

We added Time Warner, Rite Aid and Cincinnati Bell to some accounts.
*****

Mother Merrill cut its rating on NYT from neutral to sell. With a 4.5% yield we think the stock is attractive and we are buying some shares in accounts. We also added to positions and added new positions in Alcatel Lucent, Huntington Bank, and Talbot’s.
*****

Newswires are reporting that U.K. Chancellor of the Exchequer Alistair Darling said the U.K. government will guarantee all deposits held with U.K.-based mortgage lender Northern Rock if necessary. Separately, Northern Rock's board said it is "actively considering all strategic options," but is not in discussions with other parties.
*****

Gold was up $6 at $723 and Oil was up $1.47 at $80.57. Treasuries were lower with the two-year at 4.06% and the ten-year at 4.46%.

Most European indexes were over 1% lower as bank stocks were under pressure and Brazil and Mexico also closed lower.
*****

The DJIA lost 35 points to close at 13405. The S&P 500 dropped 7 points to 1478 and the NAZZ dropped 20 points to 2583.

Breadth was 2/1 negative and volume was light.

There were 120 new lows and 60 new highs on the NYSE.

The Chicago Bears and the NYSE bears won the day and both were ugly doing it. If Grossman were a stock we’d short him.
*****

Happy 30th wedding anniversary to Bette from Jody.

 

14 September 2007 Daily Comments

Thoughts

Asian markets were higher overnight but European bourses and U.S. stock futures are lower on news of a large savings bank in England needing emergency help form the the Bank of England.
*****

Northern Rock Plc got emergency funding from the Bank of England, the biggest bailout of a British lender in 30 years, after rising credit costs left the mortgage provider unable to make loans.

Northern Rock shares plunged as much as 26 percent to a six- year low after the company said today the central bank will provide an unspecified amount of credit. The Newcastle, England- based bank, whose roots date back to 1850, is the U.K.'s third- biggest lender by gross mortgages with loans worth 17.4 billion pounds ($35 billion) as of June 30.

There were reports of lines of depositors withdrawing their deposits after news of the Bank of England’s help.
*****

Gold is down $4 in the early going, Oil has a $79 handle and Treasuries have a bid on the Northern Rock troubles.
*****

Goldman Sachs Global Alpha hedge fund was down 22% in value in the month of August. August was the worst month in the fund's 12-year history. So far this year through the end of August, it was down 33.4% due to bad bets on everything from the Australian dollar, the Norwegian stock market and Japanese government bonds. Over the past 12 months, the fund has lost 37% of its value. Last year, the fund did well for the first few months but was down 9% for the year. Assets under management have slipped from a peak of $10 billion to about $6 billion.
*****

Discount borrowing under the Fed's primary credit program for banks surged to more than $7.1 billion outstanding as of Wednesday, up from about $1 billion a week earlier, the central bank said yesterday. It was the highest level since the day after the Sept. 11, 2001, terrorist attacks.
*****

Mother Merrill lowered Intel from a buy to a hold saying the shares were fairly valued even with the increased revenue guidance of earlier this week. That announcement explains the weakness in INTC shares yesterday when the markets were rallying. Obviously Merrill’s analyst was letting larger clients know of his decision to lower guidance.
*****

GM and Ford rallied yesterday on reports that the UAW will consider managing a trust fund for workers benefits. That would free GM and F from future liabilities but still would require a large chunk of money to fund the plan. And it was reported that the UAW has also chosen GM to negotiate the first contract.
*****

The DJIA opened down 80 points on negative retail sales for August and we did some buying ahead of the Fed meeting on Tuesday. We know everyone is predicting a rally on the interest rate cut and because everyone is predicting a rally the contrarians’ stance is that there will be no rally. But the contra contrarians’ stance would be that there will be a rally because everyone expects there to be no rally because everyone expects a rally. And of course we are contra contrarians. We purchased Intel, Sprint, Pfizer, Bristol Myers, Time Warner, TLAB and Boston Scientific in our large/aggressive accounts.  We bought shares of Dell, Huntington Bank, Talbot’s, Yahoo and National City in accounts that didn’t own them. We also repurchased Micron Tech at $10.96 in accounts that own AMD.
*****

We have owned all the stocks we bought today before. A new stock we are adding is Circuit City at $9.83. The shares sold at $30 this year and it will probably remain under selling pressure through the end of October as institutional investors continue to unload shares. Management stinks and sales are under pressure but the company has no debt and in bygone days it was the premium electronics retailer while Best Buy was in the dumps. That order has been reversed but we have been waiting for the shares to trade under $10 and at this price we think a few shares in our larger aggressive accounts is warranted for the risk/reward.
*****

Europe finished lower but above its lows for the day. Gold was unchanged to close the week at $717 and Oil was down $.99 at $79.19. Treasuries backed up as talk of only a 25 bps cut mellowed traders desire to own short maturities. The two-year closed at 4.06% and the ten-year at a 4.47%.
*****

We are going back into Whole Foods in a small way in a few aggressive accounts. we sold much lower than we are repurchasing but the Wild Oats deal went through and we think that gives WFMI the room to fudge earnings for a couple of quarters without Wall Street complaining. If we are wrong and the shares trade lower we will buy more. We are also adding a few beaten down stocks as initial positions. These are Coldwater Creek at $12.25 New York Times at $18.75 and Netflix at $17.25. All three stocks are down from highs this year above $26.
*****

The DJIA closed up 20 points at 13445. The S&P 500 gained 1 point to 1485 and the NAZZ rose 1 point to 2602.

Breadth was flat on the NYSE and the NAZZ and volume remained light.

There were 115 new lows and 65 new highs on the NYSE.

The bulls won the week. The Fed meets next Tuesday and it is also Quadruple Witching week so the wheel of fortune should be spinning overtime.
*****

 

13 September 2007 Daily Comments

Thoughts

We haven’t been writing much and it may be because there isn’t much occurring. The sub prime mess exists, financial earnings will probably be hit, retailers seem to be suffering from slower sales but Uncle Ben is expected to mitigate the bad news by cutting interest rates 50bps next week.

With the holiday yesterday and the Fed meeting next week the markets seem to be in a holding pattern. News of hedge fund blow ups is now greeted with a yawn and traders are looking for a reason to move stocks higher. There doesn’t seem to be any great urge to sell stocks.

And so we are just watching along with everyone else.
*****

Asian markets were mostly higher overnight except for Taiwan which was down 1%. European bourse indexes are lower at midday. Gold is down $7 on profit taking and Oil is flat. Treasuries have a weaker.
*****

Citicorp raised GM to a buy. Alcatel Lucent forecast flat sales and break even earnings and the shares ore off 10% and 20% from where we purchased them. We are buying a few more shares in large/aggressive accounts. We like the company but this is a longer term investment and with the markets in turmoil and ALU out of favor we think there may be a chance to purchase at a more advantageous price in October. We don’t want to be the farm on one stock this year.
*****

TLAB dropped under $10 today when an analyst lowered his target price from $14.50 to $11.50 with the comment that he no longer thought it was a takeover target. We bought a small amount in our larger/aggressive accounts for a trade.
*****

European bourse indexes closed higher with many up over 1%. Mexico gained 1% and Brazil 2%.
*****

Gold lost $3 to $718. Oil gained 18 pennies to finish over $80 for the first time in history. Treasuries gave ground with the two-year at 4.06% and the ten-year at 4.50%.

The talk now seems to be that there will be a 25 bps cut in the Fed funds rate and a 25 bps cut in the discount rate. If that is the case short term Treasuries are overpriced—there yields should be higher.
*****

The DJIA gained 130 points to 13425. The S&P 500 rose 12 points to 1483 and the NAZZ jumped 10 points to 2602.

Intel was lower on the day as were other tech leaders. And the mantra has been sell financials buy tech.

Breadth was 2/1 positive on the NYSE and 5/4 on the NAZZ. Volume was again light.

There were 158 new lows and 70 new highs.

The bulls won the day.
*****

 

12 September 2007 Daily Comments

Thoughts

Asian markets were mixed overnight with Shanghai recovering 1% and Hong Kong up 1.5%. Japan was fractionally lower n news that Prime Minister Abe was resigning. European bourses are off a bit after yesterday/s gains and U.S. stocks are opening lower. Gold and oil are both flat and Treasuries have a bid in the early going.
*****

Barclay’s Bank is adding $1.5 billion to a third hedge fund of theirs. Citi’s hedge fund lost 5% in value in August.
*****

Investors Intelligence reported an increase in bulls to 48 from 42 and a decrease on bears to 31 from 37 in the latest week.
*****

We were out most of the day but the markets were quiet because of the holiday. Oil jumped to a new all time high finishing at $79.80. Gold was unchanged at $730. Treasuries were flat on the short end and weaker on the long end.

European indexes closed fractionally higher.
*****

The DJIA lost 17 points to 13291. The S&P 500 rose 1 point to 1471 and the NAZZ was down 5 points at 2593.

Breadth was slightly negative on the NYSE and volume was light.

There were 105 new lows and 70 new highs on the NYSE.

Today was a draw for the bulls and bears.
*****

 

11 September 2007 Daily Comments

Thoughts

Asian markets were mixed overnight with Japan recovering from its Monday sell off and Shanghai dropping 4% on news of a 6% inflation rate in August. European bourse indexes are higher and the U.S. markets are also up almost 1%. Treasuries are a bit weaker in the early going and Gold is up $2 with Oil off a bit on news that some OPEC members including the Saudis want to increase production.
*****

McDonald’s had good numbers and the stock is higher and helping the market tone.
*****

London closed 2% higher while Germany and France were both up 1%. Mexico was up 1% and Brazil over 2%.
*****

Countrywide is looking to raise more capital since its borrowing sources have dried up or are all used up. Over the weekend the company announced it was laying off 12,000 folks. This one is a shoe.
*****

Gold jumped another $9 today to close at $729. Oil was up to $78.23 even with an OPEC production increase. Treasuries closed a bit lower in price with the two-year at 3.93% and the ten-year at 4.36%.
*****

Wheat is at almost $9 a bushel. Oil is at $78 a barrel. There is not inflation?
*****

The DJIA gained 190 points to finish at 13310. The S&P 500 rose 20 points to 1472and the NAZZ gained 40 points to 2600.

Breadth was better than 2/1 positive but volume was light.

New lows bested new highs by 85 to 47 on the NYSE.

The bulls won the day.
*****

 

10 September 2007 Daily Comments

Thoughts

Intel raised its revenue estimate for the quarter and that gave the stock markets a lift at the opening. The DJIA was up 76 points after 10 minutes of trading but began a slow fade later in the first hour.

Overnight Asia was mixed with Japan down over 2% on news that its GDP was a negative 1.2% for the second quarter. Shanghai was up 1.5%. European bourse indexes are mixed small at midday and Treasuries are firm. Gold is up $3 at $713 and Oil is down 40 pennies but still has a $76 handle.
*****

At 10am the major stock measures are all lower on comments by Fed member Janet Yellen that the housing imbroglio may affect consumer spending. You think?
*****

We purchased National City at $25.75 and Yahoo at $23.30 in our larger/aggressive accounts. The NCC is a play in the Fed rate cut and the Yahoo is a tech trade.
*****

Treasuries were strong all day and closed at two year low yields. The two-year was 3.83% and the ten-year was 4.30%.
*****

European bourse indexes were large fractions to over 1% lower across the continent.
*****

Oil gained 79 pennies to $77.49. Gold increased $3 to $712.
*****

The DJIA gained 15 points to end at 13125. The S&P 500 down 2 points to 1451 and the NAZZ dropped 7 points to 2460.

Breadth was 5/4 negative and volume was light.

There were 135 new lows and 40 new highs on the NYSE.

Today was a draw between the bulls and bears.
*****

 

7 September 2007 Daily Comments

Thoughts

The Employment Report had a loss of 4000 jobs in August when a gain of 100,000 was expected. The June and July reports were also revised downward. Treasuries are rallying on the expectation of a Fed rate cut but stocks are lower in the early going.

Gold is at $707 and oil has a $76 handle. Asia was lower with Shanghai down 2% and European stocks are also in the tank.
*****

After an hour of trading the DJIA is off 200 points. We added a few shares of Motorola to some aggressive accounts. MOT is having an analyst meeting today and in a sea of red it is one stock that is higher.

We also bought the XLF which is the Financial SPDR that owns Citi, JP Morgan, Goldman Sachs et al. we bought it in larger/aggressive accounts and it is our way of owning financials without having to pick just one that may have bad news. We plan on adding more on the downside and expanding ownership to other accounts. Of course if XLF trades higher on the rate cut we may let it go.

We bought Fifth Third Bank in these accounts at $34.75. FITB is on a multi year low with a 4.8% yield. We are sure they have as many problems as other banks but it is getting to a value level. We own for a trade on the rate cut.
*****

Traders are hoping for a rate cut and the saving of stocks that such a cut will supposedly bring.
*****

Alan Greenspan said last night that current market conditions are like 1987-88. He must be short stocks. By the way he also said the market is identical to the land bust of 1837 and the banks panic of 1907. He wanted to get all the panics in the warning. He is working for a very good living now and gets paid to say these things.
*****

The difference between today’s sell off and the one a week ago Wednesday when we went to cash was that we didn’t know of any reason for that Wednesday drop. Today’s downdraft is occasioned by the lousy Employment Report and so it is understandable. That is why we are reestablishing a few small positions. We think there will be a rally when the Fed cuts. Everyone seems to be expecting a rally and that is a negative but these markets have been so consternating that we do think the rally will occur. For how long will be the question. Also it is September and time for the wash out to begin and for us to commence placing some funds to work.
*****

We bought a few shares of Ford and GM back at the prices at which we sold them on the break on the 28th.
*****

We thought this post on realmoney.com by Robert Marcin was germane:
However, it just dawned on me that Cramer's case for so many existing bull markets is the reason the Fed should not panic.
All of us in the real estate/finance industry see the problems from excess leverage and lack of analytical rigor. But we don't see the world through the eyes of the average American.
If you work for Microsoft, Apple, Caterpillar, Deere, Boeing, Goodrich, Fluor, Halliburton, Alcoa, United Airlines, Merck, or Toyota, you don't see the financial stress. That is if you didn't speculate in Florida condos. Ditto for most other big, profitable American companies.
Jim has astutely identified about 14 different bull markets. So much of the real, ie non finance/real estate economy is thriving. Now maybe you work in the health care system, or for the government, or an educational institution. If you didn't do anything stupid with debt, things look pretty good as well. Maybe you work in the accounting or legal profession; not so bad either. Maybe you farm or mine or rough neck for a living. Things don't get much better there.
So much of the recession in real estate and finance is in our face daily, that we think the world is coming to an end. For the vast number of normal, working Americans, it's not.
Now I don't intend to underplay the struggles working Americans face with rising energy costs and stagnating wages. But those are cyclical/secular factors that go well beyond the scope of the next Fed cut.
Again, the Fed will and should cut on September 18. However, it's more insurance than in response to a collapse in the GDP or most of our manufacturing/non- financial service base.
But, it's not a panacea for stock, housing, and structured debt prices. And for most of America, that's just Wall Street's problem anyway.

*****

In the final hour as the DJIA dropped lower we purchased Talbot’s and Huntington Bank in our large/aggressive accounts and Advanced Micro Devices (AMD) in many accounts.

The sizes of the purchases today are leaving plenty of room in accounts to add shares of the same stock.

Talbot’s is on a seven year low, AMD on a five year low and in the rallies the last two weeks traders have purchased tech stocks first, and we own the HBAN for the rate cut rally and it too is on a four year low.
*****

Oil gained 40 pennies on Friday to end at $76.70. Gold was up $5 to $710 in NYC trading. Treasuries were on fire with the two-year at 3.89% and the ten-year at 4.37%. Treasuries are pricing in a 1% rate cut.

European bourses closed sharply lower with most off 2% or more. Mexico was also lower but Brazil gained a small fraction.
*****

The DJIA closed down 250 points at 13110. The S&P 500 dropped 25 points to 1455 and the NAZZ lost 50 points to end at 2565.

Breadth was 3/1 negative. Volume was again light.

There were 100 new lows and 20 new highs on the NYSE.

The bears won the day and the week.
*****

 

6 September 2007 Daily Comments

Thoughts

Wal-Mart surprised to the upside with same store sales up 3% in August and that gave a boost the major stock measures as the markets opened this morning. But the pop didn’t last for long and after half an hour trading is flat.

Gold is at $698 and Oil has a $76 handle in the early going. Europe is lower at midday and Asia was mixed with only Shanghai and India up over 1% overnight. Treasuries are a bit weaker and are reacting almost instantly in a contra manor to the moves that stocks make.
*****

Michael Lewis is a great writer and his tongue in cheek article is amusing: http://www.bloomberg.com
*****

Bloomberg reports that overnight rates for loans in Venezuela were at 22% yesterday and as high as 90% today and the Central Bank has suspended making any loans.
*****

Oil gained 55 pennies to end at $76.32 in NYC. Gold jumped $14 to $704. Treasuries were weaker with the two-year at 4.07% and the ten-year at 4.50%.European bourse indexes closed mixed to slightly higher. Brazil and Mexico were up.
*****

The DJIA gained 60 points to 13365. The S&P 500 rose 6 points to 1478 and the NAZZ climbed 10 points to 2615.

Breadth was 3/2 positive on the NYSE and volume remained muted.

There were 66 new lows and 45 new highs on the NYSE.

The bulls won the day. Traders are waiting on tomorrow morning’s Employment Report.
*****

 

5 September 2007 Daily Comments

Thoughts

The WSJ is reporting that Citicorp has exposure to $100 billion of Structured Investment Products. We have no idea what they are but we guess it is some kind of credit vehicle that some 25 year old MBAs dreamed up and which could only provide oodles of profit and no risk as long as every economic event went the way the computer models said they would.

Whatever, the stock futures are lower on this news. The fact that that the S&P 500 is up 4% in the last four trading sessions might also suggest that the stock markets are in need of a pause. The last four day up swing in the S&P 500 of 4% was in April 2003 when the bull market resumed.
*****

Asian markets were mixed overnight as are European bourses at midday. S&P futures are suggesting a lower opening and oil is pennies lower with a $75 handle while gold is down $2 after yesterday’s $9 pop higher.

On the bad news for Citi, Treasuries are higher in price as the markets try and decide whether bad news is good news because bad news will force the Fed to cut. But then after the Fed cuts will bad news again become bad news or will the Fed cut become bad news after it is good news.
*****

ADP and Challenger & Grey are suggesting weak jobs growth and that is affecting stocks. Also the Fed releases its Beige Book this afternoon and that could rally the markets if they are lower. Or maybe not.
*****

Pending home sales were down 12% in July when the market were expecting an up 5% number. It is down 16% year over year.
*****

An hour into the trading day the DJIA is down 150 points and breadth is 5/1 negative. These huge mood swings are disconcerting.
*****

We have not felt positive about our sale of Motorola. We view it in the same class as Cisco, Nokia and Hewlett Packard, all of which we traded out of way too early in their recovery. And so we are repurchasing the Motorola in many accounts.

Our desire to be in cash does not mean that we are going to ignore individual stocks that present themselves as opportunities for the longer term. And as we often say we sometimes find we want to own a stock after we sell it. MOT has been acting well. We shouldn’t have sold it but in doing so we now know that we want to own it.

The same goes for Alcatel Lucent which has a 3% yield and which we are repurchasing.
*****

The Beige Book report by the Fed districts was released at 1pm and the stock markets yawned and moved lower. The DJIA is now down 175 points. The first move on news is sometimes the contra of the final direction for the day. But then again….
*****

Apple was up all day in the down market in anticipation of an announcement toady from Steve Jobs. When Jobs made the announcement of the new iPod and iTunes the share price began to move lower in a sell the news reaction.
*****

Oil ended up 75 pennies at $75.79 in NYC. Gold lost $2 to $689. Treasuries were strong across all maturities with the two-year at 4.02% and the ten-year at 4.47%.

European markets closed 1% to over 2% lower as did Brazil and Mexico.
*****

The DJIA closed down 150 points at 13300. The S&P 500 was down 18 points at 1472 and the NAZZ dropped 25 points to 2605.

Breadth was almost 3/1 negative on the NYSE and volume was light today on the downside as it was on the upside yesterday.

There were 70 new lows and 40 new highs on the NYSE.

As they did last Wednesday the bears claimed the day.
*****

 

4 September 2007 Daily Comments

Thoughts

Asian markets were mixed in Monday trading and were slightly lower overnight Tuesday. European bourse indexes are also slightly mixed at midday. The U.S. markets opened slightly lower but now have moved to the upside. Gold is up $8 and Oil has a $74 handle. Treasuries are a flat.
*****

The DJIA was at 13362 on August 1 and at 13358 on August 31. We guess not much occurred in August.
*****

New highs are ahead of new lows on both the NAZZ and the NYSE. That is the first time we have seen that for a month and is a positive for the bulls.
*****

Over the weekend we considered our move selling the final 15% of our holdings last Wednesday and the subsequent rally of the markets on the Bernanke and Bush statements. Their statements affirmed that our caution for the last few years has been justified by the sub prime meltdown and the corresponding turmoil in the markets. The problem for us going forward is to balance our cautions with the desire to earn a decent return on investment for our clients.
Preservation of capital is always our first consideration. We now need to judge how much longer term effect the intervention of the Fed in the markets is going to have on the economy. Lowering interest rates will certainly help the banks on the funding end of the process which is their cost of money. But unless the Fed or the Congress and Bush create some kind of Resolution Trust Corp. to assume adjustable rate and sub prime mortgages and lower the interest rates that those mortgage holders have to pay we don’t see an end to the mortgage problems.
The mortgage problems have frozen and actually lowered property values over the last three months. A problem that took 6 years to create will not be solved in two months. But the thought of action by Bush and the Fed has staunched the stock markets move lower. Perception and psychology are a huge component of stock prices and since the overall trend over the years is to move stock prices higher the natural flow is to higher prices.
But there are times when corrections are needed. And sticking fingers in the dam doesn’t end the problem if the there is fundamental flaw in the dam. Is there is systematic problem with the economy at this juncture? Or is this just a correction in a bull market?
Last week we decided that trying to trade the markets with a small ownership of stock was not what we wanted to do at this juncture. In October we may decide- as we did last year- that the correction is just that and nothing more. We think we are better off waiting till October to make that decision.

*****

Gold ended $9 higher at $691 in NYC trading. Oil also gained $1.04 to $75.06. Treasuries were flat with the two-year at 4.13% and the ten-year at 4.55%. European bourses ended higher across the continent as did Mexico and Brazil.
*****

The DJIA gained 95 points to 13455. The S&P 500 was up 15 points to 1489 and the NAZZ jumped 33 points to 2630. What correction?

Breadth was better than 2/1 positive and volume was still on the post holiday light side.

There were 60 new highs and 50 new lows on the NYSE and 105 new highs and 45 new lows on the NAZZ.

The bulls won the day.
*****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



FAIR USE NOTICE

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.


Website Information

For those folks who have accounts with us, you may now go to: https://eview.mesirowfinancial.com and fill out the account information and view your accounts online. If you have trouble filling out the form, or in getting online, call and we will help you with the process. NASD regulations require the eview site to be secure. Thus your password must be changed every ninety days. You will be prompted to make this change when needed.

For information on Mesirow SIPC and Excess SIPC protection SIPCmesirow.pdf.

For those clients of LY& Co and other interested persons the Quarterly Report on the routing of customer orders under SEC Rule11Ac1-6.
For Quarter Ending 09/30/2002 For Quarter Ending 12/31/2002 For Quarter Ending 03/31/2003
For Quarter Ending 06/30/2003 For Quarter Ending 09/30/2003 For Quarter Ending 12/31/2003
For Quarter Ending 03/31/2004
All future SEC Rule11Ac1-6 Quarterly reports may be found by visiting the diclosures at LY& Co Clearing Broker Mesirow Financial at: http://www.marketsystems.com/reports/1-6/msro/.


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.


Summary of Business Continuity Plan

309 W Johnson Street Apt 544, Madison, Wi 53703 312-925-5248
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.