Saturday, September 3, 2011

This Weekend's Review of Barron's (Dated Sept. 5)

Continuing the experiment I started last weekend I now review this weekend's issue of Barron's, the big fat financial newspaper put out on the weekends by Dow Jones.  Please do remember everyone that Barron's is TOO BIG to review adequately by one junior blogger in an article like this.

I need your feedback if you want me to continue these reviews!   Whether by comment (easiest for Google (gmail) account owners) or by email.


The Cover Story is "Where Do We Go From Here?" with a cartoon bull tangling with a cartoon bear wrangling for control of the engines aboard ship.  10 Wall Street analysts bravely made their predictions.  8 are bullish, 2 bearish.  All of the analysts predicted the Fed would NOT do much...  That surprised me.

S & P 500 (now at 1174):  low prediction 1100, mean prediction 1311, high prediction 1450
If we look at the mean  / current S & P 500 we see group guess at about an 11% gain, pretty bullish (and of course not including dividends).  This is for YEAR END 2011.  Bullish indeed.

Yield on 10 Year Treasury: (now at 1.99%): low: 1.75%, mean 2.44%, high 2.75%
If we look at mean yield to / current on the 10 Year is a rise in the relative yield of 23% (2.44 / 1.99), BEARISH in that bonds would have to go DOWN for those yields to go up.

So, their average (NOT consensus) is bullish for stocks, bearish for bonds.  They are all over the place re their favorite sectors as well as the ones to avoid, not even close to a consensus.


Alan Abelson kicks off Barron's with his typical sardonic (that's OK with me) column.  He caught the "U-6" unemployment number (which includes part timers and discouraged job seekers) as edging up to 16.2%  from 16.1% even as the well known "main" (U-3) number remained unchanged qt 9.1%.

Abelson then goes on to quote David Rosenberg (who is quoted often at Zero Hedge (ZH) as well) as being pessimistic that our government will get anything done re jobs.  He also looks at a possible 20% decline in stocks maybe as bad as 40%.

He finishes up with some verbiage from Alan Newman who is bearish re stocks, mostly because of the long hangover we are on from the Debt Binge (my words).  Cash holdings of mutual funds: a low 3.3%, not much cash in the funds to jump and boost stocks.  Newman likes one sector though: gold stocks.  Gold stocks have not participated much (ZH has also catalogued this) and he says "there will be a fantastic speculative phase in which gold shares go totally berserk."  Abelson has a positive vision of that!


Economic writer Gene Epstein plows into the subject of the US$ vs. the Euro.  Seems to be more dollar bullishness now than perhaps a few (weeks?) whatever ago.  It is important to note that Europe IS WEAK.  Anyway, FWIW, the "Barron's Forecast" of the Dollar / Euro is 1.00 / 1.00 (par) by Sept. 2012.

If that turns out to be true, then that European vacation you may have been planning  would be some 30% cheaper in a year ($ / Euro at 0.70).  Epstein also mentions that Milton Friedman himself (the deceased super-famous monetarist economist) wrote pessimistically about the Euro back in 1998, someone yesterday at ZH put up a link to Milton's article from then (which actually shows, along with the other ZH references above) that if you read ZH thoroughly (very hard, lots of information), then you too can read all about it!


Stocks in three other stories are picked as cheap: Intel. Microsoft, Apple (?), Kohl's, Whirlpool and Motorola Solutions (the radio gear maker for municipalities, etc., not the Motorola hand-set maker spin-off being gobbled up by Google).


Jim McTague ("D. C. Current" column) says the fix is in for a deal to spend on infrastructure, yes that even the mean ol' Republicans will strike up a deal with Obama.  Dividend payers in this space he likes include Caterpillar (CAT), Nucor (NUE), Steel Dynamics (STLD) and metal pole and tower maker Valmont Industries (VMI).  All are well off their 52 week highs.


Editor Thomas Donlan (a real capitalist in the sense of Let The Markets Work It Out) has his doubts that Obama's upcoming speech on jobs.  He is very down on new appointee Alan Krueger as his new economic adviser.  Krueger gave us the "Cash-for-Clunkers" program...


For the second week in a row the "Commodities Corner" article highlights precious metals, this week platinum and palladium (there was a similar article some months ago about these two PMs in the same column).

Tatyana Shumsky gets a couple of mildly bearish views on both metals as automotive manufacturing has still not caught up with production pre-Fukushima.  James Steel, precious metals analyst for HSBC predicts average (from here on I suppose) 2011 platinum prices at $1825 (close to its price of $1877) and palladium at $785 (price of $773).  

Tatyana makes a point of saying that even with some general inflation, if demand (automotive mainly) goes down, these two metals could go down too.  If you want SAFETY in PMs, she says gold is better (my words).


From the Federal Reserve Data Bank (fifth last page of the Market Week section) I note the Total Fed holdings $2.869157 trillion, a slight dip from last week.  That Total is still some 19% higher then a year ago...


Please review my review!  I am doing this to see whether or not this appeals to my audience!  Besides Barron's does cost $5.00 plus sales tax, so do let me know if I save anyone any money!

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