Saturday, February 18, 2012

Review of Barron's, Dated 20 February

My Saturdays have swung into a new rhythm since starting Italian class (I hope that I am not treading into "Facebook-iness" here...).  We now are eating our sandwich "on the road" after class before we run the usual string of errands.  But this means we arrive home later than usual, and typically more tired.  Barron's almost put me under again this week (about 1/3 of the time I fall asleep there in my lounger on Saturday afternoons...

The Cover Story ("A Game Plan for HP") and is author Tiernan Ray's take on new leader Meg Whitman.  Hewlett-Packard (ticker HP) has had rough sledding over the past several years, from being an engineering-driven company (remember those "Reverse Polish Notation" calculators they came out with about 1973, the first ones that could do math like trig functions, but they costed $400?) to a printer-oriented one, then they bought Compaq and became a commodity PC business, then bought two software companies for $23 billion dollars...

While HP is number one or number two (by sales) in various of its segments, Ms. Whitman has a big job ahead of her. The author suggests that she commit to staying there for the five years he feels the company would need to be turned around.  He likes Meg's commitment to more R & D.  And that she is a good CEO with a (possibly) talented team around her.  But, in the end, the author likes HP's competitors better (Cisco, IBM, Oracle, EMC and Apple).

***

Alan Abelson's column, always one of my favorites, was full of surprises today.  The first topic he took on was the Sports Illustrated swimsuit issue and how that affects the stock market.  It seems that when an American cutie is the on the cover, well the stock market just does better than if it is a foreign gal...  He finishes his comments with the observation that no matter what the stock market does, well you have the magazine that you can leaf through...

Abelson then moves, slyly, onto surprising ground.  Namely saying bullish things because of recent (past several months) data showing good things happening to the American economy.  He notes a PNC Financial Services says that JOBS have been increased.  So, the economy is going in the right direction!  AAGH!  About gave me a coronary becoming a bull there, Alan!


Alan then immediately backpedals on his uncharacteristic bullish comments after chatting with Ethan Harris, an analyst at Bank of America Merrill Lynch.  It seems that this $26 billion deal reached between the states' attorneys general and the banks will lead to a jump in foreclosures...  Which is likely needed and better in the long run (to get it over with), but will lead to short term pain.

Whew, Alan!  Felt like I'd damned near died!

***

Michael Santoli ("Streetwise") chronicles a pretty decent start for the stock market so far in 2012.  We are already up the 8% gain to (S&P 500) 1360 as foreseen last December by Barron's.

He goes on to note that the rest of the year may not be so rosy, even with all the QE-ing coming up...

***

On Page 16 (my edition anyway) there is a nice little article titled "Desperately Seeking Dollars".  It seems that Iran and Argentina have joined ranks with Italy to keep their money from leaving the country.  Iran is talking about executing people for speculating with US dollars.  Argentina has taken a page out of Italy's handbook and has employed currency sniffing dogs to help keep its currency from getting even weaker.  Other countries recently slapping on capital controls (to keep money from leaving) include Brazil, Turkey and South Africa.

That is not good, of course.  If you start hearing talk about that happening here, uh..........

***

He Said:

"It will help level the playing field for businesses and the government to collect needed revenue while promoting economic growth."


-- Treasury Secretary Timothy Geithner (on the tax reform plan)

What!?   He is obviously lying or crazy to think that raising taxes is a good thing.  If they take the capital gains tax up and the dividend income tax rates up, that will KILL the equity markets.

***

Myriam Gottfried writes a positive article on lender CIT Group (CIT) that not long ago emerged from bankruptcy.

No thanks!

***

Mark Veverka ("Technology Week") writes that new CEO at Apple (AAPL) Tim Cook looks like he is pretty good boss!  The people working there seem to like him, he is promising to root out any bad labor practices at big supplier Foxconn (in China) and is even open to the idea of paying a dividend to shareholders (something Steve Jobs always rejected).  A new version of its operating system is due out this summer, and it will allow better iCloud integration.  iCloud?  New one for me!  Apparently the market is OK with Tim Cook, AAPL is still holding its share price over $500 (boy did I miss not buying those two: AAPL and GOOG...).

***

Leslie P. Norton has a very interesting interview with Hugh Hendry (of Eclectica Asset Management, in London).  I have seen articles and commentary at Zero Hedge that are by him and/or write about his, but this is the first time I get a feel for the guy.

Eclectica had a 12% return last year, clearly better than the 0% for stocks as a whole, and one of their hedge funds was up 46%.  He was one of the first to describe the property bubble in China (empty skyscrapers in Wuhan in 2009, he made a YouTube video out of it, I suppose that would be easy enough to track down).

They made a fair amount of money buying CDS (!) on Japanese companies, seeing pricing anomalies (no details, alas).  He thinks that all the concern over INFLATION is overblown, that (shorter-term) that DEFLATION is the bigger threat.

He sees danger everywhere though (so why does he buy CDSs?).  He thinks that the Greeks will eventually elect someone who promises to take them OUT of the Eurozone.  He expects "pathological swings in investor sentiment".

Eclectica is modestly bullish in equities, some fixed-income and VERY BULLISH on agricultural related investments (commodities, fertilzer and farm equipment).

While what he is up to is difficult to understand, IMO this interview is worth the $5.00 plus sales tax alone...

***

Jim McTague ("D.C. Current") and Gene Epstein ("Economic Beat") both write on politics and the economy on the same page.

McTague (as far as I can tell) is non-partisan in his view of the new Budget (note that Congress has not approved a SINGLE Obama budget yet!), but says that there is a lot of massaging of the numbers (no!)...

Epstein comes with an index showing indicators that Obama may have a hard time winning based on the historical indicators showing re-election vs. the numbers.

***

Dimitra DeFotis writes a bullish piece on Donnelly (RRD), the big printing company (trvium: Donnelly claims to have published the first phone directory).  They are BIG (569 printing centers, 1/3rd of them overseas) and the company offers a 7.7% dividend yield with a low P/E of 7.6.

Printing is not going away, and RRD is likely to be a survivor.  This may be a good stock to look at, 7.7% yield and all...

***

In the Classifieds this week I found some nice little nuggets.  One Sandy Lane is still for sale, they changed the header of their ad to: "One of a Kind -- The Most Luxurious Residences (es?) in the World".  Maybe the seller is asking for too much money...

42 tracts of farmland are for auction in Colorado and Kansas on March 14 (www.farmandranchrealty.com) ranging from 80 to 1600 acres each.  A low sulfur coal mine is for sale in West Virginia (fjm@energyweb.com).  Those lawyers sueing on behalf of clients harmed by the financial crisis are still looking for money and promising 10% (total market damages: $45 billion), if you want details email James at jmitchell@abbingtonpartners.com.

***

Thomas Donlan writes about how bogus (my word, not his) the proposed heathcare mandates are being proposed by President Obama.

***

There is a Special Section on America's Top 1000 Financial Advisors.

Yes, Ric Edelman ("that's rice delman dot com" on the radio ads) is there.  But, instead of listing them in national order, they break it down by states.  Ric Edelman is No. 1 in Virginia where his company's HQ is (in Fairfax actually, a small city I used to know reasonably well when living there up north).

I will not comment further of the Special Section, because if you are trying to decide whether or not to spend $5.00 (plus sales tax), then you clearly do not have enough money to sign on with these guys (high account minimums).


***


In the Market Week section, we are advised that the Dow is at a 52 week high.  Lots of bullishness out there seems to me.  On the other hand, I have MISSED many of these gains by being mostly on the sidelines.


In the "always important to check" "Commodities Corner", Tatyana Shumsky writes about TUNGSTEN prices soaring!!!  Yes, tungsten (the metal that is within 1% of being as dense as gold) is traded, but not in the futures market.  Tungsten is traded in ammonium para tun(g?)state, a powder.  This material trades around $420 per metric ton (I imagine the tungsten part of that compound is some 90% of the weight) so that would price tungsten metal at roughly $0.18 / lb.  CHEAP!  Most tungsten comes from (where else) China.  But, two Canadian companies produce the metal:

  • Malaga (MLG.Toronto) produces it in Peru!
  • North American Tungsten (NTC.Vancouver)
Both are "penny stocks"...  China is cutting back on tungsten exports (tungsten is very useful in the military...) and so tungsten supplies are tighter.  

Maybe China is also keeping some on hand to, well you know, make up some fake gold, hey, at 18 cents per lb...

I do have a bone to pick with her on tungsten though.  She says it is the second hardest substance after diamonds...  Maybe the second hardest ELEMENT, as I believe titanium nitride is harder and tungsten (something) is as well.  If I can track her down, I'll get this one straightened out (unless you tell me who is right DCFusor!)

***

Randall W. Forsyth ("Current Yield") knocks one right out of the park with this week's article!

He provides some more details on the $6 TRILLION Bond Fraud over there in Switzerland and Italy.  This apparently was a (laughable) scheme to defraud Swiss banks.  

He then goes on to write that it looks like some bondholders of Greek debt "are more equal than others".  Now when did we last hear something like that?  Oh, yeah right, GM.  It looks like game of "Screw the Bondholders" has reached Europe...

He then finishes with the observation that $99 billion of of real (as opposed to bogus) Treasury debt is up for sale this coming week.

Five Stars, Randall!

***

No IPOs of note, some little ones I have never heard of.

The "Total" on the Fed's Balance Sheet inches closer to the probably important psychological of $3 trillion dollars (it is now at $2.978 trillion, up $4.6 billion last week).  You can be sure that Zero Hedge will have some fun with Fed when they finally cross that 3 trillion dollar total.


Money Stuff (for the economists out there who know more than I do):

-- Currency in Circulation (I will include this in the future): up 0.7%
-- Monetary Base: up 1.3%
-- M1 and M2 both essentially unchanged

I regret to report that the Mighty Peruvian Sol suffered a setback vs. the US$ this week, falling some 0.005% (very little, but still...).  That is only the second time I have noted a decline in the Sol over past few months I have been watching it.  Actually, that may be good for one reason: we are soon going to Peru!  So, bring it down, bitchez!  Save me some money!


Verdict:  I am Robert Mix and I approve buying this issue.

2 comments:

  1. Hi Robert!

    Thanks for commenting on my blog. I have been well aware of your presence at zerohedge for quite some time now. You are clearly well aware of the market issues, and it is pretty relaxing to see someone like yourself being an Fofoa fan.

    Regarding Meg Whitman. I am a Californian and was very much unimpressed by her campaign for the governorship. Granted, California is a predominantly blue state, but nevertheless, imo, it was fairly obvious that she was dead in the water from the get go. Additionally, I have a close friend that works for ebay, and he gave mixed reviews of her leadership in that role. I think that you hit the nail on the head when you state that she has a 'big job ahead of her.'

    Of course, her job might be easier if California had a more business friendly climate. California is one of the most advantaged states in the union when it comes to population, natural resources, agriculture, climate, and entertainment, but nevertheless it has been run poorly for virtually my entire life!

    I suppose that is par for the course these days however, so opining about it doesn't amount to much. Anyhow, I have been aware of your blog since you first started it and have it bookmarked. I will be sure to check in more often, as I am finding more and more, that the commenters and watchers of Fofoa are an intelligent bunch of folks.

    More for my confirmation bias eh!

    ReplyDelete
  2. Bluehost is ultimately one of the best website hosting company for any hosting plans you require.

    ReplyDelete

Note: Only a member of this blog may post a comment.