Another weekend, another Italian class and another review of Barron's! I was delayed in writing this up by a number of factors: falling asleep while reading it yesterday, taking my wife to a delightful new Peruvian restaurant and having Linda and Tom over (who took us sailing not along ago).
This weekend's edition did not match the high level standard that I had grown accustomed to recently (well the Roundtable that they sponsored of course was very interesting and hard to match). Nonetheless, I spent the $5.00 plus sales tax, so I offer the below (shorter than normal) review. And, again, I only write about what interests me, whether for good or bad.
Randall W. Forsyth pinch-hit for Alan Abelson this week. After a couple of political comments, he finishes with politics with Ron Paul's reaction to Donald Trump endorsing Mitt Romney:
"Please explain to us why anyone would care."
Indeed, who cares what The Donald thinks...
Forsyth goes on to dig into the employment numbers out on Friday (better than expected, on the surface anyway). He then proffers an idea that many unemployed have had time to spend more hours on Facebook (800,000,000 users). He wonders if when more people go back to work that all those who then have to work will then go on to have more "Friends" and to "Like" people or leave comments. He then goes on to note that some economists are seeing that Americans are saving more (having gotten beaten up in 2008 - 2009) and worried about Europe...
He then finishes with comments on Facebook, money & credit expansion (especially the LTRO in Europe) and rising stock prices (highest in a long time). Looks good right? Well oil prices have doubled since December 2008 and 1,000,000 fewer people are employed....
"It is very urgent... to resolve Europe's debt crisis. China is considering greater involvement... By participating in the European Financial Stability Fund..."
-- Chinese Premier Wen Jiabao
China has a lot at stake in Europe, they trade more with Europe than they do with either the USA or with Japan.
Andrew Bary writes "At Long Last, Facebook". By comparing valuations of Facebook with Google and Apple, well Facebook does not look too good... Apple and Google both have a PE ration of aroun 16, Facebook's is around 88... I will not be buying, thanks anyway.
Lenovo is now the No. 2 PC maker in the world and is withing sight of No. 1 Hewlett-Packard wirtes Leslie P. Norton ("Protect and Attack"). Lenovo is look to move into other products like tablets, smartphones and smart TVs.
Andrew Bary wrote another article "A Remedy for Runaway Health-Care Costs" in which he diagnoses (sorry) the very high amounts the individual states are having to pay for "duals" (patients eligible for both Medicare and Medicaid). These duals are costing states a fortune (only to get worse). One partial solution will involve more managed care companies coordinating and consolidating care. Three ideas he has:
Molina Healthcare (MOH)
Will there indeed be significant savings? Bary says it is hard to say... And I would have NO IDEA...
[Ed. note: For the record and overgeneralizing, Medicare is an entitlement (you get it, no questions asked) when you turn 65, Medicaid you get after you have lost all of your money...]
Jim McTague's "D.C. Current" column ("Fannie Mae's Fire Sale") reports that there will be a test auction of selling foreclosed homes in bulk! But, not everyone can play, you have to be rich, have a record as a landlord and you cannot "flip" the properties. Fannie offered few details now (like when, or how many homes, etc.), but this idea is apparently of great interest in the real estate sector.
This might be interesting to keep an eye on.
The Cover Story is Mutual Fund Families and who came out on top in 2011. Yawn. Mutual Funds? They're still around?
I skipped Gene Epstein's article on January jobs because of the strong smell of government manipulation of jobs numbers nowadays. I don't trust them, and there are many like me who do not either...
Tiernan Ray writes that Apple and Samsung are dominating the smartphone space. HTC of Taiwan (using Android) has lost some mojo, but is working to get it back. And Intel and Microsoft are working to bust into the smartphone and tablet markets later this year. It may become an interesting horse race int he smartphone starting late this year.
Mark Veverka ("Plugged In") takes a poke or two at Jeff Bezos and Amazon (AMZN, a company I do not follow, I just buy at the bookstore, thank you). The margins are not good, the PE is 70 and has never been a shareholder friendly company.
Well, I won't buy their shares, thanks Mark for the heads up!
Mattel and Hasbro hiked dividends! Shirley Lazo writes that the toy market looks pretty good worldwide for these two companies.
Jack Willoughby writes up a complicated article/interview with former SEC Commissioner Roberta Karmel about breaking up the TBTF banks. There is a great chart showing how each TBTF got that way from 1995 to 2009 (who gobbled up whom -- complicated!).
Karmel thinks that the banks should be broken up along functional lines, that's about all I was able to understand.
In the Market Wee section we have:
-- Vito Racanelli writes about the big stock rally we have had since the November 2011 lows (around 16%)
-- Jonathan Buck ("European Trader") writes that German companies might be a good bet. This is controversial, Buck provides opinions on both sides. I guess my (less educated view than his) is "No, thanks", in that German companies are dependent on a weak Europe and weakening China. He finishes with a comment on the proposed Xstarta / Glencore proposed merger. This would be a mining and metals trading giant.
[Ed. note: BIG IPOs (Facebook) and BIG MERGERS (above) are often an indicator of a market top!!!]
-- Leslie Josephs writes at "Commodities Corner" that after an huge run that orange juice may very well drop. There is a fungicide that FDA does not like found in some Brazilian OJ... Consumption may go down, and prices have gone up so much...
-- Money stuff:
* Fed Total essentially unchanged at $2,966 trillion (they must REALLY be trying hard to not go over the $3 trillion dollar "Headline Number"...
* M1, M2 and Monetary Base were little changed
And, for the first time in weeks, the Peruvian Sol went down vs. the USD (by a tiny percentage)
Verdict: Not as interesting an issue as the last three were.