Sunday, September 30, 2012

Review Of Barron's -- Dated 1 October 2012

Recently back from vacation and wanting to catch up on all of the news I missed it Italy (fewer hotels offer internet service and fewer internet cafes because so many people have smartphones and WiFi equipped laptops), I bought this weekend's issue of Barron's.  The magazine/newspaper was VERY KIND to throw a nice slow and fat pitch: the Cover Story is "Time To Buy Goldman".  Wow!  How could I resist that?

Author Michael Santoli writes a very positive piece on Goldman Sachs (ticker: GS).  They were the lest damaged by the financial crisis (of the major banks).  Morgan Stanley has somewhat switched their business model, Citigroup is back to focusing on international banking and JPMorgan Chase, Goldman's most important competitor has changed its business mix.

Goldman is still the world's largest investment bank and institutional broker.  Santoli notes that, yes, they did file the papers to become a bank during the crisis in 2008, but they did not BECOME a normal bank, they kept at their business model, which is much more lucrative than other niches in banking and finance.  Santoli gives some history of Goldman since 2006, back when they were minting money, and that yes, the stock price is 50% lower than its peak.  He also notes that all banks would be at peril in another financial crisis.

Santoli lays it on the line: Goldman's stock could be up 25% in the coming year.

Goldman has apparently been very risk-averse, they have long held a LOT of cash and cash equivalents which has somewhat hurt their performance.  Return on equity is DOWN vs. other banks.  But, they are now less-leveraged than most other banks.  Another reason they hold a lot of cash, he writes, is that there is "regulatory uncertainty" (one of my new favorite terms) out there, and they want to be prepared...  Risk management has been their key philosophy (or maybe that would be screwing their customers?), and THAT is what CEO Bankfein, CFO David Viniar and presumed new CEO Gary Cohn are all think.

And, according to Santoli, "prop trading" was never a major profit center at Goldman.  I suppose this could be fact checked...

Watchers of the global financial markets believe an upswing is coming after years of bad ersults for eveyone, including Goldman.  But, Goldman is the BIGGEST on the block when it comes to managing BIG money and BIG mergers.

As Goldman is HATED by many of my Zero Hedge readers, I would be very interested to hear, by reply at ZH or by comment below. the BEAR CASE for Goldman Sachs.


Alan Abelson this week writes about this marvelous stock market, which keeps going up despite much bad news, and any news that is not bad is mediocre.  He cites a court case that might be of interest to any soon-to-be laid off Wall Street types: it seems a prisoner sued because he was forced to share his cell with roached and mice (no other details given), the court threw out the case on technical grounds, but Abelson suggests that prison cleanliness issues come up  again in the future, well maybe there would be some work for any dis-enfranchised financial pros...

Abelson goes on to write that it looks like we are no closer to the "Fiscal Cliff" than when I went on vacation.  What irresponsibility!  Companies are now holding back on spending, hoarding their cash.  These companies fear that this issue may NOT get resolved, and over the Cliff we go...  Abelson then cites Bank of America Merrill Lynch as saying the whole world would suffer to, as we go over the falls, so would they.  Ugh.

He finishes his column by noting that Robert Schiller (yes, THAT Schiller of the Case-Schiller index of home prices) thinks maybe we have touched bottom.  Both Schiller and Abelson note that we have had that thought before as well...


Jacqueline Doherty ("Streetwise") wrote on two interesting items: First that the "Dow Theory" (in that the transportation sector leads other stock prices) seems to have broken down, the DJIA is up, and transports down.  Secondly she writes that Harvard, Yale, Stanford (and likely Princeton) Universities are all having LOWER returns than the S&P 500 or the "60/40 Blend" (60% stocks, 40% US bonds)...  Really smart those those Ivy Leaguers!  (Special smile out to my friend John, you will like this!)


Kopin Tan (Follow-Up) says that Google still has great longer term prospects, while Tiernan Ray (same column) notes that Hewlett-Packard (HP) still has many woes, missing the boat on new products.


"Review and Preview" has two gems today...  Zach Trenholm wrfites a short piece noting that our Debt Crisis is a huge 60% based on ENTITLEMENTS, only 20% on national defense (includes the wars)and some 10% on interest and 10% on "Other".  I will say it again: entitlements have to get SOLVED, benefit must be cut, retirement ages raised (some), and then MAYBE we can talk about raising some taxes.

The other gem:

"She Says":

"Time seemed to view his job as protecting Citigroup from me, when he should have been worried about protecting the taxpayers from Citi."

Former FDIC Chief Sheila Bair on then NY Fed Chief Tim Geithner

Whoa, harsh words!


Andrew Bary suggests how we can play the Kraft spinoff.  Kraft will split into two roughly equal sized companies: Kraft Foods Group (basically stodgy US processed foods) and the Moneléz (snack foods, expected higher growth overseas).  He thinks both are OK, but prefers Mondeléz...


Author Sandra Ward writes up a bullish case for Steelcase, the office furniture maker.  Offices at many companies are modernizing, they need more creative furniture, Steelcase is winning this battle vs. Knoll and Herman-Miller she notes.


Tiernan Ray ("Technology Week") writes that Research in Motion (RIMM) may have yet more trouble ahead.  They are behind in the Holiday Season with a new smart phone, which will not come until 2013.  Apple (AAPL), Samsung Electronics, Google (GOOG, via their Motorola acquisition), Microsoft (MSFT) and Nokia (NOK), all of them (and their brother, LOL!) are rolling out new smart phones now or imminently.

Mr. Ray also moderated a social networking panel.  While West Coast bankers are all excited about Twitter and Facebook, he is not.  My words sum him up: "Where's the money?"


Shirley A. Lazo notes that world's largest defense company Lockheed-Martin (LMT) will increase their dividend, up to a decent 5%.  I wonder what happens, however, to LMT if/when defense spending gets cut, which it eventually will...


The Classifieds had two interesting little items:

-- a breakthrough jet wind turbine is ready for production for commercial wind farms, they claim it TRIPLES the power increase for commercial electricity.  Details at: 800 337 2411

-- (that's a number "1" after the first "a") wants lenders to so they can get drilling rigs (and similar), oil & gas production wells, and a crude oil storage terminal.


PENTA (Barron's special info for families with over $5 million) discusses how Prince Charles is actually a serious guy when it comes to philanthropy...

I am stumped for further comment...


Lawrence C. Strauss interviews Bill Nygren (Oakmark Fund).  Nygren says that stocks are the way to go vs. bonds (probably so).  Nygren's picks:

AIG (?!, whoa, so NOT ME)
Delphi Automotive (?, not me!  How about Hyundai Motor instead?)
Devon Energy  (DVN, they have a LOT of drilling for more profitable oil)

I like Devon Energy, maybe I'll buy it.


"Economic Beat" author Gene Epstein discusses Labor-Force Participation ("LFP" for now, vs. unemployement).  LFP is going down for both men and women since about 2007.  My eyes fuzzed over the dense economic-speak here, but Epstein says that there are disagreements about who to count as unemployed, those out of the LFP, whose numbers you use, etc.

Quite a puzzle indeed.


Editorial Commentary this week is by Scott Powell and Jay Richards.  They write that the "Wall Street Reform and Consumer Protection Act (aka Dodd-Frank) that unleashed a NEW regulatory body: the Consumer Financial Protection Bureau (CFPB), which apparently will be monstrously bad.  It is apparently up and running already, this did not get much attention because Obamacare had center stage at its formation.

ANY new Bureau is likely to be bad, and if it says "Consumer" and "Protection" in it name, hold on to your wallets.

The CFPB was designed by Elizabeth Warren (running for Senator in Massachussetts), red flag number one.

The CFPB will have lots of arbitrary power to stick its nose into MANY financial issues.  The Bureau has turned its attention to student loans, housing, requiring new scoring models for prospective minority borrowers, etc.  They can impose fines of $1 MILLION PER DAY in penalties.  The new Bureau is also busy hard at work drafting some of the 400 new rules under Dodd-Frank...

Wht is also interesting is that this new Bureau (CFPB) is funded by and located at the Federal Reserve, and so immune to Congressional scrutiny.

Our .gov is REALLY trying to screw us, dear readers.


In the Market Week section, Vito J. Racanelli tells us that the stock markets fell a bit over 1%.  He then writes that a number of defenese companies (including above mentioned Lockheed) will go over the falls is the Republicans lose the election.  He provides a handy table, with lots of UGLY "minus" numbers...  He does not like Transocean (RIG) either, as they had an oil spill off Brazil (less than 4000 barrels into the Atlantic, far offshore), the Brazilians are going after them.

Jonathan Buck ("European Trader") thinks that German airport operator Fraport (FRA.Germany, they operate Frankfurt's airport) could do very well, especially vs. other European .  Maybe so.  They are expanding operations and so far so good (more retail sales are icing on the cake).  Yet, I wonder how Germany will do if the REST of Europe falls...  He then goes on to look at Spain, but we all know their problems, and he offers us no cheer.

Kopin Tan ("Asian Trader") writes that things look gloomy in China.  But, some (like Steven Sun, HSBC) think that Macau and other sectors may do OK, also that Beijing is cooling real estate prices.  The latter is good?

Reshma Kapadia ("Emerging Markets") has good things to say about India.  recently I have only read BAD things about how India does not look to be well...  But, I have been away.  She builds her case by saying that Prime Minister Manmohan Singh has finally kicked off some reform proposals (cutting diesel fuel subsidies, inviting foreigners in to new sectors, working more on the electrical grid, all to bring in more foreign capital).  She quotes Ranjit Rajamani (Boston Company Asset Management) is cautiously optimistic, "cautiously" being operative word...  She gives some specific picks, but if it were ME, I would just buy a mutual fund for India.

Simon Constable ("Commodities Corner") writes that because of problems in Brazilian rice production (the Number One producer of rice in the W Hemisphere) and because fewer US farmers are planting rice, well, rice could go up!  There ARE a lot of short sellers of rice, however, but this, maybe, could be a bullish sign...  You can buy "Rough Rice" futures at the CME he tells us.

The "Bond Center" shows that interest rates are almost ALL coming down, still...

Insiders (please recall that I take data from both the Insider Transactions as well as the 144 Filings which are often very similar but different too) show that six insiders at OnAssignment (ASGN, who?) sold over $100 million in stock, that's pretty majestic.  Other big sales include SiriusXM Radio ($49 million), Allied Nevada Gold ($35 million) and AutoZone ($28 million).  I mention AutoZone as they have had LOTS of insider selling for as long as I can remember reviewing Barron's...  What's up with AutoZone?

And, finally getting all caught up with Peru, I am happy to report that the Mighty Peruvian Sol has yet again risen to a record high vs. the US dollar, clocking in at just under 2.60 per dollar.  For those interested, our own company there (family owned bearing importer Ameru Trading del Peru S.A.) had a BIG September, I am still working on the figures.  We're going to do it, dear readers (barring some kind of Black Swan), come in over $1,000,000 is sales down there...  :-)

Saturday, September 29, 2012

Photos That Most Tourists To Italy Do Not Take

Yesterday I wrote an article on how the citizens of Italy are selling their gold to survive...  I did take other pictures during our trip (while my wife was taking pictures of Baroque churches, historical sites, etc.).  Hey, if you want pictures of The Vatican. the Colosseum, the Roman Forum, Venice, etc., you can find those pictures in lots of places!

You can click on any of the images and see them better...

Ever hopeful that I can promote my creativity, I present the below picture "Still Life, Caserta":

Caserta is located inland from Naples, and it has a magnificent palace and grounds that the Italians claim rivals Versailles (near Paris, France).  Well, the estate IS very nice, but Versailles remains unrivalled.  There is a lovely picture of the gardens and palace in the background here:

The below photo may entertain any of my women readers.  Above the entrance to the Ladies Room in Caserta's train station is a sign saying that the area is under video surveillance...:

We saw several windmill farms while traveling about there.  In many (most?) of the windmill farms we passed I noted that many turbines were not spinning.  In some cases, there turbines spinning and many others that were not (which would rule out lack of wind at that moment).  I saw this so much that I wonder if Italy has wasted capital on these projects, "mal-investment", I really do not know.  This picture DID have some turbines spinning.  I never got close enough up to any windmill turbines to get a nice photo, this was taken on the train from Caserta to Bari:

You had to know these two pictures would be coming...  They are railroad car wheel bearings, SKF (world's largest bearing manufacturer) brand and the second RIV brand (RIV was taken over by SKF).  I asked my wife to put her hand in the second photo for scale.  From trains in and near Bari:

We stayed a couple of days in Taranto (SE Italy).  Hey, Taranto has it all!  Founded about 702 BC by the Greeks, they were taken over by the Romans about 272 BC, who stole all that gold from "Magna Grecia"'s richest city.  Now Taranto has it all in another way: an oil refinery, a cement plant, a steel mill and a fairly big port.  We also read that the citizens living in Taranto have a very high cancer rate (like Louisiana does.  Hey!  Blogger "George Washington" ought to dig around for that info).  While my wife was using HER camera to take pictures of the Old City, Greek ruins, etc., I was taking other photos...

Oil refinery, Taranto, Italy (sorry not a good photo):

Steel mill, Taranto, Italy (again, from far away):

Part of the port of Taranto, you can see (if you look closely) both steel slabs (I guesstimate about that the steel slabs were maybe 1 meter thick), you can also see rolled steel sheet in the back to the left.

Assuming these industrial facilities are running at a profit (a BIG IF), then Taranto is generating wealth.  I wonder who, though, is buying the steel, there is so much cheap steel worldwide now I gather...  We did not eat seafood in Taranto...

We rented a car in Bari and drove to various towns (including Taranto, Matera, Lecce, Brindisi and Gallipoli).  All of these towns and cities are in Apulia (SE Italy) except Matera which is just over the boundary in Basilicata.  From Taranto to Brindisi we drove along Highway 7, which follows the ancient and most famous of the Roman Empire's roads: the Appian Way (Via Appia).  The Via Appia ends in Brindisi, Italy, the Romans marked the end of their famous road with two columns.  Here is one of them, you'll see the other soon.  People who like history might enjoy the fact that the Roman poet/writer Virgil (who wrote The Aeneid) died within sight of the columns in 17 BC.

Oh!  Please excuse me for being a little touristy.  To make up for that, here is the part of the port of Brindisi where they import natural gas.  It comes in as liquid (LNG), the ships then warm it up into gas, and the Italians then store in the round vessels below:

Two of my favorite pictures of Brindisi!  Brindisi is the main port of entry for people coming from Greece, Turkey and Albania.

When I took the second picture, there was NOT a line of people waiting to buy their tickets to Vlore (Albania)...

Europeans do tractor-trailer rigs a little differently than we do here in the USA.  Here, the truck (tractor) has a  front axle with one wheel (tire) on each side, THAT is the same as in Europe.  But, here in America the trucks have TWO rear axles (providing power to the road) whereas the European trucks have only ONE rear axle for the truck (all with two tires each side).  Finally, here in the USA the rear-most TWO axles (two tires each side per axle) are bearing much of the weight of the trailer.  In Europe, there are THREE trailer axles with one tire each side.  Have a look:

I mentioned earlier about the "other column" that is now no longer in Brindisi.  Turns out that Lecce also has a claim to being the SE end of the Via Appia, so they wound up with the other column (now at the amphitheater there in Lecce, the Empire's second largest amphitheater).  Someone later on put Sant'Oronzo (St. Oronzo, also the name of the piazza) up on the column.

This last picture is a Police Report from Rome.  I was a crime victim, if you want the grubby details read it yourselves!  I censored out the personal info that the cops wanted...  The pickpockets on the Rome Metro are VERY GOOD...


Italy is a fascinating country with many marvels.  Yes!  There is history in every corner of the country.  But, we have been to Italy various times now, and I wanted to take OTHER kinds of pictures!  Once you have seen the main attractions (Rome, Florence, Venice, Naples) there are still many other interesting places to see.

Apulia is one of them.  There is often real value to be had when you get off the beaten path.

Friday, September 28, 2012

Compro Oro in Italia: Parte Due

I would like to start this article by noting that all of this is actually very bad news, at least in the sense that Italians are having to give up their gold (some of which has been in families for a long time) just to get by, in an economy that is WORSE than ours.

We arrived back to America yesterday (midnight, ugh), and I have compiled my photos and notes about the large scale of companies buying gold from Italians, individuals and families.  Zero Hedge was the first news source that alerted me to this, right before our vacation there, about a month ago.  I wrote a brief comment from Rome, and I now I include plenty of evidence that Italy is indeed losing its (private) gold holdings.  This first photo is from Rome, near our hotel, I saw this same sign over a dozen times, and because Rome is so large, I am sure there were over 100 such signs from the same company:

This next photo is their store (the company is called Yud Preziosi S.p.a., located on Via Napoleone III, 49/51, you know, if you are ever down on your luck in Rome, the guy told me they are the BIGGEST in Rome):

The van at the far right is actually an armored car.  I just barely missed getting a picture of the guard loading up the gold.  In a random act of journalism, I went in and talked with an employee about their business.  Naturally they did not want to give out their names, but they did tell me some facts.  They are buying LOTS, from lots of different people, much of it is heirloom gold...  Most that comes from Italians is 18 kt gold (75% gold), most of the gold coming from Eastern Europeans is 9 kt - 14 kt gold (!), and the gold coming from Africans is typically 21 kt (!!).  Most people who are selling their gold are in desperate states, they are not buying iPhones, they are selling their gold because they have to (Italians have long memories about the value of gold).  They typically only buy gold and silver despite what their ad says...  But GOLD is what they really buy, that's why "Oro" is always prominently displayed.  They do NOT buy platinum.  They get their gold price from

They test their gold examining hallmarks and an acid test, he told me they get BAD gold some 2 - 3 times a month.  They also discourage counterfeiters and thieves (who have robbed others) by making them sign a "Registro" which contains enough information for the cops to track them down I suppose.

They sell the gold that they buy to refineries, mostly in northern Italy, he mentioned "ARGOR" as one, I have not yet looked them up on the Internet.  He then told me that he believes that ARGOR mostly sells to banks, China and India.  Hmm.

They do have competition however.  Here's a picture my wife took of me at the sign of a competitor.  The small yellow sign about 100 feet away is yet another sign for Yud Preziosi):

We have been to Italy several times.  I always let my wife do the planning because she is more interested (and speaks the language, etc.).  This time we spent time in SE Italy (Apulia in English, Puglia in Italian).  We did spend two days in Caserta (inland from Naples) breaking up our train trip to Bari (Apulia).  Yes, there are buyers of gold in every city, Caserta:

When we arrived in Bari (a surprisingly nice city) I found more signs:

We visited the city of Taranto, which was founded by the Spartan Greeks about 702 BC.  For awhile Taranto was known as a very rich place, with lots of gold.  They were conquered in 272 BC by the Romans, after a long set of wars with the Greeks (whose King Pyrrhus gave us the term "Pyrrhic Victory", meaning that the Greeks won battles, but at a very high cost).  Taranto is now selling more of its gold:

Lecce (another surprisingly interesting city, like I mentioned above, my wife plans our trips very well), an ad on a light pole:

Lecce again, note the name "Pomod'oro" which is a pun in Italian (pomodoro means tomato), take a look at the lower left and you can see all those cities in SE Italy where Pomod'oro has branches, buying gold from broke people in Italy is big business:

And it's not just signs and storefront windows, here are two other ads, the first on the back of a bus in Lecce, the second from an Italian newspaper:

The ad on the right just above shows that they will pay 29.80 euros per gram of 18 kt gold (the usual over there vs. our usual of 14 kt), that works out to about $1205 per troy ounce, a better rate than you get in the USA.

Yes, yes, I know there are ads and kiosks at the malls offering to buy gold here in the USA.  But, this is NOTHING like the scale that I saw just now in Italy.

Saturday, September 8, 2012

Compro Oro In Italia!

A couple of weeks or so ago, Zero Hedge published a story on how Italians are cashing in their gold because of hard times.

The story is true.  I will publish my expose (with pictures and an actual act of random journalism!) upon my return (no safe computer here nor flash drive).  LOTS of companies are taking in gold here, LOTS of details when I get back, I took good notes...

And where is the gold going?  China and India...

While this story IS interesting, it is also sad...

Monday, September 3, 2012

On Vacation: Italy!

Kind readers of my blog!

I was unable to find the time to review Barron's, which is too bad because the cover was such a slow fat pitch that we could have had a lot fun dissecting that one!

The Cover Story actually discusses the views of 10 analysts that they contacted for their predictions.  About seven were bullish, two bearish, and one neutral.  The cover was a little deceptive.

There was a good article on VOLVO ("European Trader"), the world's second largest truck maker that I would have liked to discuss.

Nothing in Barron's on GOLD!


Since there was nothing earth-shattering happening, and because of our trip preparations, well, Italy first!  This trip will, perhaps, give me some understanding on what is happening in Italy (if not Europe).  Italy is a linchpin, Italy goes over the falls, then France will, then Germany, then America.

I will report back to you upon our return!  Maybe liven things up with some pictures.


Please note!  About one half the times we go to Europe in September, there is ACTION in the financial markets.  I will never forget September 2008 going to the internet cafes to ask my friends WTF was going on...

Sunday, September 2, 2012

Gun Show And Movie Review

Later on I will read and review Barron's (they sure are asking for it by saying the Bull is so tough re the cannonball bouncing off it...), but for now I write up my fun little day yesterday at the local gun show and the movie I saw afterwards.

My wife gave me a "Hall Pass' to go off to a local gun show.  There are about three that cycle through here, but this one is the largest, so it is the only one I ever go to anymore.  I needed to buy ammo, more magazines and an ammo can (just stocking, eating my own dog food).

So, I picked up 300 rounds of AK ammo (7.62 * 39) in an ammo can as well as 150 rounds of 9 mm Luger for my Beretta.  And magazines for each.  I also picked up (at long last) a Katadyn water filter, so your congenial blogger is making progress on the whole preparations front...

While at the show, I saw (first time) a .338 Lapua (Barrett brand).  Wow!  What a lovely beast that gun is!  $6000...  After touching (caressing?) it, giving me that electric-tingly feeling like when I held that one kilo gold bar that a local coin dealer once had, Zzztt!  Zzztt!  After that, they had to send over a special team (Serv-Pro, like it never even happened...) to clean up all the drool I put on the floor.  That so dehydrated me that I had to go buy a bottle of water...

And I have begun educating myself on my "next gun".  Which will be a .308 deer rifle.  I had considered a .30-06, but the guy I know who knows guns the best (local gun store manager) told me that a .30-06 is way more power than you "need", that 90% of deer rifles are .308s.  And the recoil is less, a real issue for me.


Since I had been given that Hall Pass by my wife, I pushed for more!  I was then given permission to go see the new movie: "The Expendables Part 2".  It is the sequel to other one, that came out about a year ago.  The first one had Stallone and a group of middle-aged, over the hill movie tough guys, all tricked out with very nice weapons...

Anyway, Part 2 features a couple of other of these older tough guys (it would not be right for me to reveal which ones) in cameo and minor roles.

The movie is pretty much non-stop good clean violent fun, so if you like that kind of movie, you will enjoy this one too.


So, I had the chance yesterday to get all those macho-man hormones all worked out of me.  Life is tranquil now...  I even have a "make up" Tai Chi class later this afternoon (to make up one where our instructor did come one time).  What more can I say?  Life is good, live it up!