Saturday, October 6, 2012

Review Of Barron's -- Dated 8 October 2012

This week Barron's had a number of their authors take a shot at Friday's job numbers and the unexpected drop to of the unemployment rate (U3 anyway) to 7.8%.  Many of those authors are skeptical, as have the authors and readers of Zero Hedge.  Barron's, being a weekly periodical, can only follow and perhaps analyze these figures, but there really is nothing new here.

The Cover Story ("Out of the Storm") is really about a mutual fund family that has been able to survive as its corporate parent (Lehman Brothers).  It must have been a slow week if a mutual fund family is the Cover Story.  I do not much follow mutual funds, so I only lightly, very lightly, skimmed the Special Section.

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Alan Abelson rates the debates!  Of course Mitt won...  But not all of Mitt's "facts" were true, Obama DID inherit a $1 trillion deficit (last of W's, what the new President is stuck with his first year).  Abelson notes that had Romney NOT won the debate, the race would be over.  Yes.

He then goes on to write about how Jack Welch critiqued the jobs numbers, as is he himself were not guilty himself of massaging numbers when he was the Capo at GE...  But, one month statistical flukes DO HAPPEN on occasion, Abelson reminds us.  [ed. note: yes, but the timing is suspicious...]

Abelson then finishes with a short piece on how US oil production is up (to 6.52 million barrels / week), while demand is down a hair (18.3 million bbl), and yet the price of gasoline still goes up, especially in California which has at least one refinery with big production problems.  He then writes that the Middle East might be more relevant to higher US prices. [ed. note: WTIC is about $90 / barrel, much lower than during the last gasoline price spike in 2007 - 2008]

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"Streetwise" author this week Steven M. Sears writes about stocks that have done well vs. those that have not.  Expect "window dressing" by mutual funds, an "October Surprise".  (The term I used as a comment at ZH last week)

Sears then goes on to write that he likes Wal-Mart (WMT) as well as Goldman Sachs (GS, recall that Goldman was talked up BIG as the Cover STory last week) and even JP Morgan put out a "Buy" on Bank of America (BAC).

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"Review & Preview" had less interesting items to offer (me) this weekend.  Even "He Said" was nothing new, just Jack Welch's insinuation that the administration had rigged the jobs data.  That DOES remind me of Labor Secretary Hilda Solis protesting a bit much when CNBC threw her a relatively soft question about how, erm, politically convenient it was that U3 fell to 7.8%.

"Methinks the lady doth protest too much." -- Shakespeare

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Leslie P. Norton wrote up a bullish piece on Viacom (VIAB), the the company producing a lot of cable TV fare.  It seems they are buying back stock, and so lowering the float.  Their shows may be improving, as they are trying, she writes, ta take back the No. 1 slot in children's programming from Disney.  Note that the biggest beneficiary of all has been Sumner Redstone himself controls the company with "A" shares...

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David Englander writes a short piece on Brink's, the armored car company.  They move more cash around to banks and ATMs than any of their competitors, and they are trying to grow their markets in other countries while restructure here.

"Investors are still skeptical about the turnaround at Brink's, but as earnings improve, the stock earn a higher multiple.  At 14 times 2013 estimates, it would be worth $32.50."  The stock is around $26.00 now.

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Lack of good places to find income has been a recurring theme here at my blog for over a year.  Jacqueline Doherty writes that various "Closed-End Funds" (remember those, we saw them fairly popular before ETFs came on strong).  She writes that high yielding closed-ends are both leveraged and have high premiums to asset value.

Beware!  Nice piece Ms. Doherty, real financial journalism.

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Andrew Bary writes a piece on Exact Sciences (EXAS) which is testing a new & simpler procedure for testing for colon cancer, the No. 2 cancer killer in the US.

These small medical companies...  Ahh, appear to be risky...  It would be nice if they hit a home run, but...

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Jack Hough writes a piece on how most companies will likely have lower earnings in 2013 than most of Wall Street thinks (and so believes earnings downgrades are coming).  He names four companies that have "tighter earnings estimates" (that is, more agreement among analysts), and he figures they will do OK:

Cisco Systems (CSCO)
CVS Caremark (CVS)
U.S. Bancorp (USB)
Wal-Mart (WMT)  <-- the second time Wal-Mart gets a favorable mention

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Tiernan Ray ("Technology Week") is not taking the Apple (AAPL) nay-sayers seriously.  The iPhone 5 is selling very well and AAPL's P/E is a reasonable 9.9 (ex. cash).  He thinks those down on the company are wrong.  The iStuff and the Macs are doing just fine, thank you, and likely will continue to do so.

He then goes on to write about Hewlett-Packard (HPQ) and its continuing woes, I have followed this story for a while now, and it never seems to get any better for HPQ.

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DC pro Jim McTague writes about the "taxpaying chatter" among the candidates over the past several years.  He has a nice big graphic showing what the candidates of the last four elections (includes this one) paid in taxes and what they gave away.  Mitt did pay a lower rate than anyone else ON THOSE GRAPHS, but he gave away a lot too.

McTague: "...  Think about it: rich people in general consume no more government resources than the rest of us.  In fact, they probably consume less.  Plus they employ other people who turn around and pay taxes."

Wow!  A capitalist!  While that sentiment warms my heart, there is ONE very important thing that the rich get from the government: security from the poor and criminal elements from stealing their wealth.  And let's not even go to the whole financial crimes mess...

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Gene Epstein ("Economic Beat") also writes about the suspicious jobs numbers...  Seems like NO ONE believes our government...

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IAC/InterActiveCorp's CEO (Greg Blatt)  is the man in this weekend's "CEO Spotlight".  Barry Diller picked him (in 2010) to run the internet-focused conglomerate, ticker IACI.

IAC has a whole slew of names (ask.com, match.com as well as a new focus on more local search sites).

And yet, for me, the story was not as compelling as some of these CEO stories are.  On the other hand, Blatt has been at the helm since the stock was under $30 in December 2010 and is now over $50...

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Editor Thomas Donlan is back this week, and he is not real happy with the recent Debate nor the candidates themselves.

Both candidates were very week on policy points that Donlan believes need to be addressed.  I would agree.  Both candidates refused to offer up specifics.

Donlan's most entertaining point (for me, but what do you expect an automotive bearing guy to say?) was that of all those auto companies, it is the factories of Japanese, German and Korean car companies that are the most efficient here in the USA.  NOT the ones saved by the bailouts: GM, Fiat?Chrysler and Ford.

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In the market section this week, Vito J. Racanelli starts us off by noting that stocks hit a new 52 week high, but earnings may not be very good soon...  Racanelli also took note of Jack Welch's remarks re the jobs numbers (that is at least the 4th time I see that in this weekend's edition).

Jonathan Buck ("European Trader") makes a good case for Deutsche Telecom (owner of T-Mobile which is buying MetroPCS).  The purchase will put T-Mobile into fourth place after Verizon, ATT, and Sprint Nextel.  Buck writes that things are looking a bit better (?) in Europe, maybe for telecom.  And he has shown that he likes Germany, the efficient engine of Europe.

Kopin Tan ("Asian Trader") writes that Chinese savers cannot get any income either.  Hmm, a worldwide problem it looks like.  Chinese investors are reluctant to get back into stocks because of very bad performance over the past few years.

Reshma Kapadia ("Emerging Markets") writes that malls are becoming very popular in lots of emerging markets.  She writes mostly of the scene in Brazil and SE Asian countries (malls are increasingly popular) and has some ideas for investing in the idea.  I can write this: that malls in Lima, Peru are becoming very popular as well, I have been to five of them myself, and my in-laws there tell me that regional cities in Peru even have a mall...

Michael Aneiro ("Current Yield") is not impressed either with jobs numbers...  LOL!  The jobs numbers have everyone over there at Barron's all worked up!  He notes that rates did not change much, I saw little to no significant changes at the nearby "Bond Center" tracker of various yields.

Ian Berry writes this week's "Commodities Corner" and the commodity in question is milk.  LOoks like milk prices are going up (perhaps to a record high) in early 2013.  The drought explains this: "Hot cows are unhappy cows, and don't make as much milk as they normally would."  Now you know...

William Doyle, CEO of Potash (POT) sold off some $43 million of stock.  Other than that, there were no really big insider sales.  I still note that AutoZone, Oracle and Darden are still having insiders selling off stock almost every week, maybe not that big each week, but in all three cases it adds up...

LifeLock (LOCK, I hear their ads on the radio a lot) just IPO'd.  Nothing big or interesting looking IPOs coming this week that I could see.

The Mighty Peruvian Sol once again pushed its way (slightly) higher than the US$, a 0.2% increase.  Geez, somebody ought to get on this story!

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Verdict: This time Barron's was not as good as it typically is.  Hey, but can't win them all!

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