Sunday, November 11, 2012

Review of Barron's -- Dated 12 November 2012

This week's review will be short, as we are going on a short trip!

The Cover Story ("Are We Headed for a Recession?") shows Obama and Speaker Boehner in a car speeding off a cliff.  Obama is driving naturally...  Boehner, in the back seat with his arms folded and Obama both are beautifully drawn, both are very grim.  The most artistic Barron's cover in years?  The illustrator is Scott Pollack, I will look for him again.

Well, it turns out that there are three articles on this subject.  Wall Street must be alarmed!  Resident economist Gene Epstein writes the Cover Story.  He starts with Bernanke's recent warning to Congress:

"If the fiscal cliff isn't addressed, I don't think our tools are strong enough to offset the effects."  (Bernanke, September 13 appearance before the Senate).  In other words, the Fed is not taking responsibility if we go into recession.

Epstein writes that they rate the odds of a recession at 50/50.

Focusing in on the fiscal cliff itself, he shows that it is mostly TAX INCREASES with little spending to be cut (except military spending).  Not only that, "... most of the pending tax increases will fall on the "non-rich"."

Jim McTague also writes an article on the fiscal cliff.  McTague writes that Obama must stand up and LEAD...  He (and many others) believe that the president is in a strong position, having won and with Democrat gains in the Senate.  Even Republicans are talking like they will allow some tax hikes to go through...

Kopin Tan then writes a shorter piece on Thomas Peterffy, the founder and CEO of Interactive Brokers, Peterffy was a BIG contributor to Romney and describes himself as a fiscal conservative but a social liberal.  Peterffy grew up in Communist Hungary (arriving in the USA at 21 years old in 1955).

Bottom Line?  If we go over the fiscal cliff, we may expect that out current growth rate of +/- 2% become a drop (recession) of about 1%...  And, TAX HIKES, few spending cuts.

[Ed. note: Cut the damn spending idiots!]

***

Randall W. Forsyth pinch-hits again for Alan Abelson (third week, I hope you're doing Mr. Abelson).  And what does he write about?  The fiscal cliff!

Maybe there will be a compromise, maybe not.

He does mention that Dr. Paul Krugman wrote in a New York Times op-ed column:

"Republicans are trying, for the third time since he [Obama] took office, to use economic blackmail to achieve a goal they lack the votes to achieve through the normal legislative process."

[Ed. note: This may end badly...]

***

Kopin Tan ("Streetwise", this is HIS third time in a row writing this column, maybe it's his new gig) writes about, wait for it, the fiscal cliff!  He goes on to mention, however, that prospects for the economy may not be as bad as they look, as money is seeping into the USA as well as overseas ("risk-on"?).

***

"He Said":

"Ladies and Gentlemen, let's soak this in.  Our long national nightmare is over."

Conan O'Brien on the long presidential campaign.

Hey, Conan:  What if it has just begun?

***

Andrew Bary comes out with a bullish piece on Berkshire-Hathway (BRK.A).  Bary notes that various analysts think Berkshire is undervalued.

My take?  Warren Buffett is a gold hater, so...  On the other hand, Berkshire now owns possibly the best run railroad in the USA (BNSF).

***

David Englander writes a bullish piece on FXCM (FXCM) a company that became public in December 2010, it is an on-line foreign exchange broker.  He thinks they can cut costs.

I have no opinion, but kind of do not have a good feeling about this one...

***

Tiernan Ray ("Technology Week") writes that new-ish CEO of Yahoo! (YHOO) Marissa Mayer looks to have a tough job ahead of her, turning around Yahoo!  Google (GOOG), Facebook (FB) and Twitter are all fighting with YHOO in the new, and apparently deadly, arena of the shift to mobile (smartphones)...

***

Brendan Conway ("ETF Focus") writes that certain dividend oriented stock ETFs may be in a stronger position (than I would think).  He writes that dividend taxes will not hurt very many, only the VERY wealthy. The main risk?  A big market decline due to the fiscal cliff or similar.  But, even then he says that dividend-oriented ETFs would be that much better a buy.

Ahh, I dunno, the whole high dividend stock trade seems crowded to me, but what do I know?

***

Andrew Bary (busy this week!) interviews Chris Mittelman, CIO of Mittleman Brothers Investment Management.  Mittleman uses a "privtae-equity mindset" in making his stock picks.  As I wrote up at the top of my article, I am keeping my Barron's review short, so I will just mention the stocks that Mittleman likes, if you want the details, go buy Barron's!

Revlon (REV)
Carmike Cinemas (CKEC)
Avis Budget Group (CAR)
Virgin Media (VMED)
Harbinger Group (HRG)

***

Jack Hough (who seems to have a history of writing bullish pieces about four or five stocks at a pop) writes positively about the below four sellers of products with good Holiday prospects:

Apple (AAPL, well, at least it is down $170 or so from its peak!)
Bed, Bath & Beyond (BBBY)
Coach (COH)
FedEx (FDX)
Jos. A. Bank  (JOSB, he writes "riding the jobs recovery...")

***

PENTA, the erstwhile special section ("Trusted advice for families with $5 million or more") that is now just a page or two once in a while, writes that there may be "Fresh Bargains on the Auction Block", referring to modern art sales coming up.

Just thought you might want to know...

***

"Other Voices" (an occasional column written by someone off the Barron's reservation) is by ex-permabear Peter Navarro.  He has turned into a bull, here are his four reasons:

1)  Profits of big US multinationals are increasingly coming from overseas
2)  US companies have done a good job of "right-sizing" (becoming smaller)
3)  Likely continued Quantitative Easing...
4)  The (unforeseen) energy revolution (more US oil & gas production)

Navarro hedges a bit and says that things could still go wrong (fiscal cliff or the Middle East).

***

Editor Thomas Donlan writes about the fiscal cliff (but, he says that maybe it would not be so bad, and then we could repair our system...).  He writes that there is still some time to prevent going over the cliff however (my preference).

Donlan then goes on to write that Obama may start doing what many second-term presidents do, involve himself in foreign policy more than before.

He finishes with some comments that Europe has many problems (Greece and France here).

***

In the market week section, Jim Grant is quoted ("The Trader"): "Buy element 79 on the periodic table."  (gold)

Jonathan Buck ("European Trader") writes that Obama's win does not impact Europe much (I would agree).  He then writes about Dutch vitamin and health products maker DSM (DSM.Netherlands) looks good.

Assif Shameen ("Asian Trader") writes that China might be back on track, now that their new leadership is apparently a done deal.  Shameen quotes two China analysts as saying infrastructure and reform plays might be good.

Erin McCarthy ("Emerging Markets") writes that overseas bonds may be a good bet (Reshma Kapadia, the usual write of this column, has mentioned that as well).

Michael Aneiro ("Current Yield") writes that S&P put the probability of the US going over the fiscal cliff at just 15%, how optimistic...  The election has assured the continuation of QE.  Treasury yields still are going down, and even companies like Microsoft (MSFT), ExxonMobil (XOM) and Johnson & Johnson (JNJ) are selling debt for very cheap (low yields).

Leslie Josephs writes this weekend's "Commodities Corner".  She expects cheaper chocolate, due to good weather and a bad world economy.

Three insiders sold BIG at Kohl's (KSS): $90 million worth...

The Mighty Peruvian Sol for the second week in a row was not so mighty, falling about 0.6%.  Well, that means my upcoming haircut (just a little over a month away!) will be a bit cheaper...

Verdict:  Hey it can't hurt if you at least LOOK at the Contents page this week...

No comments:

Post a Comment