Monday, January 21, 2013

Review of Barron's -- Dated 21 January 2013

The Martin Luther King, Jr. Holiday gave me an opportunity to review the weekend's Barron's more or less on time (as the bond and stock markets are not open today here in the USA)...  When I last looked, the precious metals markets were almost frozen, and there is no news out there (oh, except for an Inauguration).

The Cover Story this weekend is their semi-annual Roundtable, where Barron's invites the usual gang of Investment Professionals to opine on prospects for the economy and to offer up their ideas as to which investments ought to do well in the next year.

Barron's is kind enough to remind us of their picks from last year and to tabulate the percentage change in the value of each of their recommendations.  Here is my rough and ready calculation as to their picks from last year (S&P 500 was up about 14% last year):

Scott Black
+  6%
Abby Joseph Cohen
Marc Faber
Mario Gabelli
Bill Gross
+  4%
Fred Hickey
-   9%
Brian Rogers
Oscar Schafer
Meryl Witmer
Felix Zulauf
+  8%

Average performance of the investment pros: +12.1% (less than the S&P...).  Keep in mind that it is my rough and ready method of calculating that yields the above, Barron's (or your's) own calculations may show somewhat different results...

Marc Faber, alas, did not attend this year's Roundtable.

Author (and Moderator?) Lauren R. Rublin notes that she can best summarize the pros into two categories re the upcoming months.  Rublin (emphasis mine):

"Best we can summarize it, they fell into two distinct camps-those who foresee and improving economy, quiescent inflation, rising corporate earnings, and decent gains for stocks, and those who expect interest-rate-suppressing policies of the Federal Reserve and 37 similar institutions to end in recession, depression, and "national confrontation", otherwise known as war.  The only question pertaining to the more dismal forecast is, as Fred Hickey put it, "when this thing is going to blow."  And that, we're somewhat relieved to report, might not happen for a number of years."

Some of the pros are very bullish.

Many of them believe that the oil shale fracking boom will lead to many good things for the USA (more jobs, lower energy costs).

Specific recommendations?  Since this is just Part One (of Three), only two pros had their picks published:

Felix Zulauf's Picks

-- US dollar vs. Japanese Yen
-- USD/JPY Call Option Strike 95 Exp. 12/31/2014
-- WisdomTree Japan hedged Equity Fund (ticker DXJ, see note below)
-- iShares MSCI Brazil Index Fund (EWZ)
-- iShares FTSE China 25 Index Fund (FXI)
-- iShares Emerg Mkts Index Fund (EEM)
-- Gold

DXJ is, in essence, buying Japanese stocks with the Yen "hedged out", that is, just the performance of their stocks and no exposure to Yen movement.  Translation: should be good for Japanese exporters, at least short-term.

Mario Gabelli's Picks

Hillshire Brands (HSH)
Post Holdings (POST)
Viacom (VIA)
Xylem (XYL)
Graco (GGG)
Patterson Cos. (PDCO)
Weathorford Int'e (WFT)
National Fuel Has (NFG)
Boulder Brands (BDBD)
Fisher Communications (FSCI)


Randall W. Forsyth writes up Abelson's usual piece this weekend.  He notes that the world's central banks have learned about how to juice things from various sports celebrities (Lance Armstrong, Barry Bonds and Roger Clemens), but in this case juice economies by printing money...  It turns out that the USA has had some export success by weakening our dollar..., now the Japanese want to join that game.  The USA has been at this since at least 2010, when Brazil first complained.  But, if Japan prints (much anyway), they may invite retaliation from Europe, the euro is at a high $1.33 or so...


Jacqueline Doherty ("Streetwise") asks if we have started a new bull market.  She writes that transports are up 7.3% so far in January and that tech stocks (except Apple (AAPL)) are up higher than the market as a whole.  She also notes that some analysts are attracted to Apple too...


In "Review & Preview" William Waitzman writes a short piece on big banks paying fines to our government when they have been involved in bank crime.  Since 2008, the total has been about $40 billion in fines, sounds like a lot, but really is not considering all that has happened since then...

"He Said":

"I respect their decision."

Jamie Dimon, CEO of JP Morgan, after the Board cut his pay due to the trading losses

Lawrence C. Strauss also wrote a short piece, this time on "Captchas", those hard to read items that some websites make you enter into a box before allowing you access, the purpose of Captchas is to keep out "bots" and similar.  Well, there is a new effort to capture customer preference info via a Captcha...


Andrew Bary writes an article showing that Barron's stock picks and pans (from articles).  He claims that their picks rose some 9% vs a market rise of 5.3% (unexplained).  Uhh, OK, but I would have liked to see the methodology...


Jonathan Buck writes up the upcoming (now perhaps?) World Economic Forum meeting in Davos, where every year Big Wigs get together to opine and network with each other.

Apparently there is nothing urgent on their minds this year, worries yes, crises no.

Does this mean I can go home now?


Andrew Bary writes an article on how Michael Dell is trying to get Dell (DELL) for cheap...  TOO cheap it looks like.


Jack Hough changed his "MO" this weekend, and just wrote about three companies all in the ROBOT space.  It has been a long time since I last looked at robot companies, so I found his article interesting.  He mentions two from Japan (Fanuc: 6954.Japan and Yaskawa: 6506.Japan), but he LIKES ABB (ABB) and KUKA (KU2.Germany).  KUKA is number one in Europe and ABB is number two.  ABB also is onvolved in other businesses (power equipment).

Hough also suggests that Rockwell Automation (ROK).  ROK does not make robots, but they are big in factory automation and can take, say, a Fanuc robot and integrate it into a factory line.

Robot use is expected to grow at 11% per year, well above industrial production.  This might be an industry worth watching...


Tiernan Ray writes that AT&T (T) and Verizon (VZ) both continue to have good prospects.  Both are selling more smartphones and laying in the groundwork for LTE (long-term evolution, the weird word for faster wireless technology coming fairly soon).  T and VZ are well ahead of other cellphone companies.

Ray also writes about Intel (INTC) and how they have not been doing well in the new iWorld.  INTC is now making a bet (part of the amazing $13 billion that Intel is investing this year) that "branch predicting" will be the new big thing in chips.  Well, they hope so, but so far Wall STreet ain't buyin' it...


Editor Thomas Donlan writes again of our fiscal irresponsibility...  He believes that (once again) some kind of a deal will be worked out re the Debt Ceiling, but illustrates a couple of possible outcomes if it is not (cutting non-interest and non-Treasury principal payments would NOT be cut), this would require a cut of 40% (average) in everything else or even using scrip (as California did to some extent in 2009).  Neither of which of course will happen.  Nor will they back our money with gold, no way.


In the Market Week section, Vito J. Racanelli notes that stocks hit a Five-Year high.  Racanelli then goes on to produce a chart (and comments of course) on how mega-cap stocks seem to lose their mojo once they reach about 5% of the S&P Market Cap (like MSFT, XOM and GE all did).

Assif Shameen ("Asian Trader") writes that India's technology outsourcing companies (Infosys and Tata Consulting, among others) are doing well, India has been winning market share from Hewlett-Packard (HP) for example).

Ben Levisohn ("Emerging Markets") writes a column on Venezuela debt being volatile...  Really?  Erm, anyone would have to be braver than I am to buy Venezuelan paper...

Digby Larner fills in this week writing "European Trader".  UPS gave up on its effort to buy TNT of The Netherlands.  He quotes various European observers as saying that TNT (which dropped 41% right after UPS withdrew their bid -- European antitrust worries) may be a good stock.

Michael Aneiro ("Current Yield") writes that investors STILL think that because bond rates are so low that a great migration out of bonds and into stocks is is just around the corner...  They were saying that a year or two as well...  Aneiro goes on to write that a US debt downgrade may not hurt our bonds much.  Downgrades rarely DO seem to hurt, there was very little reaction when S&P stripped the USA of its AAA rating.

Alexandra Wexler ("Commodities Corner") writes that even though orange juice is down some 21%, well the price could move right back up if disease called "citrus greening" keeps getting worse in Florida (which provides the bulk of America's orange juice).  It's always something...

Nothing dramatic in insider sales nor anything of real interest in the Classifieds.

Once again I toss the "Total" Fed number up for examination, especially if/when it passes the $3 trillion mark (which they managed to avoid doing last year).  They are buy $10 billion away now, and it went up $24 billion last week.  I am sure that will be all over this one...

The Mighty Peruvian Sol was once again not so mighty this week, declining a very small amount .  Maybe the reports of their central bank intervening to keep it from rising even more are correct and that their CB efforts are working.

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