Once again I had to go all the way to the airport, Barron's Guys, to get this weekend's edition, and even THEY did not have it as of Saturday afternoon. Seriously fellas at Barron's, you will LOSE some of your readership here in S. Fla. and a blogger who reviews your magazine, which would be a darn shame. So, SOMEONE tell the maricones to get the distribution in order down here!
The Cover Story is very timely and most excellent: "How to Get 6%", it is special report on MLPs (Master Limited Partnerships). Author Dimitra DeFotis writes about a topic that I HAD thought was interesting but fairly simple. I HAD thought that the energy MLPs were all pretty much alike, geared for high dividend payouts and structured more-or-less the same.
No! The MLP landscape is changing. These MLPs look to be a class of investments worth more careful examination.
Because of time constraints (it is late here in the eastern USA...), I am going to save the MLP discussion for a day or two to better understand the article so I can better comment.
Randall W. Forsyth writes Alan Anelson's column this week (I call it Abelson's column for a reason, but its real name is "Up & Down Wall Street). Forsyth starts out his comments on Chinese cyber-spying and proceeds on to company leaks about takeovers and insider trading. He returns to the theme of Chinese spying on us even as we run up our debts to them... And that our trillion-dollar deficits (federal government) are becoming ever more of a geopolitical as well as an economic threat.
Forsyth then goes on to write about the upcoming "Sequestration" that may start as soon as Friday (March 1). He brings in Charles Dumas (Lombard Street Research in London) to comment that there are real risks that consumer sentiment (and businesses dependent on consumer spending -- see Wal-Mart Stores (WMT) may be damaged by the recent tax hikes as well as further uncertainty (more great stuff happens re the budget processes by March 27 and more debt ceiling (remember that? It's coming back...) by May).
Yet, Forsyth finishes, Bernanke assured Treasury debt-dealers that we are NOT in a Traesury bubble, whew, I feel better. But then Bernanke said in 2008 subprime mortgage problems were well-contained... Bernanke also goes before Congress this week, I wonder if anyone will ask him anything worthwhile.
Kopin Tan ("Streetwise") discussed some Midwest refiners (HollyFrontier (ticker HFC), Marathon Petroleum (MPC -- remember Marathon split into two companies not long ago), Alon USA Energy (ALJ, who?) and Western Refining (WNR)) with favorable remarks. He also believes that Devon Energy may be a good bet, it has slumped recently but announced it wants to switch more production to crude oil rather than beaten-down NatGas.
"There is nothing wrong with cutting spending that much...but the sequester is an ugly and dangerous way to do it."
House Speaker John Boehner in an op-ed with the Wall Street Journal.
[Ed. note: There appears to be no other way to cut spending, so just do it.]
There is an interesting ad (Page 20, my edition) on a new ETF: it "Generates variable cash flow from selling covered calls which limits upside participation." I take this to mean that you can buy this (ticker: GLDI, it is NOT tied to gold or other physical commodities) as a substitute for manual buying of stock and selling covered calls to gain income. More information at:
Andrew Bary writes a bullish piece on Canadian oil producers Suncor Energy (SU) and Canadian Natural Resources (CNQ).
Suncor gets 60% of its energy output from the Alberta oil sands and is vertically integrated (has refineries) and is quite profitable now. CNQ is having a little rougher time (no refineries), but apparently has a well regarded management team.
My comment: Both of these are worth a look.
I skip Christopher C. Williams' bullish piece (Dick's Sporting Goods, DKS) and Jack Willoughby's bullish piece on ADT (ADT) because I have no feel and little interest on either company.
That does not mean YOU might want to read those pieces though...
Similarly, I skip Jack Hough's piece (Coach, COH and Michael Kors (KORS) as it is about women's handbags... FYI, he thinks Coach might be a better play as it is a better value...
"Economic Beat" author Gene Epstein comes out beating up (sorry...) the entitlements and why no one can seem to rein them in... He calls this one of the costliest Ponzi schemes ever. Yes, he is right. And just for fun he writes the below about dearly beloved, Nobel-Pize-winning Dr. Paul Krugman:
"Krugman's own views on the deficit seem to depend on which party is in power. As recently as Feb. 1, 2005, when the deficit was running at 2.6% of GDP, he declared in a New York Times column that "the deficit is indeed a major problem." In 2013, the deficit is expected to run at 5.3% of GDP, and according to Krugman, it's no longer much of a worry."
Epstein does not cite the source of the last clause above, but I would be pretty sure it is true.
Krugman talks out of both sides of his mouth...
Tiernan Ray ("Technology Week") writes a smart piece about the winners and losers in the "Next Smartphone War".
In the short-to-medium term he likes Qualcomm (who designed all the chips, with new but weak competition coming from Broadcom (BRCM), Nvidia (NVDA and Intel (INTC)) as well as Samsung Electronics (005930.Korea <-- it seems I mention Samsung every time I review Barron's) and Apple (AAPL).
He notes that among the handset makers, Apple and Samsung made 101% of the profits in the industry between them... (The others all lost money)
Jim McTague (D. C. Current) writes a fun piece on the hypocrisy of the Obama administration. Obama says that he is for cutting spending, but is not. He then goes on to paint a dystopian future (hitting soon!) if the Sequester happens, and that it is all the R-Team's fault! The R-Team, you may recall, allowed Obama's taxes on the rich to go up in the recent Fiscal Cliff deal. The Rs say no more taxes, but Obama will not even consider spending without more tax hikes...
Why should Obama change? He has gotten his way with the R-Team to date. Yet, sentiment may be shifting..., even many D-Teamers now favor some spending cuts. <--- I'll believe THAT when I see it.
Steven M. Sears (in the second piece of "Weekday Trader") writes that traders are amassing options positions by betting against the price of GLD (that is, many think that the price of the gold ETF "GLD" will go down). He also says that this is getting to be a popular trade, with sentiment rising on GLD going down...
My recommendation: stay away unless you know what you are doing!
David Englander writes a bullish piece on Global Power Equipment Group, which has two main divisions: a nuclear power plant service division (they help do maintenance on reactors) and their Braden division, which supplies natural gas turbine components (to GE, and it looks like to Siemens as well). This stock has moved from roughly $7.00 (2009) to $30 (2011) and is down to $16.49 now because of recent disappointments.
But, he writes that things are actually looking good for GPLW. Maybe so.
Alexander Eule writes this weekend's "CEO Spotlight", he discusses the career (and current prospects of VFCorp. (VFC)) under CEO Eric Wiseman.
As is typical of the column, the CEO (Wiseman in this case) has an interesting story. He also has expanded VF from a mostly jeans company to a company with many other brands, and the stock price has more than tripled off its 2009 lows.
"Other Voices" is written by Michael Taube, who writes that Canadian model is not the panacea for the USA. WHile Canada can teach us some good things about fiscal prudence and good governance (yes and yes), they fall short of us because they do not properly utilize the free markets we have here, and they ought to remove various barriers to trade. Plus, they are more Socialist than we are...
Editor Thomas Donlan writes of the dangers of central banks, over-leveraging and high levels of debt in general. Most of his column analyzes a recent book (A. Admati and M. Hellwig, The Bankers' New Clothes, Princeton University Press) in which the authors describe in great detail these various perils.
Yes, of course our high levels of debt are dangerous. But, Donlan is doing us all a favor by showing that even the academics are worried about it.
Donlan finishes by bring in William Shakespeare by noting that Polonius told his son (and we used to be taught that in English class) "Neither a borrower nor a lender be." But no one seems to care about such and old notion... Polonius then went on: "loan oft losess both itself and friend, and borrowing dulls the edge of husbandry."
Bravo, Mr. Donlan!
The cover of the market week section had two nice little gems:
"Mr. Barron" driving his Barronsmobile is quoted, "You can call it the sequester, or call it 'chicken.' Either way, I'm buckled up for Friday.", and a note saying that higher gasoline prices are approaching the levels where a stock market wobble has happened in the past...
Vito J, Racanelli notes stocks were little changed last week (as was the week before: little changed), but offered up a nice remark: "Hedge-fund managers, for example, continue to underperform, up only 3% this year, according to Goldman Sachs..." Hah! Racanelli also tells the story of Titan International's CEO Maurice Taylor's war of words with France, already described in great detail at Zero Hedge last week.
"Asian Trader" author (this week) David Winning writes that Australia's natural gas producers have a nice future ahead, BIG deposits, BIG infrastructure being built to serve China and of course the near-certainty that China will buy big in coming years. All of his picks are Australian companies though...
Jonathan Buck ("European Trader") writes that despite the UK's downgrade by Moody's does not mean that there are not good stocks there (as many of them export so are not as exposed to the UK pound's recent weakness). He likes defense giant BAE Systems (BAESY) and ad company WPP (WPPGY).
"Emerging Markets" author Ben Levisohn writes that there has been a decline of investor interest in emerging market debt, and some losses as well. While I am interested in making income, emerging market debt is not for me...
"Commodities Corner" is by Alexandra Wexler this week and is about cotton and China. She brings in two experts who say a combination of increased Chinese importing (despite large inventories... of low quality cotton!) and less planting this year of cotton in the US could make a nice trade. I do not follow cotton, so I would have no idea...
Michael Aneiro ("Current Yield") writes about the Federal Reserve's new openness... Yes, Bernanke talks to us more, but there is more dissent that comes out from various Fed members. Aneiro believes that this may be deliberate, that the Fed is telling us that they are listening, that everything is OK, but you may want to start planning ahead... No imminent changes though. Still, you might want to think ahead...
The Classifieds this week offer up the Wyoming oil well again (www.2bpd.net) as well as an ad offering to take your company public in Europe (contact firstname.lastname@example.org).
Insider trading continues this week with Tns Inc (TNS), Precision Cast Parts (PCP), Stanley Black & Decker (SWK), American Express (AXP), Mattel (MAT) all having insider sales of over $30 million (my arbitrary level indicating large insider trading).
Gold fell last week, but the miners (Barron's Gold Mining Index) are down even more. At some point, some gold miners may be a great little play. But not for me, at least not now.
JUST in the nick of time, the Mighty Peruvian Sol is down about 0.75% (3/4ths of a percent). We leave for Peru on the 27th, so I will get my haircut for slightly cheaper than before, but that also means no Barron's reviews for a couple of weeks...
Verdict: Yes, even though my review might be late for many of you, this is a good issue! Remember that I will try to review the important income-related MLP Cover Story in the next day or two.
On the other hand, I have a couple of ideas for stories from Peru while I am there...