Economics
fiscal profligacy (Government spending as a percent of GDP is too high and the looming explosion in entitlement expenditures will make it worse. There is no good solution save spending discipline.). In case you didn’t see this article on John Murtha’s pork barrel spending in the WSJ, here it is:
http://online.wsj.com/article/SB119371051667975920.html
A different perspective on the housing problem:
http://www.tcsdaily.com/article.aspx?id=103007A
a rising tax and regulatory burden (Government has never proven that it could solve economic problems efficiently or satisfactorily.) More on tax policy:
http://www.opinionjournal.com/columnists/pdupont/?id=110010798
The Fed met Tuesday and Wednesday. In its press release following the meeting, it announced that it was lowering by 25 basis points both the Fed Funds rate (to 4.5%) and the discount rate (to 5%). I will let the media parse the statement; my bottom line is that while the Fed lowered interest rates as expected, it basically left any further moves dependent on future data on the economy--and that is as good as we could expect. If either the housing or the sub prime credit market deteriorate further, more cuts could be forthcoming; if not, inflationary pressures from oil and other commodities and a weak dollar would prompt a stable to tighter monetary policy.
Following a tough start as Fed chairman, I think Bernanke has done an admirable job handling monetary policy in general and the Fed’s response to the recent sub prime problem in particular. I want to watch Fed actions through the resolution of the sub prime problem; but assuming it performs as well as it has to date, I will remove Fed policy (reading the data correctly) as a long term economic risk.
Politics
Domestic
International War Against Radical Islam
More good news, Where is the main stream media?
http://michaelyon-online.com/wp/iraqi-islamic-party-says-al-qaeda-is-defeated.htm
The Market
Technical
Fundamental
All I hear is that oil is over priced. Here is another view:
http://www.seekingalpha.com/article/52376-the-reasoning-behind-oil-s-irrationality
This morning the Aggressive Growth Portfolio is Selling its position in Raptor and buying a one half position in H2 Diesel. The price of Raptor stock continues to decline. All checks with the company suggests that business is going well; but this stock is a Chinese water torture. If it can’t lift in an up Market, I sure don’t want to own in if the Market rolls over.
On the other hand, after extensive discussions with investors, management of H2 has reset the terms of its offering which should begin next week. Further there was over a million share of stock for sale which was has been cleaned up. Remember that the size of holdings of 10 Baggers are 1/3 to ½ of a normal position and this mornings purchase is ½ of that.
News on Stocks in Our Portfolios
Positive news on Eli Lilly (Dividend Growth Portfolio):
http://www.thestreet.com/_htmlbtb/newsanalysis/biotech/10387419.html
Penn Virginia Resource Partners (High Yield Portfolio) reported third quarter earnings per unit of $.29 versus $.55 recorded in the comparable 2006 quarter. The company also increased its quarterly distribution per share from $.42 to $.43.
FFO: 2006 $2.85, 2007 $2.75, 2008 $2.90; DVD: $1.65, YLD 6.0%
http://finance.yahoo.com/q?s=PVR
Quaker Chemical (High Yield Portfolio) reported third quarter earnings per share of $.31 versus $.32 reported in the third quarter last year.
EPS: 2006 $1.08, 2007 $1.45, 2008 $1.70; DVD: $.86, YLD 4.1%
http://finance.yahoo.com/q?s=KWR
If anyone held on to their holding of Citigroup (High Yield Universe), here is another reason to Sell:
ExxonMobil (Dividend Growth Portfolio) reported third quarter earnings per share of $1.70 versus expectations of $1.75 and $1.77 recorded in the comparable 2006 quarter.
EPS: 2006 $6.55, 2007 $6.75, 2008 $6.50; DVD: $1.37, YLD 1.6%
http://finance.yahoo.com/q?s=XOM
Altria (Dividend Growth Portfolio) is buying John Middleton Inc, a leading maker of cigars for $2.9 billion. The company said the acquisition will be slightly accretive.
EPS: 2006 $5.70*, 2007 $4.10, 2008 $4.50; DVD: $2.76, YLD 4.1%
http://finance.yahoo.com/q?s=MO
*not adjusted for the spin off of Kraft
More Cash in Investors’ Hands
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