2/21/08

Economics

The Fed released the minutes of its January meeting yesterday. Without parsing the statement, they basically said that (1) they will continue to lower rates as long as credit problems threaten economic growth and (2) as soon as it is obvious that the risk of (1) has faded, they won’t hesitate to tighten monetary policy to deal with inflation.

As you know, I have not been a consistent fan of Fed policy of late; but this time I think they have nailed the right position. Let’s just hope their actions reflect their stated policy.

The Fed also altered its 2008 economic forecast: (1) for real economic growth--1.3-2.0% [versus our forecast of 1.0-2.0%], and (2) for inflation--2.0-2.2% [versus our forecast of 1.75-2.0%]. There is not enough difference here to warrant comment.

More insight into how the government is dealing with the sub prime mess:

http://bigpicture.typepad.com/comments/2008/02/the-bankers-bai.html

A study on a country’s one year change in currency value versus its rate of inflation:

http://bespokeinvest.typepad.com/bespoke/2008/02/international-c.html

protectionism (Free trade is a major positive for world and US economic growth.). More on the US/Columbia free trade agreement:

http://www.heritage.org/Research/LatinAmerica/wm1821.cfm

The current state of the credit markets (must read):

http://mjperry.blogspot.com/2008/02/collapse-of-credit-market-data-suggest.html

Politics

Domestic

Ann Coulter is usually a bit strident for me; but this article does give the essence of the problems created by McCain/Feingold:

http://www.anncoulter.com/

International War Against Radical Islam

More good news from Iraq:

http://article.nationalreview.com/?q=MjUxNGViNDI4N2MzNDJlZDA0ZWYxOTcwZTIxODI0MDc=

But pay attention to the news on Saturday:

http://www.americanthinker.com/blog/2008/02/trouble_brewing_in_iraq.html

The Market

Technical

Fundamental

The Dividend Growth Buy List

Company Close 2/20 Buy Value Range

Abbott Labs $55.61 $51-58

Clorox 56.07 56-64

General Electric 34.36 35-39

Genuine Parts 43.26 41-47

Johnson & Johnson 63.23 60-69

McGraw Hill 42.00 40-46

Proctor & Gamble 66.17 66-75

UPS 70.58 67-77

United Technologies 72.64 68-78

VF Corp 79.79 72-83

Subscriber Alert

The stock price of Northern Trust (NTRS-$73) has risen above the upper boundary of its Buy Value Range. Accordingly, it is being Removed from the Dividend Growth Buy List. The Dividend Growth Portfolio will continue to Hold NTRS.

News on Stocks in Our Portfolios

Staples (Aggressive Growth Portfolio) has made an unsolicited offer for Corporate Express, a Netherlands based supplier of contract sales of office supplies to large US customers.

This is a great piece on Johnson & Johnson (Dividend Growth Portfolio); the financial analysis therein parallels my work and provides the basis for owning stocks that raise their dividends consistently:

http://seekingalpha.com/article/65466-johnson-johnson-doubling-its-dividend-every-5-years

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