Friday, August 15, 2008

8/15/08

Economics

Chart porn on the composition of the July consumer price data released yesterday:

https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiP093bMLpw6ovl18s20DTzMIaosnYNa-lVq_y2znT-lZjePvKZFkqIOxjUPwNrm2ukqDSBi2zkaHx5NzMsKCzzplDc3hclA_w3bDi0lpOn-NPu3sNJhB76w_Tlp_RSUJeS5jxsqbrzobu5/s1600-h/julcpi2.png

And:

http://mjperry.blogspot.com/2008/08/with-core-inflation-at-25-inflations.html

The cost per day to consumers resulting from the rise in commodity prices:

http://bespokeinvest.typepad.com/bespoke/2008/08/cost-of-rising.html\

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.). It is the 73rd anniversary of social security:

http://www.clubforgrowth.org/2008/08/social_securitys_73rd_annivers.php

The US corporate tax rate versus the rest of the world:

http://mjperry.blogspot.com/2008/08/america-uncompetitive.html

Politics

Domestic

Obama’s newest tax plan:

http://online.wsj.com/article/SB121867201724238901.html?mod=opinion_main_commentaries

And an opinion:

http://mjperry.blogspot.com/2008/08/obama-delares-war-on-two-income.html

International War Against Radical Islam

The Market

Technical

The impact of the SEC’s emergency short sales rule:

http://dealbreaker.com/2008/08/sec_emergency_short_sale_order.php

The percentage of stocks above their 50 day moving average:

http://bespokeinvest.typepad.com/bespoke/2008/08/percentage-of-1.html

Fundamental

Subscriber Alert

The stock prices of Kimberly Clark (KMB-$62) and Linear Technology (LLTC-$34) have risen above the upper boundary of their respective Buy Value Ranges. Accordingly, they are being Removed from the Dividend Growth Buy List. The Dividend Growth Portfolio never Bought KMB, so no further action is needed. The Dividend Growth Portfolio will continue to Hold LLTC.

http://finance.yahoo.com/q?s=KMB

http://finance.yahoo.com/q?s=LLTC

The stock price of AJ Gallagher (AJG-$27) has risen above the upper boundary of its Buy Value Range. Therefore, AJG is being Removed from the High Yield Buy List. The High Yield Portfolio will continue to Hold this stock.

http://finance.yahoo.com/q?s=AJG

Pop Quiz

What does it mean when the news is disappointing (weekly jobless claims -10,000 versus expectations of -13,000; core CPI +.3% versus estimates of +.2%) but stock prices goes up (DJIA +83; S&P +7)?

(1) everybody knows ‘random walk’ is alive and well; so it means nothing,

(2) most of the Floor is on vacation and those that are left are smoking funny cigarettes,

(3) Obama is crawfishing [a little] on taxes,

(4) stocks are forward looking which means the bad news is already in the price of stocks.

I’m going with (4) until proven wrong (although (3) undoubtedly helped).. This doesn’t mean that the July 2008 low was the bottom; it just means that the probability that the July low was the bottom is increasing.

**********************************

Medivation (10 Baggers) recently announced promising developments on three fronts:

(1) a positive article on Dimebon in Lancet as well as excellent progress enrolling patients for Dimebon’s phase three Alzheimer’s clinical study,

(2) it is preparing to review the results of its phase two Huntington’s disease trial and expects to begin a phase three trial in 2009,

(3) it has begun a 360mg MDV3100 prostate cancer dosing trial and has been approved for two higher dosage trials; this suggests MDV3100 has an excellent safety profile.

It continues to seem likely that MDVN will partner Dimebon with a major drug company and that it will occur before year end. While such a development would involve a substantial cash payment to MDVN and should lead to a significant advancement in the company’s stock price from current levels, the Aggressive Growth Portfolio’s position is at its maximum size; so no further shares will be bought.

http://finance.yahoo.com/q?s=MDVN

News on Stocks in Our Portfolios

WalMart (Dividend Growth Portfolio) reported second quarter operating earnings per share of $.86 versus expectations of $.84 and $.75 recorded in the comparable 2007 quarter.

http://finance.yahoo.com/q?s=WMT

More Cash in Investors’ Hands

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