Economics
Second quarter gross domestic product was reported this morning up 3.3% driven by strong exports. An statistical analysis:
http://econompicdata.blogspot.com/2008/08/export-driven-q2-gdp-revised-up-to-33.html
July durable goods were reported yesterday, up an unexpectedly strong 1.3%. Here is a breakdown of this data point:
http://econompicdata.blogspot.com/2008/08/durable-goods-july.html
The FDIC may need help given the current level of problem banks:
http://econompicdata.blogspot.com/2008/08/fdic-wants-in-on-bailout-action.html
More detail on the recent Case-Shiller report:
http://bespokeinvest.typepad.com/bespoke/2008/08/june-case-shill.html
Politics
Domestic
Republicans start to draft their platform:
http://news.yahoo.com/s/ap/20080827/ap_on_el_pr/cvn_gop_platform;_ylt=Av_TXhh3WhkBPryWWyfo6oKs0NUE
An update on the Obama/Ayers saga:
International War Against Radical Islam
The Market
Technical
Yesterday’s rally changed nothing: both indices trading within the longer term downtrend from the October 2007 high and the shorter term downtrend off the May 2008 high. The most immediate technical questions before us are: (1) will the indices bust through the above mentioned short term downtrend and/or (2) will the DJIA test and establish its August 2008 intraday low (circa 11300) as a support level that would correspond to the S&P January/March 2008 low support levels? Till we know, we play defense and hold on to our cash.
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The latest data on the NYSE short interest:
http://bespokeinvest.typepad.com/bespoke/2008/08/nyse-short-inte.html
Fundamental
In this article, Dougie Kass discusses some problems in the hedge fund industry that can affect us all. Since once upon a time in a galaxy far, far away I was a hedge fund manager, let me add: in the September/October timeframe most hedge funds start thinking about year end with a couple of things in mind--(1) performance which if it has been a good year prompts them to lock in profits [remember they get paid a percent of the profits generated for the year] and/or (2) redemptions which if it has been a bad year prompts them to sell stocks because by this time they know how much money that they are going to have to give back to their investors. Either way some selling usually occurs; that is why, in my opinion, historically September/October are the months that stocks perform their worst. Well, Dougie reminds us that this has not been a pleasant year for the hedge funds and that may bode ill for the Market in September/October.
Company Highlight
Schlumberger is the world’s leading oilfield service company providing wire line, drilling and measurement and well testing services, completion, artificial lift, data and consulting services, land and marine seismic services and reservoir services. The company has grown profits at a 12% pace over the past ten years; the dividend growth rate has been lower rate but management has stated that it intends to increase it in the near term. In addition, the company has earned a 25%+ return of equity over the last five years. SLB should continue to grow at an above average as a result of:
(1) its strong international exposure--75% of its revenues come from non-US markets,
(2) its long standing relationships with national oil companies,
(3) its market leadership,
(4) its track record of technological innovations--it grew R&D 18% in 2007 developing advances in fracturing, logging-while-drilling services and wireless service for oilfield operations,
(5) its aggressive acquisition program, in the past year buying companies in
Schlumberger is rated A+ by Value Line, carries a debt to equity ratio of about 20% and its stock yields of approximately 1%. The company raised its dividend 20% earlier this year and commenced a 40 million share buy back.
http://finance.yahoo.com/q?s=SLB
News on Stocks in Our Portfolios
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