6/12/08

Economics

More thoughts on the unemployment numbers from Barry Ridholtz:

http://bigpicture.typepad.com/comments/2008/06/unemployment-re.html

Martin Feldstein on the likelihood of a recession:

http://bigpicture.typepad.com/comments/2008/06/martin-feldstei.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.).

http://www.realclearpolitics.com/articles/2008/06/the_entitlement_mess.html

Some statistics on world oil reserves:

http://mjperry.blogspot.com/2008/06/proven-world-oil-reserves1238-billion.html

Politics

Domestic

Obama on a windfall profits tax on oil companies:

http://news.yahoo.com/s/nm/20080609/pl_nm/usa_politics_dc_96

International War Against Radical Islam

At the risk of beating a dead horse, this is another link to an Andrew McCarthy article on the Senate Select Intelligence Committee’s recent report on whether the Administration made misleading statements about Iraq. One of his main theses is that the committee left out an analysis of whether or not its own member’s statements were misleading (assuming that there were misleading statements by anyone):

http://article.nationalreview.com/?q=MmM4MTM2ZDI3OTNkZmMxNzY0ZDA1OTJlY2YwNmViMmM=

The Market

Technical

The DJIA (12083) closed well below its April 2008 support level (12263); barring a significant bounce back near term, that leaves the January 2008 intraday low (11635) as the next visible sign of support. The S&P (1335) didn’t break any support level but it is nearing its April 2008 low (1325) and the lower boundary of the 1982 to present up trend (circa 1317).

Fundamental

The guardedly up beat tone to yesterday’s Morning Call has to go down in the history books as one of my all time worst readings of the Market tea leaves. There are two redeeming features to this otherwise very humbling experience: (1) our Portfolios only made ‘some very minor additions to their (sic) holdings’--‘very minor’ being the operative words, (2) it provides a great example of the wisdom in making small incremental moves in and out of the Market--I may be wrong (which we all know I am going to be at times) but not in a way that costs us the ranch.

Of course, I did have some help in badly missing this call: (1) from McCain, who bright and early on NBC’s Today show implied that [a] a windfall profits tax on oil companies was a necessary thing and [b] there wasn’t much we could do about the supply/demand equation in oil because there was a finite supply of oil {which may in the abstract be true but has little to do with current reality that there are billions of barrels of oil in ANWR, offshore, in western Colorado and in Montana and North Dakota that we can’t get at due to environmental considerations}, and (2) from vice chairman of the Fed Donald Kohn who in a speech basically said that inflation was probably going up, that it was OK and that the Fed wouldn’t do much to counteract it. This two days after Bernanke implied that the Fed would in fact act to tamp down inflation [thereby contradicting Bernanke and undoing the positive investor reaction to his original statement] and support the dollar] and the week before Bernanke goes to Europe needing to sound tough on inflation in order to receive European help supporting the dollar.

What did we do to deserve leaders like this? And what better illustration of one of my chief concerns for Your Money: Both the domestic and international political environments are a negative for Your Money.

Finally, while our Portfolios are back on the sidelines until stocks find support, I continue to be surprised by the relative low number of our holdings that are technically weak and/or have fallen into the price zone between the lower boundary of their Buy Value Range and their Stop Loss Price. However, as always I will be closely monitoring our holdings in particular as their prices relate to our Sell Disciplines.

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CNBC Million Dollar Portfolio Challenge

Portfolio 1 (85.6%): Sold: Johnson Controls

Bought: Nucor

Positions: Automatic Data Products, 3M, Nucor,

Canon

Portfolio 2 (86.4%): Sold: Ecolabs

Bought: Nokia

Positions: Franklin Resources, Graco, Nokia,

Nike

Portfolio 3 (91.6%): Sold: Emerson Electric

Bought: Nucor

Positions: Nucor, Ross Stores. ConocoPhillips, Federated Investors

Portfolio 4 (79.6%): Sold: Linear Technologies

Bought: Donaldson

Positions: Donaldson, Blackrock, Peabody Energy, Walgreen

News on Stocks in Our Portfolios

A positive write up on Mastercard (Aggressive Growth Portfolio):

http://www.thestreet.com/story/10420304/1/visa-mastercard-see-gold-in-prepaid.html

The Board of United Technologies (Dividend Growth Portfolio) has authorized the buy back of 60 million shares.

A positive write up on Peabody Energy (Aggressive Growth Portfolio):

http://www.zacks.com/rank/zcommentary/?id=7831

Another on Chevron (Dividend Growth Portfolio):

http://www.zacks.com/rank/zcommentary/?id=7830

More Cash in Investors’ Hands