6/25/08

Economics

Larry Kudlow on today’s Fed report:

http://kudlowsmoneypolitics.blogspot.com/2008/06/is-inner-bernanke-up-to-task.html

Housing news isn’t getting any better:

http://bigpicture.typepad.com/comments/2008/06/case-shiller-in.html

Chart porn on money supply data:

http://mjperry.blogspot.com/2008/06/are-concerns-about-inflation-inflated.html

More on oil speculators (or the lack thereof):

http://mjperry.blogspot.com/2008/06/dont-shoot-price-messenger-aka.html

Politics

Domestic

Obama and McCain on ethanol:

http://www.nytimes.com/2008/06/23/us/politics/23ethanol.html?ei=5124&en=99cda34eea075353&ex=1371960000&adxnnl=1&partner=permalink&exprod=permalink&adxnnlx=1214398979-IRucV4v7CB8RgbOYV9AMqw

The Club for Growth on the Housing Bill:

http://www.clubforgrowth.org/2008/06/senate_key_vote_doddshelby_hou.php

And a little more detail:

http://blog.heritage.org/2008/06/24/morning-bell-what-is-the-worst-part-of-this-bill/

International War Against Radical Islam

Good news from Iraq:

http://www.mudvillegazette.com/archives/030260.html

The Market

Technical/ Fundamental

Barry Ridholtz in defense of technical analysis:

http://bigpicture.typepad.com/comments/2008/06/lets-get-techni.html

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Yesterday was on the surface another ho hum day--inconclusive trading in the indices resulting in no additional clarity on their direction. However, a fairly large number of the stocks in our Portfolios got whacked really, really hard; indeed, yesterday all of our Portfolios dramatically underperformed the DJIA and the S&P--the first time that has occurred in a long time.

This dichotomy in performance could be nothing more than a random occurrence or it could suggest a couple of differing Market scenarios: (1) stocks in general are in a broad bottoming process and investors are just now getting around to selling those equities that have held up the best in this recent decline, (2) investors are starting to believe that the economy is in much worse shape than I currently believe and they are revising down their earnings assumptions and valuations of stocks in those sectors that they had previously believed would be relatively immune to a slowing economy.

My unease is somewhat enhanced because (1) both the DJIA and the S&P have barely rallied since they hit the lower boundary of their clearly defined May to present down trend; the longer we go without a rally, the more likely we are to have more to the downside, and (2) as illustrated in the chart we ran in yesterday’s Morning Call, the VIX index is trending up and that usually means lower stock prices.

I have no idea at this point which of the three aforementioned alternatives is the proper explanation for yesterday’s price action; but right now I am a very uneasy camper. Clearly, it makes no sense to alter our investment strategy based on one day’s Market performance. So at the moment I am simply pointing out an unexpected peculiarity in the performance of a sufficient number of our holdings to warrant heightened concern.

Subscriber Alert

The stock price of Colgate Palmolive (CL-$68) has fallen below the lower boundary of its Buy Value Range. Accordingly, it is being Removed from the Dividend Growth Buy List. The Dividend Growth Portfolio never bought CL, so no further action is required.

CNBC Million Dollar Portfolio Challenge

Portfolio 1 (88.6%): Sold: none

Bought: none

Positions: Automatic Data Products, Johnson Controls, Nucor, Canon

Portfolio 2 (88.1%): Sold: none

Bought: none

Positions: Franklin Resources, Graco, United Technologies,

Mastercard

Portfolio 3 (93.0%): Sold: none

Bought: none

Positions: Nucor, Smith Int’l. ConocoPhillips, Mastercard

Portfolio 4 (85.9%): Sold: none

Bought: none

Positions: Suncor , Colgate Palmolive, Peabody Energy, General Dynamics

News on Stocks in Our Portfolios

More Cash in Investors’ Hands