Economics
This Week’s Data
Weekly jobless claims were unchanged versus expectations of a 3,000 decline.
I neglected to include the third quarter personal consumption expenditure index (PCE) in yesterday’s GDP report. Third quarter PCE rose 4.2% (annualized rate) in line with estimates; core PCE was up 2.9% versus a 2.2% increase in the second quarter PCE.
There are always adjustments to the initial GDP number. Here is an analysis of likely changes to net exports:
http://econompicdata.blogspot.com/2008/10/gdp-breakdown-not-better-than-expected.html
September personal income rose .2% versus estimates of a .1% increase; on the other hand September personal spending fell .3%, in line with forecasts.
http://www.capitalspectator.com/archives/2008/10/saving_its_the.html
Other
More perspective on the taxes paid by ExxonMobil:
http://mjperry.blogspot.com/2008/10/exxon-taxes-federal-tax-revenue-from-6.html
Politics
Domestic
The candidates on trade:
http://online.wsj.com/article/SB122523957339378291.html
An analysis of Obama’s health care proposals:
http://www.american.com/archive/2008/october-10-08/obamas-plan-to-end-private-health-insurance
International War Against Radical Islam
A view in opposition to last week’s raid on
http://www.slate.com/id/2203243/
The Market
Technical
The current stock market decline as compared to other major crashes:
http://calculatedrisk.blogspot.com/2008/10/comparing-stock-market-crashes.html
Percentage of stocks trading above their 50 day moving average:
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Yesterday’s rally changed nothing technically. Both indices (DJIA 9180, S&P 954) remain below over head resistance (DJIA 9707 or 9264, S&P 1062 or 954; you pick’em). The VIX, which traded down, is still at elevated heights (65) and volume was paltry.
Two positives which we get new information on today: the VIX closed right on the lower boundary of an easily identifiable up trend--if it closes below that boundary today that would at least hint that lower levels are possible; and we didn’t get the late day sell off that has become a regular feature of daily trading--that suggests that fund liquidations could be winding down.
On the other hand, maybe it is not winding down:
http://dealbreaker.com/2008/10/bring-out-your-dead.php
Fundamental
Meanwhile, credit conditions continue to improve:
http://bigpicture.typepad.com/comments/2008/10/ted-spread-impr.html
While many think that the economic outlook is getting bleaker:
http://calculatedrisk.blogspot.com/2008/10/feds-yellen-economy-contracting.html
Subscriber Alert
Our Portfolios will continue to lighten up today. They are selling both stocks that seem to have gotten ahead of themselves and those that haven’t participated in the rally. These sales are small and will bring the cash portion of the Dividend Growth Portfolio and Aggressive Growth Portfolio to 25-26% and the High Yield Portfolio to 22-23%.
In the Dividend Growth Portfolio: McDonalds’ (MCD) (ahead of itself); and Johnson Controls (JCI) and Canon (CAJ) (pathetic rally).
In the High Yield Portfolio: Kinder Morgan Energy Partners (KMP) and Pfizer (PFE) (ahead of themselves) and Bank of Nova Scotia (BNS) and RPM (RPM) (pathetic rally)
In the Aggressive Growth Portfolio: Schwab (SCHW), Luxoticca (LUX) and Medtronic (MDT) (pathetic rally).
A number of stocks have traded above the upper boundary of their
On the Dividend Growth Buy List, Commerce Bancorp (CBSH), Kimberly Clark (KMB), Home Depot (HD), Nucor (NUE), Boeing (BA) are being Removed.
On the High Yield Buy List, Plains All American PL (PAA) and SanofiAventis (SNY) are being Removed.
On the Aggressive Growth Buy List, Reliance Steel (RS) and Westamerica Bancorp (WABC) are being Removed.
As a final note, Avon Products got whacked hard at the Market open yesterday on a disappointing earnings report. It seemed too late to sell at that point. I want to see how this stock trades in the next couple of days before deciding what to do.
News on Stocks in Our Portfolios
A review of ExxonMobil’s quarter (Dividend Growth Portfolio):
http://www.thestreet.com/p/_htmlrmd/rmoney/oil/10445178.html
More Cash in Investors’ Hands
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