May 09s 810
More bad weather in the corn belt. Sunspot activity nowhere in sight.
There was an interesting article in Business Week that the US export economy can't come back quickly because all the support firms have left. In other words, all the infrastruction to support many of the exporters is gone and can't come back quickly. This is similar to where O&G was several years ago after the long bust...it takes time to regrow what was lost.
All, I stepped back to look at possible bargains in the market outside of the banks, banks as bargains is debatable, and energy. The weekly new lows list is long. I just pulled some names that I have in the past considered, GE, Proctor and Gamble, MMM, Am Express, Vodafone, Dupont and Kraft. Collectively they are selling at 12 times next years earnings, yield 3.8% (Vodafone's 7% yield does skew this) and are expected to grow 10% over the next five years. Two, VOD and KFT, are not in the Dow 30. It just seems to me that absent a global melt down, the market is cheap if you are a long term player. And all of those cos. should be global players. I also looked at the rest of the Dow and XON at 9 times next years earnings, UTX, Boeing, several look like good bets. I have stayed away from the techs because I don't understand their businesses, also the drugs. But the drugs look cheap, Merck at 10 x and Pfizer at 7 x. And if you want to look at something cheap, AIG is selling at 5 x next year's earnings. You can argue that the writeoffs are still the overhang. But if we get through these, and the world continues to grow as many on this board would argue, the US market's situation is not that dire. So we could get a pull back in energy which wouldn't injure the energy equities, XON at 9x 09 earnings, and which would help everything else, and the banks clean up their mess in the next two quarters, a 12 month view doesn't look too bad. For whatever it's worth.
One other item from Peter Schiff interview in Barron's, has been negative on the US for some time. He sees the Chinese currency appreciating "5 times" its current value against the dollar as they are forced to float the yuan. Seems to me, that would cause a major adjustment in the global economy. Oil would be a lot cheaper in China, and no let up in demand. ??? If we survived the inflation, it might give us an export economy again. Interesting to think about the ramifications. Hare
Wild and wooly out there in architecture-land-big slow down. My chum laid off staff, only to finally land a Dubai Palm contract & a $30 million fee-- the very next day. It's all happening abroad for these firms. >Park
It's sure happening in Dubai. One fourth of all the construction cranes in the world are in Dubai right now.
Well Park, I do have my full 100 shares of VLO (a toe-hold position to keep an eye on, but any loss seems a bad loss), so I feel some of your pain. I guess about time to harvest some ST losers and reload.
Good luck! And great to hear that park is not only alive and well but that he's still got game, so to speak. That's the darn problem with sprinklers, Park, you need a shed. I don't suppose that there are a lot of shed's left in the Rathole. At one point or another in the modern era they must all have been converted into multi-million dollar pieces of residential real estate.
We're headed off to inspect the sales as well but this time its an actual modern art auction--Skinner Auctioneers. New England being such a conservative esthetic place and unappreciative of the more advanced thinkers in art maybe we can get a small bargain or two.
In reviewing the week I note that all of the trends in place over the last 18 months are fully intact but that it very much seems as if the number of things that one can own to participate in the sweet spot have narrowed. The things one shouldn't own--anything that is dependent on the US consumer--are generally being taken out and shot, one by one.
The easiest way to illustrate how difficult the situation will be to navigate for our political leaders and for the Fed is simply to put up Bloomberg's rate page:
They're not all there, of course, but two key ones are. Note that the 10Y closed back under 4% rate of return again but that a typical 15 year mortgage is now said to be 5.79 while a 30 year is at 6.23. Both of those rates are as high or higher than they were when the whole crisis began and are substantially higher than they were a mere 3 weeks ago. As long as that flight to quality idea persists, the broader market will struggle mightily and the commodity story will likely stay intact as a consequence.
Theres my friend
As Peter would say its nice to hear from you and that your well.
"Long corn Just?"
You betcha Im long corn. Many many contracts along with about 53 acres of the stuff. The man who owns the local co-op has been pestering me to death since corn was 6 to hedge with him. I told him Im thinking about it. The great thing about selling to him is that hes less than a mile away. In fact Im thinking of selling a couple thousand bushels at 8 just as a good faith measure. Im up to my earballs in GLD and ABX. Coxe talks as though the Gold stocks with the reserves is where to be so I might take some off the table in the GLD and spread it around into some of the mid tier miners. Yep the refiners have my attention again. I have traded in and out on the really oversold conditions like we are seeing now and have done OK. I learned my lesson early on with these guys when I recieved a bloody lip right out of the gate. With this speculation frenzy one could conclude it is probably not wise to overstay a welcome. Well the animals are fed the lawn is almost finished so this wild as a june bug poster will ride around the block and see if I can find a prize or two at the yard sales. I am a firm believer that the early bird gets the worm.
Hi All! Phoning in from the trading range!
Zonked. "Park phone home," warmed the cockles of my weary heart. Merci Messieurs. Good to see Just peeking his head out, too. Long corn Just?
Been riding the ultra shorts here, Ag & gold- got into KGC just in time Peter to see it take off from 18. AEM has done alright too of late & little Fortescue Metals is now a double for me.
Have even strayed into corn with a few contracts a while back. So far so good- stops in place in high 6s. Made a nice chunk in DRYS, sold & reloaded for now. But am thinking the swings in ferts are more than enough thrill for my stomach lining at present. Not sure if I can take on the BDI,yet again here. And just fyi- if you want to appreciate the high quality of an energy cc, just listen to the most recent Rimm cc- snapped me right back to commodities- HA!
And Moosebit you have your banks & I have my refiners- got into them, uh, a bit too early here--but looking at them as a hedge at this point. VLO in the 30s- Wow/Whoa/Ouch.
But overall, looking good given the market swoon & bouts of buy-to-sell here.
Still manage to check in here regularly to keep abreast of the DNR brain trust thread. Also,
Peter, have my scouts in the Midwest alterted to strange looking,old, rare sprinklers. High garage sale season & all. Sprinklers were a big item out in those parts.
Storage being the premium that it is in Rathole, I'm just trying to figure out where we are going to wedge our luggage in the new abode. Warehousing 100 odd sprinklers is beyond A Rathole resident's grasp. You really should treat us to a photo essay of your more prize pieces.
More later. Still looking at the Haynesville players here. HK behaving well so far. I think I have to figure out a more sane investing/trading strategy for 09. HA! Keep those recipes coming guys, I'm downloading them all for test runs in the new kitchen.
Wild and wooly out there in architecture-land-big slow down. My chum laid off staff, only to finally land a Dubai Palm contract & a $30 million fee-- the very next day. It's all happening abroad for these firms.
Thank you. We're fine, though some of the neighbors took a little water in the basement from the heavy rains that came with the flooding. The fields are a mess...flying in it looked like april (wet and brown), not July (lush and green). This is not a good sign, that I suspect mirrors a very wide region. Should start catching up on the crop reports again next week.
Fascinating market action the past 1/2 year. Still looks like I'm holding in the green, though a lot of volatility. Would be doing even better if I had waited a bit longer to start nibbling at the banks last fall, but that's life.
Hare et al,
The market got some good news this AM in the form of better than expected personal income and personal spending and a calm PCE deflator.
Another indicator that I watch is this one:
I think it ought to have something to say about NA economic activity. It has fallen off a cliff in the last several weeks. A very good part of that may be the flooding in the Midwest. I would watch that index as the flooding subsides to see if we get a good recovery.'
Welcome back to Moosebit. Hoping that you found everything to be high and dry.