Bulls get fed today with a better than expected ISM manufacturing report. The reading for March was 53.4%, vs. expected 53.0% and February’s 52.4%. In other words, the American manufacturing sector is growing and accelerating at an unexpected pace. This report also represents the 32nd month of consecutive expansion in the sector.
My favorite parts of the report are the 2.9% gain in Employment, and the 3% gain in Production.
Over the weekend “China Bears” got punched in the face with a better than expected report on their manufacturing sector. However, there was a conflicting HSBC private sector report that indicated a contraction. I wouldn’t put it past the Chinese government to cook their numbers, but I am not concerned with a “hard-landing” in their economy. Frankly, their Government doesn’t put up with any bullshit, on any weakness they will proactively use monetary and fiscal stimulus to jumpstart their economy. Do you remember how fast they responded to the 2008 financial crisis? They also have tons of room to cut their base lending rate, which hasn’t been touched since 2008.
Apple has officially shaken off the negative news from the Foxconn labor report. The costs needed for any reforms will mostly bear upon Foxxconn. The head of the Free Labor Association, the originator of the report, admitted the infractions are no worse than any other factory in China.
I was buying Apple hand over fist on Friday, after trading out of shares near its all-time high on Wednesday. Today I was thankful for my instincts, and even added to the position early in the morning. Now I am dancing all over the Bear’s faces, again.
Apple shorts do not have a legit case. The Kindle and Droid are not viable competitors. Getting short because it made a parabolic move is insane. Unless you are unaware of traditional valuation techniques, AAPL is NOT expensive. The stock has been in and out of technically overbought levels all year, just because it slipped out last week doesn’t mean shit.
I initiated a trade in Global Payments, like catching a falling knife I snatched a small position at $45.66 this morning. My thesis for capitalizing on their unfortunate circumstances is that the credit card theft was an isolated incident. GPN still has a solid business. Apart from this event, they are an excellent emerging market play on electronic payment processing. By my calculations, the shares have an intrinsic value around $65, and they are technically oversold.
Sold BID, MCD & ALXN. Felt like booking some trading profits
Bought shares and call options in both ORCL & INTC.
