Today I went on a Bernanke inspired buying spree. He is committed to keeping money cheap for the next couple of years, propping markets up higher and rewarding the risk-friendly gentlemen who participate in them.
New Positions
GLD FCX GOOG BMY DUK
I also pressed my existing bets on AAPL and TIF.
Comments »I knew there was rumors floating around last week that TIF was a takeover target. The suitor was not obvious to me so I dismissed most of it. Today’s rumor is Swiss luxury giant, Richemont is considering a $90/share buyout, which was much more upside than I initially calculated. Immediately my decision to book TIF profits on friday was regrettable.
I bought back half of my former shares this afternoon.
A TIF spokesperson has stated the company’s policy is not to comment on market rumors or speculation. Standard stuff. What I like about this rumor is that it is not going away, and more details are coming forward. It is also plausible, Richemont has the fire power and TIF is trading at an attractive valuation.
I also bought back half my AAPL shares. Neither company looks overbought and I probably should have not included them in my selling spree.
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Comments »In the past two days I sold out of TIF, ORCL, AAPL & FCX. Each trade was substantially profitable and in the face of an overbought market and an unresolved European debt crisis, it would be greedy of me not to ring the register.
Comments »On January 10th Tiffany & Co. released sales numbers and an updated earnings forecast. Mr. Market was not impressed, and he subsequently discounted the stock by over $5/share.
Here is a summary of their y/y sales for the two months ended Dec 31st 2011
– The Americas saw modest growth of 4%
– New York flagship store declined 1%
– Europe was essentially flat, increasing just 1%
– Asia-Pacific increased 19%
– Japan sales increased 13%
Tiffany’s full year earnings forecast was notched down from $3.70 – $3.80 to $3.60 – $3.65. The initial forecast given last March was $3.35 – $.3.45, perhaps they got a little too excited. Anyways, the current forecast is represents earning growth in the 23% – 25% range.
Regardless of Mr. Market’s opinion, Tiffany & Co. is not that shabby. I appreciate their profitability, financial stability, brand recognition, stable dividend, and rapid sales growth in the East. Technically the stock is oversold, and price is testing an area of known support. I bought shares last week around $59.50 because I expect a bounce to occur relatively soon. My stop-loss on this trade is around $58.50 and my profit target is around $63 – $64.
Comments »A couple days ago I was preaching how Utilities, Services, and Healthcare would be the only sectors I would get long until a Euro-zone resolution occurred… Turns out I was only lying to myself. Last night one of my favorite technology companies, Oracle, reported its first earnings miss in nine years. I was unable to sit ideally by as the stock plummeted into abyss after the market closed, so I made a small purchase, and another this morning. I have confidence that Oracle’s miss was due to a weaker macroeconomic environment. Oracle still has ample competitive advantages and when corporate spending turns around they will eat everyone’s lunch.
Comments »The European debt crisis is tiresome. Leaders are reluctant to take steps to actually resolve the issue once and for all. Short-term resolutions are also failing to materialize at the moment.
In the stock market there are only a few sectors that have performed decently throughout this debacle: Utilities, Healthcare & Services. Until Europe gets their act together, my attention will be focused exclusively on these sectors for any potential longs.
Short-term resolutions to the European fiasco consist of:
– An ECB commitment to back sovereign debt, ideally setting a ceiling on yields and making a clear statement to the market that unlimited Euros will be printed to combat bond vigilantes.
– A Euro-Bond, backed by the full faith and trust of Germany.
– Bank nationalization/TARP-like program
– Massive IMF assistance
One or more of these scenarios could trigger a “risk-on” trade that could persist for an extended period of time. In which case I would redirect my attention to the following sectors: Basic Materials, Technology, & Industrials.
Unfortunately these events will not constitute a long-term solution for the European debt crisis and the “risk-on” trade will eventually unwind. In order to ultimately resolve the problems in the European Union fiscal unity needs to exist, and I am pessimistic all member states will agree.
Too much money has been wasted on bailing out Greece. In retrospect a default, coupled with expulsion from the European Union would have been a better tactic. A country like Germany should have never been associated with one like Greece in the first place. Unlike the German’s, Greeks do not know how to work hard and pay taxes. Historically Greece has always been reckless with their finances, and what have they contributed to the Euro-Zone?
The membership of other “Club-Med” countries should also be examined. Spain for one has some serious issues, like an extremely high unemployment rate (>20%) that competes with South Africa as having one of the developed world’s worst jobless problems. One of piece of legislation that deters employment in Spain is a law that entitles a fired employee to six-months salary. Businesses are afraid to add jobs because if demand dries up and layoffs occur they could face tremendous losses.
The lesson learned from the Euro experiment is that it is impossible to share a currency amongst countries without homogeneous cultural and fiscal values.
Alas, A coordinated central bank intervention has eliminated the risk of an imminent Euro collapse, and liquidity squeeze amongst Europe’s banks. Along with this Bulls also recieved a gift from China, with a cut in their reserve requirements. The thought of more Communist demand sent Copper up 6%. On top of that ADP said over 200K private sector jobs were created in November, we have not seen private sector job growth like this in a while.
The Bears that tried to fade Monday’s rally are bleeding all over Wall Street. Pending good job numbers on Friday I think there is a high probabilty the market rallies into the December 9th meeting of EU leaders. Beyond that a Santa Claus rally is very plausible.
Comments »
As Italian yields surge, and the ECB reiteriates its stance as a non-lender of last resort to sovereigns, Italian Pro-Footballers have pledged to buy their county’s bonds while international banks unload holdings in a virtually bid-less market.
The patriotic campaign was motivated by Italian entrepreneur Giuliano Melani, who placed a full-page ad in Corriere della Sera stating “Let’s buy the debt”.
I applaud the Italian’s willingness to buy their own debt, which at current yields looks fairly attractive if doomsday is not upon us. Encouraging domestic ownership of a country’s sovereign debt is good idea, perhaps it is the only reason Japan has been able to maintain low yields despite their ridiculous debt/GDP ratio (>200%).
Link: Italy’s Footballers Aim to Takle Country’s Debt By Buying Bonds.
The “Super Committee” exemplifies failure in our Democracy. Our machine is broken. Nothing gets done.
In reality, cuts will be made despite our selected representives reluctance to compromise.
Moody’s promised they would not downgrade us, Fitch hinted they may.
In reality, no one should give a fuck what the rating agencies say, they’ve lost creditability long ago…
The Chinese may not enjoy full freedom, but they do know how to get shit done, they inject banks with capital overnight, they murder criminals within a couple months of their crime, and they do not wait for congressional approval.
There is a fire sale going on in the European bond markets. Banks are liquidating positions and the ECB is taking the other side of the trade. One possible reason for the immediate selloff: Banks holding CDS for Euro bonds could be unwinding their trades now that their hedge is essentially worthless because of “voluntary haircuts” not being classified as a technical default.
U.S. Economic data has been favorable lately for the bulls.
– Exports are up despite weakening demand from Europe.
– Industrial production is perking up.
– Leading indicators have been better than expected.
– Retail sales show consumers are spending, and personal income is growing.
