Baron's and The Week Ahead
Vito you are killing me. Vito Rancanelli writes the cover story about Greece. It ain't pretty, but his analysis and supporting metrics are spot on. The whole PIGS sector is is really bad shape and watching Greece go through the iterations of catastrophic fiscal collapse has to be scary as all heck for Portugal, Italy(or Ireland, either I will work) and the big domino of all is Spain. Merkel has been a verbal supporter of Greece and Spain, but wasn;t she a strong supporter of nuclear energy about one year ago? Mmmm? Remember Germany hold most of the purse strings for the Eurozone.
Alan Ableson takes us on a nice journey from defending Steve Balmer of Microsoft fame to World War Veterans and something about Winston Churchill and dems and republicans and unemployment and PIGS. The trip has more turns than the Jungle Cruise at Disney Land.
Johnathan Laing takes a contrary position against Vito saying the Euro Mess is not as bad as it looks? Speaking of Jungle Cruise, Mark Veverka does a great piece about AMZN Amazon. They just launched a Romance Publishing company and Veverka suggests aht it is just the beginning for the company. (The book industry announced that in April, more books were sold in a digital format than in print format.) Now Mark suggests that AMZN is doing this to build a wider competitive moat to protect itself from AAPL and iPad market grab for Kindle readers and its customers. Ironically in 1995 Bill Gates wrote a book called The Road Ahead (out of print) where he describes cloud computing, digital publisher's that control content and distribution digitally and mega media enterprises that have complete vertical control of content from design to delivery. The obvious question is why did not Microsoft become that company? But I digress. The takeaway from Veverka's article is that in our discussion of value versus growth, AMZN falls into the latter category. Do your home work, WE DO NOT own AMZN.
Kopi Tan did a great job of summarizing the week and the month for us. It is a great read and worth the price of admission of you want a no nonsense explanation of what went on and why certain things happened. Kopi then switches gear and describes dare I say it, a value play for MOS Mosaic. The stock is down 9% year to date. He explains why and suggest a further decline by years end as phosphate pricing continues to slide. He talks about all the payers in the filed POT, TTCH, BHP, VALE and MOS comes out looking like a very viable ugly duckling. We are going to dig into this later this week.
And Jay Palmer does a very bullish piece on PSMT PriceMart, based upon their international ambition. A good article. WE DO NOT own.
Looking ahead into the shortened week, we see studying for finals. Yes Jack our man child has finals this week so we will post when we are able.
But for the week ahead, we have The White Hot economy of Canada announcing interest rates tomorrow. Despite a great economy and strong Loon, look for no change. If they do bump even by a quarter point it might send our market down a half a point. More eye will be on the Case-Schiller home price report. Look for another downward trend, but just a little and that is priced into the market. The Chicago PMI business barometer report tomorrow and look for a drop. The experts say a drop from 67 to 63. Look for a number close to 60. We also have the Consumer Confidence number out tomorrow. Some say its up a teeny tiny bit. We don't see it. Look for another drop to say 64.5. With all of that good news look for the market to adjust down about 1 full point.
On Wednesday we will have motor vehicle sales or lack there of. Demand and supply issues will drive the number down. More bad news. Mortgage applications report on Wednesday and look for a further decline in that number. The ISM survey comes out on Wednesday it to will be down and down below estimates. Then we close the day with construction spending. Any guesses, yeah not pretty look for this to disappoint as well, making for another down day on wall street. Look for another half a point unless the jitter in Europe drive it down lower.
Thursday we will see initial jobless numbers hang right around the 424 number we saw this week. Bad news but expected. The Non-farm productivity report comes out on Thursday and with the GDP weakening it is going to be hard to sustain industrial productivity. Look for a disappoint there. Factor order will also be down, leading to another down day in the market. We guess a half a point.
Friday we should see a decent payroll number near 200,000 which is better than expected. And the ISM non-manufacturing survey will disappoint.
So the week ahead sucks. It will be the 5th week of decline so tighten your stops, don't enter any new position unless you know something all don't know. Look for the dollar to drop, commodities to go up, and gas to go up. It is going to be ugly. Our guess is the markets will be down 2-2.5% this week. That gives us an S & P below 1300 and a Dow below 12,130. Hope I am wrong.
Salve Lucrum
