Some Say Yes, Some Say K(no)w

While we were running around with Antonio today answering questions about plugs and transformers and GFIs, we heard caught much of the parade of idiots in Washington playing the Debt Ceiling Debate Game. The market did not now what to think. On teeny tiny volume Mr. Market, closed off 88 dollars. It was much worse earlier in the day, and a string of nice earnings reports kept the number from staying in the toilette.

The dance of the town idiots did have everyone's attention against the background of a Euro zone that is still in a state of flux. One thing we did notice, the bond market firmly believes there will be no default by the government. The ten year yield only moved 4 basis points to 3.04%. That is a good indication that the big money mover do not think there will be an implosion. Gold made more of surge today to 1,616. We have pimped gold here since 2009 when we got in a $735. Hope a lot of you got on board. Silver did well today suggesting that people have adjusted to the new margin requirements from a couple of months ago.

There was some good pin action in the Salve Lucrum portfolio. First off we cancelled our Baker Hughes put option purchase right before the bell because they surprised us and everyone with a nice beat. We immediately got into a call position which we sold quite quickly with a 27% gain. We are seeing some other call options mentioned here ripening up as well.

 This week in Barron's and the week ahead.

This week's issue was a little disappoint as it was really focused on the Debt Ceiling Debate. Abeleson set the tone by explaining the market was up about 2% on the week BUT (Behold the Underlying Truth) and then the magazine in article after article explained the underlying truth according to that author.

Even when pimping other stocks, article suggest well valued stock as a way of escaping the angst of Euro Contagion and US debt spookery. One little interesting sidebar article was entitled Red Flag. It was a story about 13 phrases when used in the 10K filings of companies have a statistically significant correlation to future stock prices. You can buy the report here $151.00.  Anybody want to split it with me? Here is how I would use it. Go to the SEC filings, hit control F and use the search feature to find the corresponding verbiage. If it sounds bad, buy a cheap 90 day out of the money PUT for that stock. Vegas Money Only boys and girls.

Andrew Bary does a great job with a positive article on MRO, Marathon Oil. It is worth the read. Leslie Norton does a good piece on IBM. We took a profit and got out of Big Blue back last year. Oooops, don't look back or you will turn into a pillar of salt.

Ok the rest of the week.

Tomorrow we have consumer confidence reporting and it will disappoint again. Look a 54 on the index. Mr. Market will be watching the parade of fools in DC, but will not like this piece of news. New Home sales will be soft again so that will make Mr. Market unhappy. Look for another point down tomorrow.

Wednesday we have the new durable good order number being released. Let me interject some polispin into this story. We think that durable goods will be nice. The reason is because of all those wealthy private jet owners who get those abusive tax breaks. Yeah those big bad billionaires and large corporations that get these special loop hole tax breaks. Now here are the tax breaks. In order to stimulate the economy in 2008 and 2009, The President, Congress and Senate approved a rule that allowed companies to buy capital expensed items like presses, and fork lifts, and yes PRIVATE JETS and let them expense the capital improvement this year 2011.

Usually a company must expense a capital improvement over a 5, 10, 15 years basis. In order to get companies spending money right away they allowed the tax break in 2011. So when you hear Harry Reid or President Obama say they should not allow billionaires and companies to get these tax breaks, he knows two things. He put them in place and they end on December 2011. Reality TV you gotta love it.

Friday we will see a GDP report that will be flat and possibly up a tad. Mr. Market will still be focused on the sound bite of the moment, so don't look for a huge reaction.

The market will end the week about one point up on very light trading. Look for a Dow on Friday of 12,806 and a S&P of 1,364. That would be a 1.5% increase.

Salve Lucrum