Friday, November 13, 2009

BAGAKOAA November 13, 2009 Planes, Gains, and Gas

BAGAKOAA November 13, 2009 Planes, Gains, and Gas.

Didn’t post last night as we were enjoying a nice dinner with some friends from Colorado, and possible new readers of the blog.

Well, I am now hypersensitive about being called a “day trader”. I went back and looked at all of my activity since October 1, 2009 AND, “almost” guilty as charged. There has been a lot of in and out moves, several of them in one day due to the sizable correction a few weeks back. (Oct 31 post). My actions do not reflect the volume of trades that a day trader might execute and I am not playing the minute to minute changes that a day trader might react to, but (Behold the Underying Truth), I am trading more than I need to. I should use the same discipline as I am in assisting a friend in The UK as trading there is obscenely expensive. Popping in and out of positions in the UK (Barclay’s) eats up all the profit. A nine dollar trade at Schwab is an 18-24 dollar trade in the LSE, ouch.

Speaking of across the pond, BA is merging with Iberian Air. How do two profitless capital depleted companies decide to get together and say, this would work. Especially when one of them (BA) has a threat of crew and fight attendant work stoppages (a bit redundant to me) looming and their Pension debt is larger than their market cap. No Butch that is not something you wear. I’ll explain later. Anyway it’s a 7 billion dollar merger. Glad I fly Virgin. Although, I am Glad they got rid of the purple flight suits from several years ago. I looked like a 300 pound teletubbie. But I digress.

I ONLY have one new trade. I started a small position on America Movil, a large Mexico based cell provider. I ran across it looking for iPhone opportunities in Brazil. It appears (I am doing homework) that two networks in Brazil are becoming the backbone for the iPhone (Claro and Vivo), Claro is owned by AMX (America Movil) They have close to 200 million cell phone users in Central and South America. I am working on the fundies, but it looks impressive with an ROE of 47.38, very healthy and improving net margin, good annual and quarterly top line growth, a little inconsistent in the 5 year NIBT, impressive cashflow, and they can pay off their long term debt is about 15 months from earnings. VIV is another iPhone play in Brazil and I will probably take a position in it before day’s end. More on that as I research it.

The Int’l trade report came out earlier today and while it was about 2 billion wider than expected, look at those exports. Hey we are making and shipping stuff, what a concept. Could it be a real recovery? We’ll see. The deficit was higher than expected mainly because the weaker dollar is bring the cost of oil up and we are using more oil. Maybe we used more oil making and shipping stuff.

For those of you with gas, of course I mean Nat Gas either the ETF like FCG or straight stock plays like APC or XTO, the inventory came in higher than expected (25 vs 19 billion cft) taking any momentum out of the commodity. I still like it, once the industry starts paying the right people in DC to get there point across. It will happen in time.

The hiccup we had this morning in the markets was from the less than stellar, Ok it sucked, consumer confidence report. The Reuters/UOM report dropped rather severe. The down turn was short lived because lots of pictures of the President playing nice in Asia made everyone feel good. Disney had a good earnings report, (it needed it to support its current 30 dollar price). That along with some advances from MCD, UTX, and DuPont got the market back up and again. I am a little worried about JC Penney and Abercrombie and Fitch (remember when that was a classy place to shop), reported such horrid numbers. That could be a tell about Monday’s retail report. (BTW, I will be listening to the DIS earnings Call AND go and see Christmas Carol in 3 D)

Speaking of that report, keep an eye on the Asian markets Sunday night along with the S & P futures for Monday’s opening. If they are all in the red and we get a bad retail report, we could be looking at a nasty correction on Monday. Tuesday is Producer Price Index and Industrial production. Wednesday is Consumer Price index and Housing Starts. Hell of a week ahead. This is fun.

If anybody has any new equities they want the group to look at or kick around send them to me or post them as a comment. Have a great weekend and put your stop in it could be a wild ride next week.

Salve Lucrum


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