Thursday, January 14, 2010

BAGAKOAA; Jan 14, 2010 Tell Me What I’d Say, Tell Me What I’d Say


Jan 14, 2010 Tell Me What I’d Say, Tell Me What I’d Say

I love that song. So it will be hard not to sound like Cramer, but tomorrow wait and see what he has to say about Intel. Now I mentioned the estimate was 31 cents a share, the whisper number (Really the one to beat if you’re going to get the attention of the big boys.) was 33 cents. Now a great report would be 35 cents. Now that does not seem like much, 2 cents a share until you do the math. INTC has a market capitalization of more than 118 Billion with a B dollars. Take 118 billion dollars divided by the current price (exploding by the minute) and you have 5,501,165,501 shares. Now take 2 cents a share times 5,501,165,501 shares and you have $110,023,310.02 over what was estimated. But that is not what happened. They reported 40 yes 40 cents a share profit blowing by the whisper number by 7 cents a share. I’ll let you do the math.

It is a grand slam (Got my notice about spring training for the Angels so I thought it would be OK to do a baseball metaphor.) of financial reporting. Sales up 29%, margins up and 2.28 billion in profit. After hours trading has the stock up almost 2%. It should open strong. I expect to see a 35% uptake on my calls and then I will close them and take it to the bank. I still have a respectable position in the stock itself. Look for 1-1.5% bumps in AMD, Broadcom, and my other little sleeper ARMH. Cramer is going to go crazy with this tomorrow. I am sure he will position it as the second coming.

And I must apologize as I lead you to believe JPM was reporting today, they actually report tomorrow. Sorry about that. I’ll keep my money out of the stock but thinking it is not going to hit its mark.

The New Beige Book is out the New Beige Book is out. I hope I am not the only one who thought of Steve Martin in The Jerk. But I digress. The Fed released the Beige Book. It is available in HTML or PDF. Yes you can send it to your Kindle. I like it because I can cut and paste it and plagiarize it all to death because it is public information. Here are some of the highlights FOLLOWED BY MY COMMENTS-BEN LOVES IT WHEN I COMMENT-IN CAPS:

Reports from the twelve Federal Reserve Districts indicated that while economic activity remains at a low level, conditions have improved modestly further, and those improvements are broader geographically than in the last report. FOR FUN, GO BACK AND COMPARE THIS TO THE 2009 JANUARY REPORT. THIS SOUNDS GREAT BY COMPARISON.

Ten Districts reported some increased activity or improvement in conditions, while the remaining two--Philadelphia and Richmond--reported mixed conditions. THAT IS UP FROM 8 DISTRICTS AT LAST REPORTING.

Most Districts reported that consumer spending in the recent 2009 holiday season was slightly greater than in 2008, but still far below 2007 levels. I AM TRYING TO FIND OUT OF THIS INCLUDES ON LINE SHOPPING. THIS IS A GOOD SIGN.

Reports on tourism were mostly flat or weak, but for two Districts whose ski resorts enjoyed early season snowstorms. I KNOW THE ROAD FROM LAS VEGAS TO ORANGE COUNTY WAS PAINFULLY SLOW.

Toward the end of 2009, home sales increased in most Districts, especially for lower-priced homes. Home prices appeared to have changed little since the last Beige Book, and residential construction remained at low levels in most Districts. REMEMBER, WE NEED TWO THINGS TO SUSTAIN THIS RALLY. CONSUMER SPENDING AND A BOTTOM IN HOME PRICES. WE ARE GETTING CLOSE.

Consumers were variously described as cautious, price sensitive, and focused on necessities, but sometimes willing to spend on discretionary purchases. NOW THAT’S WHAT I’M TALKING ABOUT. DISCRETIONARY, LIKE SCUBA DIVING?

Boston reported widespread positive activity in advertising, consulting, private equity firms, healthcare, biotechnology, education, and government services. High-tech service firms reported favorable conditions in Kansas City. New York reported a general pickup in activity. Health care providers reported increased demand in the San Francisco District. THAT’S THE WAY AHA AHA I LIKE IT AHA AHA.

Manufacturing activity has improved since the last report in six Districts. New York reported a general pickup in activity, broad optimism, and some increase in employment. Production was stable or slightly up in the Cleveland District. Firms in the Cleveland District expect greater export opportunities going forward, but steel firms expect slow growth in overall demand. Manufacturers in the Chicago District cited gains at firms tied to the auto industry (F) and those benefiting from an increase in exports to Asia. Firms in the Boston District also cited Asian exports as well as defense work as sources of their positive demand, but identified weak demand for exports to Europe and for products related to energy sectors (RIG) and commercial construction(FLOUR). San Francisco reported a modest net improvement in manufacturing activity, with semiconductors (INTC, AMD, ARMH) strengthening and aircraft and parts stabilizing at moderate levels. Metal fabricators and housing products have also stabilized, but at very low levels. I FELT THAT WAS PASTING THE WHOLE SEGMENT AS THERE IS GOOD NEWS IN MANY CATEGORIES. THIS EXPLAINS WHY EARING MULTIPLES ARE TRADING AHEAD OF THEMSELVES. BECAUSE THEY MIGHT NOT BE.

Homes sales increased toward the end of 2009 in most Federal Reserve Districts, except San Francisco, where demand for housing has been steady, and Kansas City, where residential real estate activity has eased since the last Beige Book. GOOD NEWS CONSIDERING THE LAST 18 MONTHS.

Federal Reserve District Banks reporting on agricultural conditions generally indicated that cold weather at the turn of the year had adversely affected crops and stressed livestock. Atlanta noted damage to citrus crops from the cold, and Chicago and Minneapolis reported that winter storms halted corn harvesting, and impeded tillage and fertilizer application. THAT WAS FOR YOU COMMODITY PLAYERS. I DON’T THINK WE HAVE ANY BUT I AM AFULL SERVICE BLOGGER.

Production of energy-related materials has risen moderately since the last Beige Book. Atlanta reported that oil production has continued to increase. Minneapolis reported an increase in oil and gas exploration, and Kansas City and Dallas reported increases in drilling. San Francisco noted an increase in extraction of natural gas but a continued low rate of oil extraction. CVX RIG MUR CON

Labor market conditions remained soft in most Federal Reserve Districts, although New York reported a modest pickup in hiring and St. Louis reported that several service-sector firms in that District recently announced plans to hire new workers. In the Richmond District, temporary employment agencies gave mixed reports, but some noted increased demand for administrative and sales workers, laborers, and warehousing and distribution workers. HEY WE’LL TAKE THAT, WON’T WE?

Now you can read the entire thing at

Ok I am going to wrap up here but wanted to let you know about a couple of relevant upgrade down grade news.

Credit Suisse upgraded GOOG’s target price from 620 to 675. They must think GOOG is bluffing about China. (I personally think they are but some damage has been done. Bloomberg announced today the some on line advertisers have already switched to Baidu over in China.) I’ll stay clear a few week and see what happens.

UBS, gosh I like those guys. Boosted some positive comments about Boeing. What I don’t get it the upgrade notice says they are looking for 50 a share and its selling at 61. m m m m

Barclays was liking AMZN today. They raised their target price to 160. I hope so because I got a few calls that could use the lift.

OK let’s see what the market brings tomorrow. I will hopefully be bragging about the 35% jump on my INTC calls. I’ll let you know. Tomorrow or this weekend I will republish the portfolio as I did liquidate a few things this week.

Salve Lucrum


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