Tuesday, July 13, 2010

July 12, 2010 14 cents = a shiny quarter


July 12, 2010 14 cents = a shiny quarter

We’ll we got lucky again. We called 14 cents a share for Alcoa against a 12 cent expectation. That should help this 5 day rally (as small as today’s was) run at least one more day. It didn’t hurt that CSX had a strong showing. More importantly, execs indicated that global consumption of aluminum should improve from 10% to 12 %. That is a 20% improvement, not a 2% improvement. That is sizeable and means economies will be using many forms of the metal. This is positive news. We will be looking for any accounting games in the numbers but at face value they look clean.

Today’s WSJ had several gems in it if you looked for them. In the Money and Investment section there was some dismal information about the Baltic Dry Index. I have mentioned that metric many times here in the SL blog. However I may have misrepresented the number as being the tonnage of cargo shipped internationally. It is in fact an indicator of the daily rate charged for shipping. That rate has collapsed over the last two months. It is actually lower than April 2009 figures. So it could be extrapolated that the global economy is no longer expanding. However, and this is not in the article, rates are determined by availability of tanker. During the economic boom of 06-09, when oil was high and commodities were high possibly due to a dismal dollar, shipbuilders went on a frenzy floating anything they could build. That capacity is now on the high seas creating carrier to carrier competition meaning they are lowering their rates. Henceforth, (cool word- always liked that word) rates are falling and the BDI is collapsing. I would for a while pull this metric out of the leading economic indicator crystal ball.

In the corporate news column there was a little article about MSFT and Fujitsu teaming up on a cloud computing partnership that some say will exploit Fujitsu’s network of global data centers to support MSFT Azure software suite. The announcement will come on Friday. This might be one of those “buy on the rumor (today) sell on the news” (Friday). With MSFT so cheap, it might not be a bad bet.

It’s like they were hiding the good news in the Journal today. They even tried to hide it on the front page. In the lower left had corner they showed a chart from the Organization for Economic Cooperation and Development (OECD) and low a behold 29 of the 30 countries leading economic indicators have continued to rise from a low of 96.7 in March of 2009 to 101.48 in May 2010. The growth has slowed, but it is a 4.9% growth in 14 months which is sizable.

On the inside cover was an interesting article about the size of The US Navy. I highly recommend you take look at this article for the opportunities implied about the future use of drones and remote control war fare as it relates to the size of our Navy Fleet. If you do some homework, you will discover linkage and some interesting speculative plays. (Check out Israeli company ESLT @ 50 a share.)

And then, there was a real interesting article about The Obama Administration addressing the business community to see what obstacles are there to hiring people. Now first let’s take a look who is heading this effort. This policy review committee is driven by The US National Economic Counsel and they probed the Business Roundtable (An organization of the several hundred leading US Businesses from the likes of Allstate and Alcoa to Yahoo and Xerox) on what policies could be changed to improve the employment situation. Heading the US national Economic Committee is of course President Obama, but the director is Lawrence Summers an economist with a questionable backround who has NEVER been responsible for a budget or creating a single job in the private sector. He is assisted by Jason Furman who by his own Whitehouse bio is an economist and an influential policy intellectual. They are helped by one Diana Farrel who was a director or research at McKinsey and Company a lobbyist research resource company. They are joined at their meetings by (I will proved the names and practical work experience in the private sector managing budgets and hiring people since that what this policy review board was intended to do.) Joe Biden NONE if you don’t count a couple of part time jobs while in school), Hillary Rodham Clinton, NONE if you don’t count her time on the Board of Wal-Mart as legal representation) Timothy Geithner, NONE ,

Tom Vilsack NONE, Gary Locke NONE, but managed to put together enough part time jobs and scholarship to make his way through Yale, Hilda Solis NONE (Anyboday seeing a trend here?), Shaun Donovan, he was a Managing Director at Prudential Mortgate overseeing a 1.5 billion dollar portfolio of loans, Ray LaHood who did work his way through school and was director of the Rock Island County Youth Services Bureau, which based upon a newsletter from March 2010, annual proceeds today might be in the neighborhood of $60,000 (that would be thousands) meaning he had some budget responsibilty, Steven Chu physicists NONE, and Kathleen Sebelius has a BA in political science and an MBA in Public Administration NONE.  If you recognize the names from Joe Biden on, That is the White House Cabinet. 

(Sidenote- I got a crisp $100.00 Bill to the first person who can tell me what administration had fewer people from the private sector responsible for a budget or creating jobs on their cabinet.)

Here is what the roundtable came up with:  "FCC controls on broadband Internet, EPA regulation of greenhouse gases, increased taxes on foreign earnings, shareholder rights to nominate directors,
new requirements on derivatives trading, end to secret ballots in union elections, expanded damages for pay discrimination, uncertainty over new healthcare rules,and  restrictions on drilling".
Source: Business Roundtable I did cut and past that list.

Now we provided this list as a record for what the 54 page document provided to the government might help grow employment.  Let's track what if anything they do with the list.

Salve Lucrum


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