Tuesday, September 14, 2010

September 14, 2010 It’s good to be wrong


September 14, 2010 It’s good to be wrong

On Sunday we made a few guesses about economic news and its time to check in to see how good we are. On Monday we had a look at the Federal Balance sheet if you will, and the number got a bit confusing. When we were looking at the consensus, we used the numbers of 60-80 Billion expansion in the deficit. We thought that it was underestimated and suggested an increase in the deficit by 100 billion. When we researched the numbers tonight, the deficit expanded by 90 billion, BUT the consensus figures had changed to a 95-120 billion growth in the deficit. Now I can’t explain the discrepancy as I was sober Sunday night when I published. My only thought is that the experts are reading my blog and shifted their consensus number on Monday morning, yeah that’s the ticket, they read my blog. But I digress.

With that said, I will call it a near miss. This should have taken the market down but didn’t because of a thing called Basel III. Ever heard of it? Me neither, but it is a set of liquidity standards for international banks as set forth by the Bank for International Settlements (BIS). The announcement of liquidity standards was an unexpected pop for the market early on the day. It sent financials up and that rallied the market a bit. The reason it was a boon to our banks, JPM BAC, etc was that the standards presented were well in line with current capital requirements for our largest banks.

Now today we suggested that we would have a sizable miss on the retail report. The estimate was a .3% gain. I didn’t see it and did not agree and expected no growth in the retail number. It did come up.4% and .6% with the auto numbers included. Glad I got it wrong.

I didn’t miss the inventory report. The estimate was up .6% and reading backwards into the wholesale report and wholesale sales figure I suggested a 1% jump in inventories. We nailed it baby. 1% up BUT (Behold the Underlying Truth), the market did not react. The market did not go anywhere, but that could have been due to the decent retail sales report. Glad we got the number right, glad we called the market wrong. This is fun!

It was a little weird not to see more pin action in the market today with the retail report and some provocative news out of Europe about industrial production and a spicy inflation number out of the UK. One reason might be because the S & P is trying to break out of a trading range. You all know me, and I am not into reading tea leaves (Charting), but so many of the trading program algorithms are tied to charting its hard to ignore. Gold is still moving upwards as there is no clear direction in the market.

There was no action in the Salve Lucrum Portfolio. I am going to be taking some profit tomorrow morning once some of my stops have been adjusted. It is probably not the best thing to do at this time, but I am cash poor at the moment and want to get a couple of bucks off the table while these stocks are up. Besides the firm of ORP (Obama, Reid, and Pelosi) needs the tax revenue.

Earnings Call Report Card

We also made some prognostications about a couple of stocks. DFS, Discover Financial was supposed to have reported on Monday, but that report is now moved to the 20th of September. I’m stickin to my guns and expecting a little disappointment. We should see 30 cents a share versus 32.

We really missed on our guess about Best Buy BBY. They were hoping for 45 cents a share, and we suggested a miss by 3-4 cents. Well they blew away estimates and hit 60 cents a share and as a result were up 6% today. A whopper of a beat and a nice assist to the retail sector, reminding me I owe you some homework on William Sonoma and Target, aka “The Black Hole”.

Barron's Likes It Too

If you have been following the blog for anytime and clicked on the links provided, many direct you to the FINVIZ.com website.  I am not sure where I found this site a year or so ago, but have always liked it as a great one place to get the initial info I need type of place.  We were pleasantly surprised when Barron's reviewed the site in this week's issue.  Here is what they had to say, and as usual, we suggest you pick up a copy of the magazine as it was a great read.

"But for those wanting to sift the securities universe more finely, the free screener on FinViz.com is far more capable, and even easier to use. Both the screener and the Website's many resources are fun and illuminating. FinViz.com (the name stands for Financial Visualizations) employs an edit-in-place spreadsheet format with color cues, dozens of searchable parameters and many features—such as the ability to save screens you've customized—not available in other general-purpose screeners."

And from the candid White House Photo Gallery:

"Momma said they'll be day like this.  They'll be days like this Momma said."
Salve Lucrum


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