Tuesday, May 6, 2008

Barron's Roundup

Barron's roundup. What I found interesting. You make your own interpretation.

Short sales as a percentage of all NYSE volume hit a record of 25.6% the week of April 11th.

Corporate insiders have recently picked up their selling to levels that are no longer bullish.

To many folks appear to be hoping the commodity trade to unravel (66% in last weeks Barron Big Money poll).

Citigroup increased their common equity offer to $4.5 billion.

Thursday is when U.S. retailers report comparable sales. Expectation is 2.3% increase after last years very weak April which saw a decrease of 1.8%.

Wrigley is trading at $75.69. Over $4 below the $80 deal price. The stock with dividends has an annualized return of close to 10% assuming the transaction closes by year end. Analysts believe this deal has a very high probability of closing. Berkshire's stake could be as high as 15%.

Wrigley's global gum shares is estimated at 34% versus 27% for Cadbury.

Analyst thinks because the rebate money will be arriving in consumer pockets in just a few months it will be more like the equivalent of 4% of gross domestic profit. Even so the effects likely will peter out in the final quarter of the year.

Sun Microsystems saw revenues down .5% in the quarter from a year ago. Had a 10% drop in U.S. revenues. Storage system sales were down 5.4% while computer hardware sales were down 1.8%. Sales in both areas came up $100 million short in sales compared to internal projections. They said they started seeing customers hesitate on new orders in the quarter and pushing projects into the future.

Dow theorist like the market. Richard Russel of Dow Theory Letters (dowtheoryletters.com) says what investors have endured since the market's October 2007 peak hasn't been a bear market at all. It is just a correction in the huge bull market that started in 1980.

On January 22nd the Dow transports recorded a low, along with industrials. A rally ensued, followed by a decline in which the industrials broke to a further low that was unconfirmed by the stronger transportation average. From there, the transports headed higher dragging the industrials along.

The ISM survey of manufacturing highlights one key reason for the better performance between then and now (referring to 2001). The week dollar, together with the robust global economy, continues to drive exports. Thursday, ISM reported that its index of exports ran 57.5 in April, which signals expansion. The same index stood at 47.5 as of April '01, which signaled contraction.

The whole editorial entitled Not By Bread Alone I found very interesting.

Late last week, nearly 77% of components of the S&P 500 have run ahead of their 50 day averages similar to levels las seen near stocks October peak.

For April the S&P 500 was up 4.8%.

Money market funds stand at $3.5 trillion the highest level since early 2003.

Merril's Rosenburg said the cheap dollar has ushered in a made in America manufacturing renaissance as labor costs relative to the rest of the industrialized world fall to the lowest level in three decades.

A box shortage is developing which ought to be welcome news for the container and packaging industry that has suffered the double whammy of high raw material prices and rising transport costs.

Libor remains stubbornly high with the three month at 2.815% which is higher than it stood before the Fed's previous rate, to 2.25% from 3% on March 18th.

Airlines was the best performing industry group last week. Platinum and precious metals was the worst performing.

PE Ratio for the S&P 500 was 21.36 last week up from 21.12 the previous week and 18.47 last year. Earning yield was 4.68% down from 4.73% last week and 5.41% last year. Price to book was 2.80 compared to 3.32 last year.

For the Dow Jones Industrial Average PE was 70.34 compared to 57 last week and 17.6 last year. Price to book was 3.9 compared to 3.8 last year.

AAII index was 53.3% bullish and 26.3% bearish compared to 30.4% bullish three weeks ago and 48.7% bearish.

Put call ratio hit .67 the lowest level since January 1st when it was .63. October 5th it was .57.

1 comment:

Anonymous said...

there is an interesting commnet on marketwatch as to rusell´s forecast
I dont think we are in a bullish market, this is a tricky rebound typical of a bearish market, taking into account those high price earnings and forecasting a recession ahead and slow economic growth i think we will see low returns next five years at least.