Thursday, April 16, 2009

Bought 50 PYT/ Eric Savitz on Intel/Abbott Lowers Sales Estimates for Humira/NY Fed Manufacturing Index/ Beige Book/JPM

On the conference call, Abbott did lower the 2009 projected sales increase for Humira from 25% to 15 to 20%. Sales in the U.S. were anemic during the first quarter and most of the almost 17% increase came from international sales. The new forecast implies little growth in the U.S. this year. JNJ and SGP may launch this year a competitive drug called golimumab, see for more information: Forbes.com.

It does not take much in the way of positive news to energize the bulls. The Fed Beige Book basically showed the recession deepened last month and into early April but 5 of the 12 Fed regions saw moderation in the pace of decline. And, some regions saw stabilization in some sectors. FRB: Beige BookThat was a slender reed to hang onto but sufficient for the bulls to beat back the bears at least for yesterday.

The New York Fed released its manufacturing report for its region which showed improvement. Empire State Manufacturing Survey (overview) - Federal Reserve Bank of New York The new order component rose 41 points to close just below zero, and the shipping index rose 25 points to also close near zero. I view the new order component of this type of index to be one of the indicators that suggests stabilization in the economy and a possible turn.

While I believe the economy is still in a recession, there are many signs of improvement. Some are discussed by Jon Markman in his column as MSN Money that are derived from economist Geoffrey Moore. MSN Money

The myopic Eric Savitz continues his negativity about Intel in his Tech Trader column posted yesterday. Tech Trader Daily - Barron’s Online A couple of weeks ago he quoted extensively in evident approval a bear on Intel who referred to INTC as his best short idea. Dynamic Asset Allocation Trumping Trading Rules/Oops Forgot about 55 million/Earnings Yields for Recent Stock Purchases The stock was then at $14.58. Since it has risen from that level, Eric must feel a need to try to pound it again. Intel is one of those stocks where it probably does not matter much what anyone says about it, investors will reach their own judgments about good entry and exit points.

Barron's has a favorable article on Kraft (KFT) in its online edition. Barrons.com I own 100 shares. SOLD NADX IN IRA/BOUGHT Kraft & NESTLE/ Bought Lottery Ticket in CBG at 2.39/ Drags: TALF, AXP and GE

J P Morgan posted better than expected earnings for the 1st quarter of 2009, earning 40 cents versus expectations of 32 cents. The Tier 1 capital ratio is at 11.3%. The firm had high credit costs of 10 billion including 4 billion added to reserves. The Card Services division had a net loss of 547 million which was a decline of 1.2 billion from the prior year. The managed net charge off rate rose to 7.72% up from 4.37% in the year ago quarter. The 30 day delinquency rate rose to 6.16% up from 3.66%. These kind of statistics show a consumer under stress. Dimon said in the conference call that JPM could pay back the TARP money at anytime without raising new capital, and was simply waiting for guidance from the government.

Last night, I found a Goldman Sachs floater that I had previously missed when examining TCs originated by Merrill Lynch. The symbol is PYT. It is a synthetic floater in TC form with a minimum of 3% and a maximum of 8% with a float of .85% above 3 month Libor which is all good. Interest is paid quarterly.

This is a link to the prospectus:  www.sec.gov

It matures in 2/15/2034 at a $25 par value. I added 50 shares at $11.2. There was a wide spread between bid and ask at the time my market order was placed so I only bought 50 shares at the ask price. The current yield based on the minimum guarantee is around 6.7% at a $11.2 cost. I am earning less than 1% with my money market accounts now. The top yield at the maximum rate would be 17.86%. At an average 3 month Libor rate of 3.5% over the next 25 years, which bumps the coupon to .0435%, then the yield would be 9.7% at a $11.2 cost. Amortization of the spread between the $25 par value and a cost of $11.2 results in another 4.9% per year, provided of course GS survives to pay par value in 2034. The 3 month Libor rate has been a better benchmark than the 3 month treasury bill in recent times. The 3 month Libor rate is currently at 1.11%, and the 3 month T bill is at .14%-free money almost for the U.S. I intend to trade the GS floaters that I currently own, in my typical manner of managing a bond position to lower my cost over time, but I do not intend to do anything until short rates rise to over 3% which will not happen this year in my estimation. So, I will be looking for the opportunity to manage the GS floater position sometime in the later part of 2010. When I start to manage the position, which will most likely expand from the existing holdings, the most likely one to be jettisoned first would be GSPRA.

General Growth Properties (GGP) finally filed for bankruptcy. GGP is a REIT and the second largest owner of malls. This was inevitable.

China's GDP continued to slow in the 1st quarter rising 6.1%, down from 6.8% in the 4th quarter.


DISCLAIMER:
I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. I have never worked for a financial institution and never will. In these posts, I am acting as an unpaid financial journalist and an occasional political commentator. I am also aggregating financial news stories that I view as important and providing any reader of these posts, assuming there are more than a couple, with links to those articles, sort of a filtered, somewhat intelligent, free search engine. Any discussion made by me of particular securities is not a recommendation to buy or to sell. Trade at your own risk. Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons. The sale may before or after the post. Before buying or selling any stock, even one recommended by a trusted financial advisor, please research it and make up your own mind which is what I always try to do. Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news. In this post, and all others by me, I am merely describing my reasons for purchasing or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale. The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile. By way of example, it is unlikely that I will ever need the funds contained in my retirement accounts. Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments. Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed. It is always important to follow the investment process. the investment process/links to further information on canadian energy or royalty trustsInvestment Process Part II: Bonds and Bond Like Investments NOT A RESEARCH SERVICE/Add of PWE Last Week These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities. All content in these posts is provided for informational and entertainment purposes only, and it is a form of entertainment for me.

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