1. Microsoft: Eric Savitz joined the chorus of tech analysts who have just discovered that Microsoft was near the start of a major upgrade cycle. Barrons.com While Eric is just a journalist who apparently had to beg Barron's to buy him a new laptop after his fingers drilled holes into the keys of his old one, I have to wonder where all of these highly paid analysts for the brokerage firms have been for the past several months. I do not even follow Microsoft, being an Apple guy, and I knew about the upgrade cycle when I bought Microsoft earlier in the year at $17.79.ADD 50 MSFT MSFT Now, with everyone starting to recommend it, I am starting to become uncomfortable, as if I was being invited to a come to Jesus revival meeting, particularly when Eric starting talking about Microsoft's aura. Still, notwithstanding all of these new converts after a 30% gain in the shares, I plan to stay around for a few more points. Generally, however, as a rule, I do not like crowds.
2. Stryker: It was not that long ago that Barron's featured a bear on Stryker, who considered SYK to be one of his best short ideas. /SYK a short?/ I mentioned in that post from December that SYK was an odd choice for a short, hoping it would fall to $30 or about 9 times the then estimated earnings for 2009. I bet against the guy and now own some shares. The stock closed last Friday at $40.32. It did fall to 31.19 in early March, as the entire market headed into the deep abyss, and then turned up with the overall market's rally. Barron's now has a favorable article on Stryker's prospects in this week's edition. Barrons Reut
3. What is the Output Gap now: For those who believe inflation is not about to be a problem, one factor emphasized by them is the output gap, the difference between the economies potential output and what it is actually producing now. The Congressional Budget Office predicts that the output gap is greater than 6%. This would indicate a lot of slack in the economy which would restrain inflation. The staff at the San Francisco Fed recently contended that, if the output gap was that large, inflation should have fallen a lot more than it actually has. FRBSF Economic Letter: How Big Is the Output Gap? (2009-19, 6/12/2009) If the CBO estimate was near being correct, core inflation should have fallen significantly during this recession but it has fallen relatively little. (If any of these economists could actually produce a model that would predict the future, or even explain what is happening now, then why are we in this mess ?).
4. SeekingAlpha Article by Neil George: I read an article by Neil George this morning at SeekingAlpha that mentioned two of the Trust Certificates that I own, PJL and FJA. Seeking Alpha I thought that the article contains several errors. And, for the first time, I posted a comment to someone's blog.
5. World Bank: I wonder how anyone can really measure the world's GDP, and any number attempting to measure it would have to be suspect. I doubt if it is possible to come up with an accurate figure just for my State. An estimate of the world's GDP number would have to have a large range of possible errors, both up and down. The World Bank issued an estimate of this morning, which will likely provoke some selling, that the world's GDP will shrink 2.9% in 2009.
We all know that the world is in an economic recession, as bad or worse than any suffered since the Great Depression. The world's GDP may actually end up falling more than 2.9% or it may end up being better. It may actually be stabilizing and improving in many countries. Personally, I don't think the World Bank knows, nor does anyone else, nor will anyone else ever have a reliable actual or estimated number or one that could be relied upon in making trading decisions now.
6. Walgreens: I own 50 shares of WAG, and was not pleased with the earnings report released this morning. WAG earned 53 cents versus 58 cents a year ago, and below the 56 consensus estimate.
Same store sales increased 2.8%.
While this report is disappointing, it is not sufficient to cause me to sell my shares. My buy target for adding more shares, which was below 20, was never hit during last Fall's meltdown, so I only own 50 shares. Chart | WAG This is a link to a post from last October where I discussed those targets. WALGREENS
7. VIX: I noticed that the VIX was trading up over 11% this morning to 31.20. I have recently raised funds by selling short term bonds with the intent of buying common stocks. I am going to wait until the VIX finds stability in the 20 to 30 area, and trades below its 52 week moving averages, before buying stocks with those funds. I may even pare some purchases made in early March with the proceeds from earlier bond sales if the VIX continues to show volatility in the 30 to 35 range.
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