1. Strong Demand for the 40 Billion Dollar Auction of 2 Year Treasury Notes: There is always something to be thankful for, even when everything has gone to pot. I am grateful for all of those foreigners who are helping us out in our hour of need by buying all of the paper Uncle Sam needs to float and accepting virtually no interest in the bargain. Heck, let's see if we can float a trillion dollars in two year notes at 1% next week, and just call it quits for a few weeks. There was good demand yesterday for the 40 billion 2 year treasury note auction, with the yield coming in at 1.151%. I did not submit a bid. Admittedly, I do not understand why anyone is lending money to our government for 2 years a 1% or ten years at less than 4%. But I am grateful that others are doing so, and will express my gratitude on behalf of the country to everyone willing to accept so little from Uncle Sam. I would hate for us to have to finance a 1.8 trillion dollar budget deficit at say 6% per year.
2. Duke Energy: Duke is one of my core utility holdings. I was not expecting a dividend increase this year from DUK but the company raised the dividend by a penny to 24 cents. I am reinvesting the dividend, and do not expect much from the stock over the near term. Duke was downgraded yesterday by Argus to hold.
3. Walgreens (WAG): There was a favorable article in the online edition of Barron's about Walgreens, written by Tiernan Ray who recommended buying WAG on the dip after its most recent earnings release Barrons.com Some of Ray's points make sense, including WAG's surging cash flow, with free cash flow hitting 1.76 billion last quarter on an 8% rise in sales. I am fine just holding onto my shares. Admittedly, I needed to be more aggressive buying WAG when it fell into the low 20s, that was just a gift, but LB was firmly in control during the 4th quarter of 2008 here at HQ.
4. Valero: I do not own Valero but I have generally been receptive to buying some shares in the $16 to $17 price range in the past (item #6:Valero) . I am not so receptive now, given its recent setbacks. Valero is going to close its 235,000 barrel a day Aruba refinery for a couple of months due to the plant's profitability. Then, there was the recent huge earnings miss, where Valero announced that it expected to lose 50 cents a share in the second quarter compared to a consensus estimate of a 74 cent profit. WSJ.com It also lost out on buying a 45% interest in TRN, a refinery in the Netherlands. It also recently sold 40 million shares at $18 to raise capital, near a five year low price, diluting existing holders by 8%, partly to finance the TRN acquisition. MarketWatch It has had a problem at its St. Charles refinery. Reuters Since it is too hard to see any light at the end of the tunnel, I am going to postpone a nibble, even though the current price is within my buy range.
5. Upgrades: Bernstein upgraded Conoco to outperform. StreetInsider Oscar Gruss upgraded Given Imaging, a lottery ticket, to a buy. StreetInsider.com That analyst liked the long term risk reward for investors who did not have a peptic ulcer.
6. RB Causes Major Deviation from Two Major Rules Yesterday: LB must have been taking a nap late yesterday afternoon, just before the market closed. Old geezers need their rest periods. RB, with a two year olds outlook on the world, seized the keyboard, started playing "Born to Run" again on Itunes, went to the Vanguard web page, and bought about 15 grand in two stock mutual funds. This was not only a violation of all of the trading rules, but violated the prohibition on adding new mutual funds. Wow! LB does not even want to look, did not even total the entire investment up, and was just thinking about calling Vanguard this morning to explain what happened, asking for a redo. Or, maybe that would not be a good idea. I doubt that the customer representative would understand. For now it was just another breakdown in discipline here at HQ requiring LB to bring out the heavy hand minus the velvet glove this time. But, then again, the rate paid on the money market account is just ridiculously low. Even LB, the Frank Sinatra music lover, rocking chair geezer, tortoise extraordinaire, was fed up with accepting that rate. So LB will let this breakdown go. But no more afternoon naps for the old geezer either.
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