Today, my brokerage accounts are lit up with green numbers. Naturally, I feel smarter than I did a few days ago, when they were filled with red numbers…
This morning, Mr. Market loved what he read about the new deal to bail out Greece, sending the S&P 500 up 1% today.
Fickle as ever, Mr. Market likes the Greek bailout, which includes something referred to in the press as a "partial" or "temporary" default, which is like being partially pregnant or temporarily dead.
But the market is lukewarm on tech giant Apple, which was trading flat just after noon today (+0.09%)... despite Apple reporting cash and securities holdings of a little more than $76 billion and trading for less than 15 times earnings (if you deduct the cash from the value of the business). That's more than Microsoft ($60 billion) and more than the combined cash hoards of Cisco ($43 billion) and Intel ($21 billion).
Initial claims for state unemployment benefits rose to 418,000 this week, above economists' expectations of 410,000. These claims have now been above the 400,000 mark (the supposed stable labor market level) for 15 straight weeks.
More negative news... The Borders Group liquidation (which we wrote about here) will increase available U.S. retail space by around 6.3 million square feet. The liquidators will auction 259 Borders stores (some 40,000-plus square feet). And that's on top of the 225 stores Borders has already started closing. According to commercial real estate analysts CoStar Group, the U.S. currently has 859 million square feet of empty store space.
Shares of Retirement Trader pick Abbott Labs jumped today on good earnings. The health care company announced a 50% increase in earnings. Revenues increased 9%. Retirement Trader editor Doc Eifrig noted the company's ability to grow sales and its diversified business model in his June newsletter:
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I like that Abbott has been growing "top-line" revenue during these tough economic times. Its net sales grew 38% (from $22.3 billion to $30.8 billion) during the past five years. And if management's business plan continues to succeed, the bottom line should blossom as aging baby boomers make more and more use of the health care system. |
Doc recommended selling puts on Abbott. If the puts expire worthless next month, as it appears they will, readers will keep the cash they received when they opened the position and book a 54% annualized return on margin.
And that would be Doc's 29th straight winner. You read that correctly... Doc has closed 28 successful trades in a row in Retirement Trader – an incredible feat. His super-safe trading style is perfect for retirees – anyone really – looking to produce solid and consistent gains. He's due to release his next Retirement Trader issue tomorrow… If you haven't already looked into Retirement Trader, you can do so here...
An interesting article in Reuters today describes the "gold fever" overtaking India and China (the world's two largest gold consumers). The giant Asian nations expect gold demand to increase through the year...
"Record-high prices won't scare away investors," said Shi Heqing, an analyst at Antaike, a state-backed metals consultancy based in Beijing. "Investors are likely to chase the rally and continue to buy gold because paper money feels increasingly worthless and they are worried about inflation."
Shi believes China's gold demand could increase 20% to around 700 tonnes this year from 570 tonnes last year. In other words, a couple billion people are starting to worry – rightfully so – about their paper savings. And they're starting to buy gold for protection. This could be a huge trend that will drive gold even higher. And this buying doesn't even include central banks. You can read the full article here.
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New 52-week highs (as of 7/20/11): McDonald's (MCD).
In today's mailbag, one reader seconds Jeff Clark's view of the Greek bailout, and another new subscriber has questions about Stansberry's Investment Advisory. Send your feedback to feedback@stansberryresearch.com.
"Jeff is either a genius or a nut! His piece on the German couple had me roaring. Unfortunately, he is spot on with his analysis. With all that is going on, I am grateful for his recommendation to be invested in EUO. Keep up the great work!" – Paid-up subscriber Tom
"As a new subscriber, I have a few questions.
"Please Explain the 'Black List' – Does this mean do not purchase?
"Victims List – Are these past purchases that have been sold?
"Yet you list EUO as a 'BUY.'" – Paid-up subscriber Tom Dozier
Goldsmith comment: The SIA Black List (a proprietary list Porter publishes in his newsletter, Stansberry's Investment Advisory) is a market monitor... It's simply a list of expensive stocks that appear expensive by two specific metrics. While most of the names that appear on the list are likely overvalued, it's not intended to provide trading advice on those individual stocks. There's no specific action to take solely from the list.
Instead, it's a market gauge. When a lot of stocks appear on the list, say more than a dozen, the market is likely frothy.
The "victims" in Porter's portfolio are stocks he's selling short. In the case of EUO, it's a double inverse euro fund. Buying shares of this fund is the same as shorting the euro.
Regards,
Dan Ferris and Sean Goldsmith
Medford, Oregon and Baltimore, Maryland
July 21, 2011
Mr. Market hates cash hoards?!... Higher jobless claims... Empty Borders space... Abbott Labs up... Doc's streak: 28 winners in a row!... Chinese/Indian gold fever... U.S. gov't seizes gold coins...