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Kenny Landgraf
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As Principal and Founder, Kenny Landgraf started Kenjol Capital Management in 2001. Under Kenny’s leadership, the firm focuses on providing wealth management strategies to high net-worth clients. Kenny serves as the principal investment consultant and is the portfolio manager for several of... More
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  • Let's the Earnings Game Begin!! 0 comments
    Oct 18, 2010 6:25 PM | about stocks: DAG, JJA, RJA, JJG, PAGG, MOO, DBA, HAO, PGJ, TAO, GXC, FXI, SLV, DBS, DBP, PTM, PGM, SGOL, IAU, GLD, DGL, BRF, EWZ, GML, ILF, EWW, INP, EPI, PIN, FNI, JJT, SGG, BAL, FUE, UGA, UCD, JJU, JJN, OIL, BDG, UBM, RJZ, USO, EZU, IEV, PXR, VWO, EEM, EEB, PXH, EWX, IWM, VB, IJR, IWC, IWN, IJS, SLYV, DBE, KOL, OIH, IXC, IEO

    Topic:  Investment Landscape

    Big week upcoming for earnings – especially the techs and the major banks.  112 companies in the S&P 500 are slated to report earning this week:

    • Monday – Apple (OTC:APPL), Citigroup (NYSE:C), IBM (NYSE:IBM), Halliburton (NYSE:HAL)
    • Tuesday – Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC), Coca-Cola (NYSE:KO), Johnson & Johnson (NYSE:JNJ)
    • Wednesday – Morgan Stanley (NYSE:MS), Wells Fargo (NYSE:WFC)
    • Thursday – American Express (NYSE:AXP), AT&T (NYSE:T), Xerox (NYSE:XRX), Nokia (NYSE:NOK)

    Last week, the headline news was Bernanke’s call for further Fed asset purchases.  The market has assumed this is going to happen although other Fed governors will wait until the next Fed meeting.  Basically, Bernanke is making the case that we have been saved from the abyss but that the pace of growth is “less vigorous than we would like”.   Accordingly, the Fed will take additional steps to ease monetary policy by buying Treasuries and other interest bearing assets (mortgage bonds, ?).

    And for every action, there is a reaction.  The reaction is coming in the gold, silver, and precious metals market as well as the falling dollar versus other major currencies.  Last week the U.S. dollar fell to its lowest level against several major currencies.  Even against the Euro, the exchange crossed the 1.40 (U.S. Dollar to the Euro) threshold before ducking back under today.

    For precious metals, gold closed at 1367.50 and silver reaching a high of 24.27%, a 5% rise.  Since our currency is no longer on the gold standard, gold has no true economic value beyond jewelry or other niche products.  Like tech stocks and dot.com stocks of the late 90's, what may be driving the rise in prices is the "next guy" factor.  Basically, the belief that the next guy will be willing to buy at a higher price.  This works very well until it doesn't and then everyone turns into sellers, thereby crashing the price.  Right now it appears that QE2 is driving the belief that the next guy will still be willing to pay higher prices.  I am all too reminded of the "Oil Prophets" predicting $200 oil in May / June 2008 as oil approached the $150 level.  Just when everyone had to own oil, the price crested and descended all the way down into the $30 by the spring of 2009.

    In the energy sector, the moratorium on drilling in the gulf was lifted which also lifted the prospects of the energy and energy service sector.

    Bank stocks got killed at the end of last week with the news that major banks were robo-stamping foreclosure documents.  State attorney generals stepped in and most major banks put their foreclosures on hold while they review their foreclosure procedures.  While it is understandable that the process should be reviewed, the foreclosure cycle needs to complete if we are ever going to get through this housing mess.  Investors that are not being paid on their mortgage should not be rewarded with extended periods of "squatters" remaining in a house that they are not paying on.

    Again we interest rates being so low and yields on stocks exceeding some yields on bonds, we might see assets flows to equities pick up especially since we have entered the seasonal strong period of October – April.

    Econonic News

    • Trade deficit jumped on greater imports
    • Consumer prices were flat in September while Producer prices ticked up slightly – no deflation at least not for now
    • Retail sales showed continued strength
    • 10/19 Housing Starts

    What is happening in the market – What do we like?

    Investors continue to like precious metal and international allocations to hedge against the risks of quantitative easing here in the U.S. combined with yields that are getting squashed across the board.  Investors have to walk the “yield plank” or into equities to get a better return.

    No major changes this week as investors continue their push into equities ahead of earnings.  Many markets are approaching overbought conditions so investors may want to tighten stops as we may get some “sell on the news” with earnings being reported this week.

    The sector winner for the prior week was technology as investors bought shares ahead of earnings this week and the positive reports from Google (NASDAQ:GOOG).  

    Market Strength:

    • Agriculture – DAG, JJA, RJA, JJG, PAGG, MOO, DBA
    • China – HAO, PGJ, TAO, USCOX, GXC, FXI, MCHFX
    • Precious Metals – SLV, DBS, MIDSX, DBP, PTM, PGM, SGOL, IAU, GLD, DGL
    • Latin America – BRF, EWZ, GML, ILF, EWW, PRLAX, SLAF, FLATX
    • India – INP, EPI, PIN, FNI
    • Commodity – JJT, SGG, BAL, FUE, UGA, UCD, JJU, JJN, OIL, BDG, UBM, RJZ, USO
    • Europe – EZU, IEV, RYEUX, UEPIX
    • Emerging Markets –  PXR, VWO, EEM, EEB, PXH, EWX, TWMIX, FEMKX, TREMX, VEIEX
    • Small Caps – IWM, VB, IJR, IWC, IWN, IJS, DSV, RYAZX, SVPIX
    • Energy – DBE, KOL, UGA, OIL, USO, OIH, IXC, IEO, XOP, FCG, XLE, VDE, IYE, RYVIX
    • Asia – FNI, EPP, MAKOX, USCOX, FSEAX, PRASX

    Market Weakness:

    • Bear Funds
    • Bonds – Short, Mid, Long
    • Zero Bonds
    • Finance
    • Emerging Market bonds
    Invest Wisely!!!


    Disclosure: Long SLV, LONG DBP, LONG GLD, LONG DBB, LONG EFA, LONG EEM, LONG SCZ, LONG EPU, LONG BRF, LONG THD, LONG GXG, LONG RWX, LONG EPI, LONG EPP, LONG MSMLX, LONG IDX
    Stocks: DAG, JJA, RJA, JJG, PAGG, MOO, DBA, HAO, PGJ, TAO, GXC, FXI, SLV, DBS, DBP, PTM, PGM, SGOL, IAU, GLD, DGL, BRF, EWZ, GML, ILF, EWW, INP, EPI, PIN, FNI, JJT, SGG, BAL, FUE, UGA, UCD, JJU, JJN, OIL, BDG, UBM, RJZ, USO, EZU, IEV, PXR, VWO, EEM, EEB, PXH, EWX, IWM, VB, IJR, IWC, IWN, IJS, SLYV, DBE, KOL, OIH, IXC, IEO
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