William Trent1

Recession or Slowdown: What Do the Numbers Say?

Thanks for the idea. If I get too many reports that may be unwieldy, though. One idea I had was to do this as a weekly update, which maybe would allow the footnotes (for that week) not to be too long. I could still update important data as it happens, but reference the more minor reports in the weekly wrapup. Would that work?

Recession or Slowdown: What Do the Numbers Say?

Not a bad idea (when I can figure out how to do it.) Right now the classification chart is an image from an Excel file, rather than an editable table within the post.

Not Buying It: Best Buy Claims Earnings Hurt By Product Mix

The Circuit City results should help answer that question.

On Corporate/Treasury Bond Spreads and Risk Premiums

Good question. I'm not really up on the bond ETFs but I bet there are others here who are and could correct me if I am wrong.

It looks to me from the Bespoke ETF Tree that you might be able to short IShares IBoxx High Yield Corporate Bond (HYG) for the junk exposure and buy the IShares Lehman 10-20-year treasure (TLH) for your treasuries.

Trent Becomes Not-Bearish On Semis

Thanks J. I know I can't please all of the people all of the time, but if I add enough value for enough people it will be worthwhile. In a business where being right 60% of the time results in rock star status I realize I'm going to have duds too. We'll see how my timing works out on this trade.

Semis With Highest, Lowest Production To Sales Ratio

Ralph - I am comparing the amounts produced to the amounts sold to customers. If more is produced than is sold inventories will rise. If less is produced than is sold, inventories will fall. Too much inventory can be bad for future margins in one of at least two ways: 1) lower production, which due to operating leverage would mean each unit would have a higher cost; 2) obsolescence, which could lead to write-offs. Underproduction can mean lost sales.

Frank - You got two of the three potential reasons, with the other being a temporary shortfall (perhaps due to high seasonal demand or other factors.) In the case of MEMC, the prolonged underproduction is due to limited supplies of the raw material polysilicon. I would classify this as a production problem, but since it applies to all manufacturers it is not an MEMC problem. In fact, it is helping their margins since they are one of the few available sources.

Andrew - per my comment to Ralph, over/underproduction at fabless companies can impact margin through obsolescence or by missing out on sales if the inventory is not available. I think it is still worth looking at the trends for each company, although further analysis would require separating the companies into fab/fabless as well as other segments such as analog or memory.

Will it Take a Liquidity Crisis for Intel to Rationalize Capital Spending?

Nobody is advocating zero capex - I just think they need to spend enough to meet demand and no more. In the long run it is nearly a mathematical certainty that they will do so. It is the short term variations that result in cyclicality.

CDW Corp: With Solid Earnings and Buyout Talk, Probably Little Upside Left

According to the company, they shopped the deal around. Unless somebody wasn't in on the process to begin with they presumably have the best offer in hand.

Of course, I've been wrong before...

Dell Tries Its Hand At Mass Distribution

Dell isn't competing with Apple (at least not directly.) They are more concerned with HP, which suffers from the same retail channel limitations but has had no trouble selling through it. In fact, WalMart had a big special on HP notebooks and Best Buy did the same last year. Somebody was buying those boxes.

The U.S. Rally Is Tepid, Even In Dollars

Michael,

Thanks for the extended analysis. How do other regions (Asia, Latin America) compare over the 1-month?

Can't Take a Hint: Micron Proposes $1.1 Billion in Convertible Senior Notes

Well, any capex ought to result in a revenue increase. More chips for sale generally equates to more revenue.

The problem is they are clearly continuing to drive sales without much regard for profit. It is the return on investment, not the sales it generates, that Micron can't seem to get their arms around.

On Starbucks' New Low: Not Writing Call Options At This Price

David - That I'm not worried about. Eventually SBUX will be able to pass along most of those costs, and I don't believe most of their customers consider many alternative choices to be true substitutes.

John - sounds interesting. I'm an equity guy just starting to dip my toes into the options arena. Would love to learn more. One reason I'm not as aggressive as you say is I have more pressing demands than monitoring a short-term portfolio right now. Hopefully I will have a larger portfolio someday and it can take precedence!

On Starbucks' New Low: Not Writing Call Options At This Price

John,

Thanks for the comment. Actually the option part of the deal was secondary. I've owned the shares for a long time and only write the call options against it when I think it is at such a high valuation that I'm willing to risk have them called away - like last year when my implied long-term return was just 5-8%. Otherwise I'd just as soon keep them.

Just my way of reconciling a long-term holding style with the fact that markets fluctuate.

Thanks,

Bill

Reading Between the Lines To Spot the Next Cisco

TradeRadar - True. But that makes it all the more unlikely that they would go from 15 weeks to 5 all at once. In the interest of avoiding disruption even if the system could take them from 15 to 5 I would expect them to go 15 to 14, 13 and so on.

The comment, to me, sounded as if Cisco was making an abrupt change in their ordering patterns. I just don't believe they could or would ever do that.

Reading Between the Lines To Spot the Next Cisco

Thanks for both comments.

It is definitely more important to have reliability than low inventory or short lead times. My point, though, is that LEAN doesn't seem to explain Cisco's order slowdown this quarter. It just seems like a cover story for everyone.