A Sneak Peek into Our Client Discussions…..

May 6, 2010 1:49 pm

Each day we discuss relevant topics related to our portfolio positions as well as the economy with our clients. The Disciplined Investor managed Growth Strategy is geared to an open and transparent understanding of the investments and portfolios.

Below is a sample of what we are talking about today. If you wish to find out more click HERE or you can try a test-drive for 2-weeks of the private client site:

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Thursday started out with a good outlook. Jobless claims came in as expected and there was a continuing claims fell again. But, there was the still the problems over the pond. European leaders were meeting to discuss the interest rate outlook for the EuroZone, and as expected, held rates tight.

ADP Payrolls came in showing an increase of 32,000 for the month. We are looking at the real possibility of a significant increase in the Non-Farm numbers for Friday. Analysts are estimating that an increase of 189,000 will be seen, but there is a good chance that we could see more like 250,000 – 300,000. See details of the rationale, HERE.

ADP vs Payrolls 20100505

From Briefing.com

Trichet notes that the euro was attacked in 2004 and it vigorously defended it; constantly calling for rules of EMU to be followed religiously… says that they have considered the improvement in the markets was justifying the progressive and phasing out of non-conventional measures; notes measures still in place for the 1 week and 1 month operations; 3 month operations will say that it is not intention at all that the result would put this interest rate higher than 1%, expects 3 month borrowing to remain close to 1%

We wanted to see where all of the gold buying was occurring. See more HERE.

BMC Software (BMC) reports Q4 (Mar) earnings of $0.65 per share, excluding non-recurring items, $0.05 worse than the Thomson Reuters consensus of $0.70; revenues rose 2.5% year/year to $491.3 mln vs the $508.7 mln consensus. Co issues upside guidance for FY11, sees EPS of $2.84-2.94 vs. $2.83 Thomson Reuters consensus; sees total bookings and revenue growth in the mid single digits, continued improvement in non-GAAP operating margin. The Company also expects full year fiscal 2011 cash flow from operations to be between $660-710 mln.

Regarding Steel/miners – positive earnings/outlooks from Vale, Vendanta and Tenaris; separately, Rio Tinto says it has put some Australian expansion projects on hold to study the impact from the gov’t’s recent tax. Australia is pushing ahead w/the tax plan despite pushback from the mining industry according to reports this morning.

  • Progressive (PGR) Target price increased to $21 by UBS
  • Intel (INTC) Dropped Coverage at Buy by UBS
  • Millicom (MICC) Target price decreased to 96.2 by AlphaValue
  • Progressive (PGR) US Target price increased to 21 by Citi
  • Lockheed (LMT) US Target price increased to $$$95 by Citi

Economic News

  • Initial Claims 444K vs 440K consensus, prior revised to 451K from 448K
  • Continuing Claims falls to 4.594 mln from 4.653 mln
  • Q1 Unit Labor Cost- prelim -1.6% vs -0.5% consensus, prior -5.6%
  • Q1 Nonfarm Productivity-prelim +3.6% vs +2.4% consensus, prior revised to +6.3% from +6.9%

Looking at the last two points from above, you can see that the trend is continuing for the lower cost of labor and the high level of productivity. What this says is that employment will be slow to gain in the private sector and wages have been kept low by companies. This strategy is exactly what we have been discussing over the past few months as the way companies are keeping their EPS growing.

ADP Payrolls came in showing an increase of 32,000 for the month. We are looking at the real possibility of a significant increase in the Non-Farm numbers for Friday. Analysts are estimating that an increase of 189,000 will be seen, but there is a good chance that we could see more like 250,000 – 300,000. See details of the rationale, <a href=”http://www.thedisciplinedinvestor.com/blog/2010/05/06/the-friday-nfp-preview-1-2-4-or-500000-perhaps-250000/”><strong>HERE</strong></a>.
<p style=”text-align: left;”><a href=”http://www.horowitzandcompany.com/tdimg_blog/wp-content/uploads/2010/05/ADP-vs-Payrolls-20100505.png”><img class=”size-full wp-image-6027 aligncenter” title=”ADP vs Payrolls 20100505″ src=”http://www.horowitzandcompany.com/tdimg_blog/wp-content/uploads/2010/05/ADP-vs-Payrolls-20100505.png” alt=”ADP vs Payrolls 20100505″ width=”588″ height=”355″ /></a></p>
<p style=”text-align: left;”></p>
<p style=”text-align: left;”><strong>Thursday </strong>started out with a good outlook. Jobless claims came in as expected and there was a continuing claims fell again. But, there was the still the problems over the pond. European leaders were meeting to discuss the interest rate outlook for the EuroZone, and as expected, held</p>
<p style=”text-align: left;”>average</p>
<p style=”text-align: left;”>We wanted to see where all of the gold buying was occurring. See more <a href=”http://www.thedisciplinedinvestor.com/blog/2010/05/05/who-is-buying-all-the-gold-gld/”><strong>HERE</strong></a>.</p>
<p style=”text-align: left;”></p>

<strong>BMC Software </strong> (BMC) reports Q4 (Mar) earnings of $0.65 per share, excluding non-recurring items, $0.05 worse than the Thomson Reuters consensus of $0.70; revenues rose 2.5% year/year to $491.3 mln vs the $508.7 mln consensus. Co issues upside guidance for FY11, sees EPS of $2.84-2.94 vs. $2.83 Thomson Reuters consensus; sees total bookings and revenue growth in the mid single digits, continued improvement in non-GAAP operating margin. The Company also expects full year fiscal 2011 cash flow from operations to be between $660-710 mln.

Regarding Steel/miners – positive earnings/outlooks from Vale, Vendanta and Tenaris; separately, Rio Tinto says it has put some Australian expansion projects on hold to study the impact from the gov’t’s recent tax. <em>Australia is pushing ahead w/the tax plan despite pushback from the mining industry according to reports this morning.</em>

<em>
</em>
<ul>
<li><strong>Progressive</strong> (PGR) Target price increased to $21 by UBS</li>
<li><strong>Intel </strong>(INTC) Dropped Coverage at Buy by UBS</li>
<li><strong>Lockh</strong>(MICC) Target price decreased to 96.2 by AlphaValue</li>
<li><strong>Progressive (</strong>PGR) US Target price increased to 21 by Citi</li>
<li><strong>Lockheed </strong>(LMT) US Target price increased to $$$95 by Citi</li>
<li>Initial Claims 444K vs 440K consensus, prior revised to 451K from 448K</li>
<li>Continuing Claims falls to 4.594 mln from 4.653 mln</li>
<li>Q1 Unit Labor Cost- prelim -1.6% vs -0.5% consensus, prior -5.6%</li>
<li>Q1 Nonfarm Productivity-prelim +3.6% vs +2.4% consensus, prior revised to +6.3% from +6.9%</li>
</ul>
Looking at the last two points from above, you can see that the trend is continuing for the lower cost of labor and the high level of productivity. What this says is that employment will be slow to gain in the private sector and wages have been kept low by companies. This strategy is exactly what we have been discussing over the past few months as the way companies are keeping their EPS growing.

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