WSW: Louis Rukeyser's Wall Street Summary &amp; Discussion $treet

Top 813. Jul 31, 2004 4:21 AM

» SteveT - 7-30-04

Consuelo Mack once again served as guest host. She was happy to report the market was up this week, perhaps triggered by the Tuesday report from the Conference Board on consumer confidence. This report hit a 2 year high and has now posted 4 consecutive monthly gains. On the down side oil prices closed the week at $43.80, a 21 year high.

Rich Bernstein thinks the slowing of expected future earnings can explain the market activity. Also weighing things down are the FED increasing rates and the price of oil. Rich advises going with quality and dividends. Stocks he likes are Alltel (AT) and Ameren Corp (AEE).

Liz Ann Sonders says Mutual Fund flows have been strong in June and July. Corporations are buying back stock. Which leaves hedge funds as the sellers. She believes that started to turn around this week and could be the catalyst for a nice rally over the next couple months. Liz Ann agrees about going with quality and recommends being properly diversified. Stocks Sonders likes are ChevronTexaco (CVX), Nordstrom (JWN), Safeco (SAFC), and Potlatch (PCH).

Ed Brown said the third quarter got off to a tough start. He wonders if a weaker than expected economy with alleviate the FED from increasing rates at the next meeting. He expects the market to be rocky with slower earnings and terrorism fears. Ed too signs on to the quality theme. Saying he looks for both deliverability and predictability of earnings and he never pays too much for a stock. Brown believes a shift will occur from value to growth stocks. Stocks that fit his criteria are Health Management (HMA), Staples (SPLS), Harley Davidson (HDI), and Applied Materials (AMAT).

Consuelo then introduced Daniel Boone III, Portfolio Manager, Calvert Social Investment Equity Fund. Boone’s fund invests only in companies that respect the environment and communities in which they work. Further his criteria include strong balance sheets, growth approaching 15%, and reasonable valuation. Focusing on socially responsible companies helped him avoid holding stocks of bankrupt companies or those involved in the ethical and accounting scandals. He is positive on the economy and stock market. Daniel believes we are in a consolidation phase and after that is complete the market can go up 10% or 15% over the next year. He uses a top down approach and is currently over weighted Health Care and Information Technology. He is underweight interest rate sensitive areas such as Finance, Telecom, and Utilities. Boone believes short term rates will peak out around 3.5% to 4%. Stocks he likes now are Medtronic (MDT), Costco (COST), and Dell (DELL).

Rich asked about the impact of raising rates on housing and the consumer. Daniel believes it will be a headwind. One of his biggest concerns is can inflation stay around 2%? If it does the FED funds should top out about 2% above that, at 4% or so. If we go above that threshold those with excess debt and adjustable mortgages will have even less money to spend. Liz Ann asked when the Health Care sector should see earnings growth improve. Boone says that earnings are starting to pick up across the spectrum of Pharmaceuticals, Devices, and Providers. Valuations are the lowest they have been since 1993 so as a contrarian now is a good time to buy. Ed asked where we are today in the capital spending cycle. The economy is growing in the 3% to 4% range after coming in higher in the initial stages of the recovery. Using history as a guide Boone expects capital spending to be strong for at least the next 18 months.

Next week Consuelo Mack will host the annual travel special. Guests will be Jason Ader, CEO & Founder, Hayground Cove Asset Management covering the gaming and hotel sector. Other guests will be Julius Maldutis, Airline Analyst, Aviation Dynamics, and Chris Ceraso, Auto Analyst, Credit Suisse First Boston.

-- posted by SteveT

Top 814. Aug 21, 2004 7:16 AM

» SteveT - 8-20-04

Consuelo Mack once again served as guest host. Mack reported on the flap over the Google IPO and for the first time in a few weeks both the stock market and oil prices increased. She pondered if the link between higher oil and lower stock prices has finally been broken and gave both the panel and guest a heads up of the direction of the discussion.

Mary Farrell reminded us every time it is different that before. She believes we may have seen the peak in oil or close to it. The market still will have uncertainties with the election, and Middle East. She sees no reason to run in and buy the market. Mary would take money off the table in energy and become more defensive. In a slowing growth environment she would look for best total return. Stocks Farrell likes are HSBC Holdings (HBC), Gillette (G), and Alltel (AT). She would be cautious on bonds and shorten durations.

Frank Cappiello said oil stocks maybe telling. Prices have been gradually sliding. If oil goes down it should be good news for stocks. He did warn we still have Iraq and a slowing economy to deal with. Frank is looking to buy companies that will surprise on the up side with earnings, have more buyers than sellers, and net insider buying. Stocks fitting that theme are Home Depot (HD) and Popular Inc. (BPOP). Cappiello said buying bonds now is buying a guaranteed loss until rates start going down. He would sell energy and buy them back later after they come down.

Kim Goodwin says over the past five years there is no specific correlation between oil prices and the S&P 500, except when oil prices spike, and then only in the riskiest asset classes. For now the riskiest asset classes seem to be small cap growth and semiconductors. Kim likes the Large Caps that are using cash to benefit shareholders. Some of them are Microsoft (MSFT), Tyco (TYC), and Consol Energy (CNX). Goodwin would sell any stock under $1 Billion market cap that has appreciated quite a bit and is starting to look expensive.

Consuelo then introduced Charles Maxwell, Senior Energy Analyst, Weeden & Company. Charles thinks oil prices are very close to the top of this wave. He believes there will be a second and third wave. The current normal oil price should be around $34 a barrel, the rest is the terrorist premium. Maxwell said oil companies did their long range planning on $22 oil, but we are entering a new era. Oil will probably range from $30 to $60 and average in the mid 40s. This will bring on a huge amount of new projects. They have the capital to start them any time they wish. This will benefit the Big off shore drillers such as Transocean (RIG). His oil forecast is for oil to pullback for 12 to 18 months, then move above $40 in 2 or 3 years. Finishing the decade at $55-$60 a barrel. Charles did say he liked a couple Canadian Companies as long-term investments but might wait for oil to drop before buying them. They are Encana (ECA) and Suncor (SU).

Mary asked what is happening with solar energy and if it has a future. It has a future but for now it is less than .1% of the energy market. So even if it quadruples it has almost no effect on solving our energy problem, yet it is coming along. It is constantly becoming more efficient but will not be much help over the next ten years. Kim asked which types of companies would benefit from the natural gas prices. U.S. supply peaked in 2000 and we still have good demand with no additional supply. This means we will have to import liquefied natural gas. Also the large cap drillers have exited the market and turned over leadership to the mid caps drillers. Frank wanted to know what a President could do to break the cycle of one energy crisis after another. Find a way to burn coal without the pollution, promote a revolution in peoples minds about nuclear energy and figure out when we are going to solve the associated waste problem, and first and foremost conservation. Fund research for cleaner diesel engines, hybrid cars, and insulated homes better. Ultimately the market will decide these issues, it always comes down to the pocket book of the consumer.

Next week Ron Isana is scheduled to host. Special guest will be David Williams, Portfolio Manager, Excelsior Value & Restructuring Fund. The panel will be Laszlo Birinyi, Michael Holland, and Brian Rogers.

-- posted by SteveT

Top 815. Sep 4, 2004 6:09 AM

» SteveT - 9-3-04

Bill Griffeth served as guest host this week as Lou continues his slow but steady return to good health. Bill talked about the rhythm of the market, or seasonality. Griffeth compared the market to a dance, sometimes fast, sometimes slow. With the dog days of summer behind us is the market due for a rally? Will the pace pick up? Will all the markets get back to doing the same dance? Time will tell.

Barbara Marcin is positive on the market even though it appears the economy is moderating. She is encouraged due to the confidence shown by corporate executives and thinks the market dip is temporary, caused by rising oil and election uncertainty. Marcin likes companies that use their cash to buy back stock and increase dividends. Some of her current favorites are Halliburton (HAL), Noble Corp. (NE) and Microsoft (MSFT).

Frank Gannon says corporate cash is king now. The key for the economy this year and next is what will corporate America do with their cash? If they spend it the economy will grow. Frank thinks the DOW will be a barometer for the Presidential election. If the DOW is up Bush should win, if it is down Kerry could win. Now Gannon is looking to add volatility to his portfolio wanting to make the most out of an anticipated market run going into the end of the year. Stocks he likes are Transocean (RIG), Goldman Sachs (GS), and Lexmark International (LXK).

Elizabeth Dater said the consumer is always key to the economy. She does agree at some point in this cycle capital spending will pickup. For now cash is accumulating quicker than capital spending is increasing. Beth thinks we are still unwinding the last of the excesses from the late 1990s. She thinks before they buy new equipment companies want to be absolutely sure money spent is going to see a return. Dater also thinks stock buy backs will be increasing as well as merger and acquisition activity and more private equity investors. She likes Carbo Ceramics (CRR), Denbury Resources (DNR), and Mentor Corp (MNT).

Bill then introduced Michael Fasciano, Portfolio Manager, Neuberger Berman Fasciano Fund. Michael is a small growth manager and believes small stocks always offer the opportunity to make money and can be exciting. He is currently optimistic but always cautious. He tempers his enthusiasm, saying he is looking for real businesses, making real money, that present real value. He doesn’t buy growth unless he sees value in the stock, and don’t buy value unless he sees growth in the business. Fasciano says small stocks are fertile ground for finding companies that are under followed by Wall Street and under owned by institutions. They also can be frequently under valued. His current thinking is go with quality and proven moneymakers with positive free cash flow. Stocks he likes now are International Speedway (ISCA), Direct General (DRCT), and Young Innovations (YDNT).

Barbara asked if he is finding value in small cap energy stocks? Michael thinks they can do well as long as oil is above $30 per barrel. Possible selections could include Carbo Ceramics, Offshore Logistics, and FMC Technology. Frank asked if M&A would be a big part of the small cap story going forward? It is possible as larger companies look for niche players. This is true more so in moderate economic growth periods as larger companies look to enhance their growth rates. Fasciano thinks this will be held in check by the relative valuations of small vs. larger stocks. Beth asked for a view on technology. Michael is under weighted by about 50% of his normal tech allocation. He is not anti-tech but is looking for longer product cycles. He tries to look out five years, and right not five month is a stretch for many Tech companies. He did mention some holdings that could be worth a look. Scansource, Plantronics, and Methode Electronics.

Next week Consuelo Mack will be back as guest host. Special guest will be Ned Davis, President and Founder, Ned Davis Research. The panel will be Mary Farrell, Tom Gallagher, and Liz Ann Sonders.

-- posted by SteveT

Top 816. Sep 11, 2004 11:32 AM

» hairie31 - Ned Davis: 9-10-04

*
I only caught the last few minutes of
Ned Davis' interview.

In it, he said he expects the markets to go up after the election regardless of who is elected.

He said presently, the markets don't like the uncertainty of the election.

Did anyone see the entire interview?

Did he say that he expects the markets to go down prior to the election?

At such a critical junture in the markets, it's interesting to know how a eminent Market Historian sees the road ahead.

-- posted by hairie31

Top 817. Sep 25, 2004 9:40 AM

» Kirk - 9/24/04 Ed Hyman

.
Ed Hyman was on Rukeyser Friday. He has by far the best record of economists.

He said we are in a period much like 1993/1994 (pretty much what I've been saying in my recent newsletters.)

Ed said we are three years from a major attack and recovering from a recession just like 1993/1994. He seemed to be saying he expects a long, slow recovery characterized by low inflation and low interest rates.

He said Real Estate will probably be "the next Nasdaq Type Bubble" but it is now only at 1993/1994 levels. (I think this is possible given it is the only really true hard asset and we will have inflation with the huge deficits).

He said Bonds will surprise people and not go up in yield much as measured inflation will be quite low.

He said some guest on the show will warn of deflation in the next year.

He said Cash is not going to be a good relative investment but many are in cash now as they fear both bonds and equities.

-- posted by Kirk