Oct

26

Abelson: Karl Rove is the man behind the curtain, tells W what to do. There is no October surprise, except for the bad economy. A smart guy from Merrill predicted the bad GDP numbers, and he thinks housing is going to get worse. For some reason, the stock maket has been strong. Google is so overpriced, that Abelson admires them for using their overpriced stock to buy things. It’s not just the economic fundamentals that look bad, Frederic Ruffy says the techinicals look bad, too. The sky is falling.

Page 19: Canadian Natural Resources is sitting on a high-growth project in the Alberta Tar Sands. Wall Street worries that it will spend too much money developing it, but over the last 20 years CNQ has done a great job with acquisition and drilling activity, so the shares are enticing.

Page 21: Verizon is a great company. Buy now. In May, Barrons recommended Sovereign Bancorp, and it is up 20% since. Now it is a buyout candidate. Buy now.

Page 22: Tellabs went from over $60 in 2000 to $10.30 today. But it has great long term prospects and is undervalued.

M4: The market goes up, and it goes down, so don’t sweat the fact that it went down on Friday. Coming off of last week’s assignment of human character traits to the Dow, Michael Santoli is upset because this week the market was not forthcoming with us about why it does what it does. Anyway the rally is legit, because a lot of people haven’t participated in it, and are now itching to get in. The options back-dating scandal still has legs, and will hit a bunch more companies.

M8: The Airbus deal with China presents a lot of problems for Airbus because working out the logistics of the production agreement will be tough. Royal Dutch Shell paying top dollar to minority owners of Shell Canada. Costs in their tar sands operations are way over budget (but don’t let that scare you away from CNQ, mentioned earlier).

M9: Sinopec (SNP) looks cheap.

M13: In case you have been on a desert island, GDP growth was bad, and the housing market is bad. Washington and Wall Street will be watching October’s employment data, due out Friday.

M15: Sugar supplies may dissolve quickly in early 2007, due to the vagaries of the sugar market in Brazil. Somebody says prices could top out at 13.50. Due to ethanol used in Brazil and elsewhere, sugar prices are now influenced by oil, somebody points out that if crude remains high, and lot of Brazil’s sugar will go to ethanol. Corn futures were up.

M18: When MSO reports earnings, option traders, like Dan Quayle, will be expecting the unexpected. Therefore, options traders have all sorts of different positions.

Page 25: United Health is looking good now that they have raised earnings projections and fired their chairman. Christopher Bonavico says the stock is dirt cheap when he considers where earning could be in three years.

Page 26: Feature article detailing the fact that the tech sector is very competitive. Paul Wick of Seligman Communications and Information has done a good job of picking the winners and losers. He likes ASML, CYMI, KLAC, MFE, STX, SYMC, SNPS. He hates APCC, AVCI, CCI, DELL, NTES, NYT, KNOT, WBMD. Dell is a one trick pony and the trick is gone.

Page 30: Chrysler and Mercedes haven’t meshed well because Mercedes doesn’t want to ruin its image by being associated with Chrysler. Chrysler is a mess, and CEO Tom LaSorda has lost credibility despite his legendary record on the field. Chrysler, however, is doing what it can to improve.

Page 32: The guy on page 26 was wrong, Dell is at the bottom, and there is real value in it. The release of Vista ahould help.

Page 33: New rules for options margining, now you can take a “portfolio approach” to your position, and net out your long and short positions in the same stock when calculating maintenance margin.

Page 34: Former Columbia Professor Michael van Biems now runs a value focused fund of funds. Says it is impossible to forecast growth, so he likes value strategies since they don’t try to forecast growth. He doesn’t like leverage. He has $155 million in his funds.

Page 35: Fund of funds are listing on exchanges in Europe, people like this because it provides liquidity. There are also tax efficiencies.

Page 38: Before you buy a Chinese index fund or ETF, figure out what you are buying. Different funds have different construction rules. The Powershares global dragon fund is based on the Halter USX China index. This Halter guy has a side business having Chinese companies do reverse mergers with shells that he has an interest in, and then they make it into his index. This could be good or bad.

Page 40: M.D. from Stifel Nicolaus ponders various telecom issues. Says the most important issue for the next two years is what happens with the direct-broadcast satellite companies. Lots of different things could happen to them.

Page 46: Capitalism is the answer to health care costs. In Maryland, the state is reneging on promises it made to its deregulated utilities.


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