Thursday, January 31, 2008

Vince Farrell of Scotsman Capital-Verbatim

From: vince farrell []
Sent: Wednesday, January 30, 2008 10:27 PM

Busy all day today and will get around to disecting todays news later.The Fed cut 50 and the market sold off slightly as we guessed it would. For what it's worth, my bet is the market has seen its near term rally and needs to test the lows we put in place during the last weeks crazy volatility. The Dow Jones Industrial average closed today at 12444. The low of last week was around 11600. A 50% retracement of the gain is probably the best outcome, if not a total pullback to the low. We're not traders and we won't disturb the investment positions we have, but look for better prices to buy the next few weeks.
Felix Trinidad got decked twice in a bout against Roy Jones, Jr. and lost the fight. He later said "If I could have avoided the knockdowns, I think I could have won the fight." O.K. If I could have avoided the losses, I could be a zillionaire. "You was my brother Charlie. You shoulda taken care of me. I coulda been somebody. I coulda been a contender, instead of the bum I am now." Marlon Brando to Rod Steiger in "On the Waterfront".


From: vince farrell []
Sent: Thursday, January 31, 2008 6:36 AM

You've read more than enough about yesterdays weaker than expected GDP report. A few details that caught my eye however. Inventories were liquidated during the quarter, hitting the overall by -1.3%. Inventories had not been built to any extent the past few months, so I would expect inventory restocking to be a contributor to the balance of 2008, unless we are on the edge of a recession and there would be little chance of restocking.With a relatively lean inventory total, the good news is if a recession were to hit, it would not be exacerbated by high inventory levels that would need to be worked off.
Housing, on a normal basis, is about 4.5% of GDP. Exports are around 13%. But yesterday, housing weakend GDP by-1.4% and exports contributed only +.4%. I get the housing weakness, but, with the weak dollar, exports should have contributed more. Could be the number will be revised, could be just one of those things, but seems at odds with what you would expect.
Unemployment claims come out today and we have been keeping a close eye on them. Claims always have spiked as recessions have unfolded and claims have been trending down for the last few weeks. We'll see if the good news continues. The big jobs number comes out Friday and everyone is raising estimates because of the strong ADP (Automatic Data Processing- a company that does its own survey) number yesterday. The consensus had been for around 65,000 new jobs and I see numbers over 100,000 now. Lastly, OPEC mets tomorrow and no way are they going to increase production.
One quarter of the world's cranes are working in Dubai, constructing 5000 new buildings. With desert heat by day and seaside humidity at night there is not much to do except the beach and shopping. They got that big time. A 12 million square foot mall is being built and will have waterways, parks, ice rink and aquarium. Remarkable. Probably will require a bit of air conditioning.
The Girl Scouts are packaging cookies in smaller, 100 calorie boxes, for people who find it difficult to close a package of Thin Mints. They said it wasn't their intention for cookies to be eaten by the box. The hell !!!! Next they'll tell you Doritos are to be savored and not eaten by the bag (or case.)
Couple of more reasons it's easier to be a guy:
Chocolate is just another snack.
Other people get pregnant.
Belching is kind of expected.
Phone conversations are over in 30 seconds.
Wedding dress-$5000, tux rental- $200 (little more if you want the powdered blue shirt with the ruffles.)
You only wear comfortable shoes.
Remember, I expect a market pullback to correct the spike we saw last week. With the Fed news out of the way, we are not likely to get a surprise big enough to ccounter the very mixed bag of Q4 earnings that are now coming out.

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