All Ears, No Cattle at Disney

Also, the government's data are masking real inflation.
Author:
Publish date:

Editor's note: This compilation of blog posts from Doug Kass is being republished as a special bonus for TheStreet.com and RealMoney readers. It first appeared on Street Insight. To sign up for Street Insight, where you can read Kass' commentary in real time, please click here.

It's All in the Ears (and Tax Benefit) at Disney

11/10/2006 8:13 AM EST

Once again the market had a Pavlovian reaction to

Disney's

(DIS) - Get Report

earnings report after the close.

It soared to a new high over $34 a share right after the announcement (I shorted small) as investors failed to dot their i's and cross their t's.

What appeared at first to be an earnings beat rested on the company's large tax benefit, which favorably affected results. And on its conference call, Disney spoke of a weakening consumer products outlook and flat park attendance.

The shares sold off by about 3% later in the evening (I have covered the short).

Government Stats Mask High Inflation

11/10/2006 8:44 AM EST

I have argued that the real inflation is far higher than the government statistics.

I prefer to use the trimmed mean PCE rate used by the Dallas Fed, which indicates inflation is well above the Fed's comfort zone.

That said, CNBC is now doing an interesting segment on the inflation in tuition, something I have written about in the past.

This, along with health and home insurance premiums and other factors, are contributing to the plight of the lower- and middle-class' inability to expand their real incomes.

The decline in the price of energy products over the last several months is being offset by multiyear highs in the price of coffee, orange juice, cattle, corn and wheat.

With food roughly 20% of the CPI and the economy's growth moderating, the pressure on real median incomes might intensify.

More on Bad Breadth

11/10/2006 8:06 AM EST

Apropos to my poor breadth observation on the Nasdaq yesterday,

Merrill Lynch

(MER)

traded 38 million shares in the hole yesterday (in an unregistered secondary, so it didn't hit the tape).

Someone wanted out.

At time of publication, Kass and/or his funds had no positions in stocks mentioned, although holdings can change at any time.

Doug Kass is general partner for two investment partnerships, Seabreeze Partners L.P. and Seabreeze Partners Short L.P. Until 1996, he was senior portfolio manager at Omega Advisors, a $4 billion investment partnership. Before that he was executive senior vice president and director of institutional equities of First Albany Corporation and JW Charles/CSG. He also was a General Partner of Glickenhaus & Co., and held various positions with Putnam Management and Kidder, Peabody. Kass received his bachelor's from Alfred University, and received a master's of business administration in finance from the University of Pennsylvania's Wharton School in 1972. He co-authored "Citibank: The Ralph Nader Report" with Nader and the Center for the Study of Responsive Law and currently serves as a guest host on CNBC's "Squawk Box." Kass appreciates your feedback;

click here

to send him an email.