- Bernanke's newfound bullishness,
- the way of the typewriter, and
- a mighty trio.
Bullish Ben Puts the Markets on His Back
Posted at 11:05 a.m. EDT, March 16, 2009 We're seeing some really strange and positive market behavior this morning. We have a confluence of bullishness. I find the rally in the transports and the simultaneous rally in the soft goods like General Mills ( GIS), Pepsi ( PEP) and Abbott ( ABT) (the last one benefits from an upgrade) to be something so bullish that it makes me lean more closely to
The Way of the Typewriter
Posted at 2:16 p.m. EDT, March 17, 2009 When I first got in the business, one of the hottest stocks was Smith Corona, a company that younger people reading this have never heard of. The company had a bunch of divisions: It was a conglomerate with spices and chemicals. But at its core it was a typewriter business. At the time, we all used typewriters. Some used Smith Corona, others used IBM ( IBM) Selectrics. I swore by my Smith Corona and was particularly enamored with its erasing feature. It had a nifty reverse feature that enabled you to take back what you have written in seconds. Then, one day, word processors just took off. Suddenly the typewriter disappeared. The word processor was just a better delivery system. Smith Corona was sold and its typewriter division simply vanished. When I read about the newspaper situation -- and it is everywhere because of the closing of the print division of the Seattle Post-Intelligencer and the Financial Times article "When Papers Fold" -- I think of Smith Corona. Isn't the current form of Gannett ( GCI) Smith Corona? How about the New York Times ( NYT)? McClatchy ( MCI)? These are just various Smith Coronas, where a better distribution system has come forward -- the word processor, the digital division. A superior way to get the job done. Unfortunately, no one could really make any money with word processors. They were commodities and were later incorporated into regular computers as pretty much of an afterthought. There were profit margins to it, as the powerful desktop ended the business as a stand-alone. Now I look at newspapers and it's just not possible to make money with them. There is a superior way to deliver the news and it is the Web, but the Web does not allow profit margins to cover the cost of the product. Worse, the big computer -- in this case, Google ( GOOG) -- makes the word processor -- in this case, the newspaper -- a second-rate way to deliver the product.
The Mighty Trio Will Lead Us Higher
Posted at 10:44 a.m. EDT, March 19, 2009 The unholy troika's back -- oil, tech and banks -- and I think it contains the losses here to levels that the bears will simply not be able to tolerate and will force them to change species. That's what happens when you have leadership. You can stabilize, you can regroup, you can gain adherents. Generals beget foot soldiers. And when you have three leaders, you have lots of followers, and these three leaders -- oil, tech, banks -- are the most powerful forces in the market right now. They are the virtuous circle we need to go higher. Think about what these umbrellas allow you to have run. When oil takes off, not only do you have the integrateds like Chevron ( CVX), BP ( BP) and Occidental ( OXY) taking off, but you get the service group -- Transocean ( RIG), Schlumberger ( SLB) and Halliburton ( HAL) -- and then you get the solar plays, which have been crushed since the oil decline ... great for First Solar ( FSLR). Strength in oil means strength in commodities, which gives everything from Nucor ( NUE) and U.S. Steel ( X) to Caterpillar ( CAT) and BHP Billiton ( BHP) a lift. Infrastructure rallies, too, because of the leverage to higher oil prices. Tech's running because of excellent earnings from Oracle ( ORCL) and great guidance by glass maker Corning ( GLW), the latter a complete misjudgment by the company of the strength of its own markets, in part because a collapse of the competition. We've also caught an upgrade of Nokia ( NOK), showing that cell phone demand could be improving. All of these changes are incredibly important: You can buy everything from Adobe ( ADBE) to Salesforce.com ( CRM) off of the great Oracle news, plus the Oracle dividend is a terrific sign of responsibility when it comes to shareholders. Even Microsoft ( MSFT) benefits!