LiveRocket Week 3 overview - Down 1.7%

Some interesting developments worth a few comments.

OIL I was very focused on why Saudi Arabia was letting oil slide to $50. I gave a few possibilities:

* Undermines Iranian government

* A means of achieving discipline from other OPEC members that cheat on production cuts

* helping out the US economy

It turns out that is was to drive discipline. Cheating has been rampant, as expected. Several countries recently re-committed to the cuts starting with Venezuela.

As if to emphasize the message that oil prices don't affect investment in oil equipment/service companies, SLB reported fantastic earnings: up 71% and 305 higher than analysts expected.

Oh yeah, there is a lot of money being made here.

Oil equipment stocks are growing faster than high tech stocks, driving higher cash flow, and with dramatically lower P/Es.

BERNANKE AND INTEREST RATES
Ben expressed concern about the Federal Budget, specifically Medicare and Social Security. He focused on Medicare because Social Security is more of a political headache (it funds the deficit and reduces the true size of the Federal deficit, SS is also a key focus for the elderly and for the lower income earners). Driving down Medicare costs affects only companies - a lesser political headache.
This is not real news - everyone knows this. Hilary & Bill Clinton tried to tackle it starting in 1992. So why is Ben talking about it now?
1. He's neutral: as a non-politician he loses nothing to highlight the problem
2. He can play CYA: Ben will be around for a while, so he needs to be able to cover his ass and say: I told you so.
3. Deficits reduce flexibility to lower interest rates

The key here is interest rates. Ben needs to prepare for an economic slowdown and the weapon of choice is interest rates. Inflation is an important factor in determining when interest rates can be moved and by how much (FWIW inflation is mild). But the Fed is now competing in a global economy that can invest in other financial instruments like the Euro and the Yen.
The Bank of England raised rates and so did the Bank of Japan. That pressures US rates up, not down, to stay competitive.
Meanwhile, a bigger deficit is funded by more IOUs (aka Treasury Bills). If the Fed has to flood the market with T-bills, it has to offer competitive interest rates. Again - that pressures rates up.
I take away a few thoughts from this:
1. The Fed wants to lower rates but is not able to do it yet
2. Generic drug companies are sitting in a good place, big pharma is not

STOPPED OUT
We were stopped out of TRID, UCTT and CSH.


I like UCTT and will explore re-investing. It fell almost 15% this week, taking $1000+ of profit with them.


I had reservations when I got into CSH because of my fears that a housing construction slowdown would affect their payday loan business. We lost 8% on this and, frankly, I am debating re-entering.


TRID is killing me. We lost 20% or $1400. I personally bought back in today (1000 shares) because I am loving a $17 price for this company. I am waiting for LR to get in below $17 so that I can average up a little bit. Sadly, TRID pre-announced that - while they are releasing financials next week - they still can't disclose the earnings due to the options.


I find this unbelievable - this is not a large employee company like Apple. Three quarters in a row with no earnings clarity.





These 3 companies together accounted for our losses this week.





WEEK IN REVIEW


The Dow and S&P were flat but the NASDAQ fell 2.1%. Compared with last week when the NASDAQ was up higher than the DOW by the same amount. The main reason is Apple (AAPL). AAPL is down 8% for the week after rising 15% last week. Many others failed poorly: INTC -5%, CSCO down 8%, GOOG down 3%.



In our portfolio, the major movers were:
ENERGY

ATW - Up 3%
CLB- Up 2%
ESV - Up 5%
MDR - Up 5%

HEALTHCARE
DIGE - Up ~5%
HOLX - Up 6%
IMA - Down 4%

OTHER
NUAN - Down 5%

I feel pretty good. Most stocks headed up strong (especially when the market was pretty weak this week).