June 2011

Chicago PMI Rebounds in June

by Glenn Busch June 30, 2011
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The countdown to the national ISM is over. The last two remaining regional business activity surveys, the Kansas City Fed’s and the Chicago PMI, were released today. Both showed a rebound in business activity.

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When Good News Hits a Fallen Angel

by Glenn Busch June 29, 2011
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For months, the possibility of government regulation capping interchange fees at $0.12 per transaction have weighed on the stock. Then today it is announced that the interchange fee will be capped at $0.21, much higher than people were expecting and Visa took off.

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Why Own Microsoft?

by Glenn Busch June 29, 2011
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Why would anyone want to own Microsoft (MSFT)? They’re lagging behind Google and Apple in the smartphone category. They’ve made poor capital allocation decisions like paying $8.5 billion for Skypeand Microsoft’s stock has gone nowhere for the last couple of years.Yet, big name value investors like David Einhorn of Greenlight Capital, are making Microsoft a big position in their portfolios.

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Countdown to the ISM: Richmond Fed Business Activity Survey

by Glenn Busch June 29, 2011
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Will the ISM print above or below 50 this Friday? We’re one more regional survey closer to this Friday’s report. The Federal Reserve Bank of Richmond released their business activity index yesterday and it still shows expansion.

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Housing Sector Still Slowly Improving

by Glenn Busch June 29, 2011
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The National Association of Realtors (NAR) released their Pending Home Sales Report for the month of May this morning. While not as influential as the other housing reports, the pending home sales release has some good news for the housing sector.

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Governments Becoming Portfolio Managers

by Glenn Busch June 28, 2011
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Governments are becoming more than regulators and supervisors of the markets; they are becoming portfolio managers, active players in the capital markets. Mohamed El-Erian of PIMCO breaks down the three phases governments have gone through in beomcing portfolio managers since the failure of Lehman.

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Calculating Returns in a Merger Arbitrage Trade

by Glenn Busch June 27, 2011
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In the previous post of this series I discussed the sources of event risk associated with merger arbitrage. In this post I will focus on the returns associated with merger arbitrage, more specifically how to calculate returns, gross and annualized, for each of the three deal structures.

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ISM Countdown: Federal Reserve Bank of Dallas’ Regional Manufacturing Report

by Glenn Busch June 27, 2011
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This Friday is the national ISM report and the question is will it stay above 50 or will it drop below 50 for the first time since 2009? We still have several regional manufacturing reports and the Chicago PMI to get a better picture of the upcoming ISM. The Federal Reserve Bank of Dallas released their report this morning.

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Leaders in Investing Summit: Value in the Defense Sector

by Glenn Busch June 24, 2011
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A fallen angel is a company with a strong business model that generates high return on capital and has fallen in price. It is buying a great business at fair price. One sector where we’ve been finding fallen angels is in the defense sector and we’ve picked up a few names so far.

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Chicago Fed: Below Average Economic Growth

by Glenn Busch June 23, 2011
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Another economic report showing an industrial slow-down but not another recession. A zero value for the 3 month moving average Chicago Fed National Activity Index (CFNAI-MA3) means the eocnomy is expanding and a positive number means above-average growth. A negative number does not mean an economic contraction, it means below-average growth.

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