September 2011

Muddle Through is Over, The U.S. is in a Recession According to the ECRI (Video)

by Glenn Busch September 30, 2011
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We had some good manufacturing news this morning with a better than expected Chicago PMI. While recent data has been mixed, some bad and some not so bad, Lakshman Achuthan of the Economic Cycle Research Institute (ECRI) appeared on CNBC to say the U.S. economy is in a recession.

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Strong September Rebound for the Chicago PMI

by Glenn Busch September 30, 2011
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As I mentioned yesterday, the Chicago PMI is considered an advanced read on the national ISM. Usually the Chicago PMI is ahead of the national ISM by around 2 points and with a much stronger than expected reading today the national ISM should come in higher than its consensus estimate too.

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Writing Covered Calls on Microsoft

by Glenn Busch September 29, 2011
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Writing covered calls, if done correctly, can add extra income to an equity portfolio. It is a strategy we pursue in accounts with our enhanced dividend income portfolio. We buy high-quality stocks that we deem to be undervalued that pay a consistent dividend and show a propensity to grow this dividend too. One of the portfolio holdings is Microsoft (MSFT) and we recently sold some calls against this position.

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The Kansas City Fed Manufacturing Survey Improves in September

by Glenn Busch September 29, 2011
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This was the last regional manufacturing survey and when we look at all of them combined the national ISM is shaping up to be a weak report again. However, last month the regional surveys were much worse and we still had a positive ISM. Given slightly better regional surveys the national ISM will still show weak economic growth but will remain positive.

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Joel Greenblatt and his Magic Formula on CNBC (Video)

by Glenn Busch September 28, 2011
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Hedge fund manager, author, and creator of the Magic Formula and Formula Investing Index Funds, Joel Greenblatt, appeared on CNBC today to discuss his Magic Formula, buying companies that generate a high return on tangible capital but are also cheap relative to their cash flows, and which companies or sectors are making his magic formula screen.

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August Durable Goods Better Than Expected & Businesses are Spending

by Glenn Busch September 28, 2011
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The mixed economic reports, some good some bad, continue to roll in with today’s better than expected August Durable Goods Report. It was in August that Europe began to get much worse and the global economy noticeably rolled over, yet U.S. businesses increased their capital spending, a good sign, and durable good orders were down only slightly.

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Merger Arbitrage: CoStar Group (CSGP) & LoopNet (LOOP)

by Glenn Busch September 27, 2011
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Back on April 27 of this year through a definitive agreement, CoStar Group (CSGP) and LoopNet (LOOP) announced their intention to merge. It is a cash + stock transaction with a deal spread that offers good absolute and annualized returns.

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Texas Manufacturing Increases for September

by Glenn Busch September 26, 2011
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Texas factory activity increased in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 1.1 to 5.9, suggesting growth picked up this month after stalling in August.

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Housing Supply Decreases in August

by Glenn Busch September 26, 2011
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The lasting issue with the housing slump and probably one of the largest factors to its rebound is the supply of homes. As long as there is too much supply, home prices will remain depressed and home construction will be very low. At the current sales rate, the Census Bureau estimates months of supply at 6.6 months.

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Below Average Economic Growth According to Chicago Fed National Activity Index

by Glenn Busch September 26, 2011
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While the August number by itself is weak, the key thing to look at in this report is the 3-month moving average. A zero value for the 3-month moving average equals an economy growing at or near its average rate. Numbers above zero indicate an economy growing above trend and numbers below Zero indicate an economy growing below trend.

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