Fox Happy Hour Cody's Big 3: Big Oil, Illuminati, Sex/City

still more sloppy macro with decent miss from ny fed. in past 2 years, the bad macro would have caused short term hiccups in shares. not now. not in monetization bubble. sentiment turning bullish and new buy screen is light. so these should offset any positive spin from cliff negotiations. its just stupid to see talking heads salvaiting over one small concession to a lengthy process. see nhl negotiations for that. lots of progress made on most issues there, but still no hockey. there will be no grand bargain this year. we will go over cliff unless we kick the can with a "low progress, temporary deal" which i consider creaating more uncertainty than solution. the million dollar question is how investors will take a bad deal or no deal...

so i pose the question: what happens to stocks if we get a bad, small progress, temporary deal that kicks the issues down the road for anohter 6 or 12 months?

@Bob: my guess would be a relief rally that is short-lived. Maybe one week market bounce. But would prob depend on what details got cemented and what got kicked down the road.

stopped out of big chunk of short hedges at breakevenish. watch out below! added another new long starter position in the ems space. stock was down a lot from high, very cheap, and pays a real dividend. which is rare in the space. also, they have decent exposure to apple biz and should have double digit revenue growth in calendar 13.

new buy screen is down to around 150 names which is slightly negative. under 100 is sell negative. NAAIM sentiment level is also approaching reduce equity levels. but the II sentiment indicator is still neutral. with positive seasonality and investors ignoring all negative news, i am more neutrally positioned.

bulls win.

@robert: what is ems space? Thanks

electronics manufacturing services, ie the contract manufacturers

now is the time to focus on what one owns as much as how much one owns. defensive, large cap names should lag the rally, and risk on MITE should outperform. consumer discretionary should also be good. cyclicals better than staples, including technology. in the seasonal trade, the rut outperforms the spy.

@robert: Thanks, Bob, I think I found your company. The one I found is paying a 1.8% divvy right now, does that sound like yours?

sounds right.

if the china plays come back into vogue, my favorite tire and wheel company should get some action. it has a large mining and construction bsiness in addition to the ag exposure. that trade is still open.

even my pigment stock is getting a strong dead cat bounce and now profitable. thats the way my process should work. big trades when they work like gmcr, and pushes like pigments when they dont. thats the reason i have been banging out some new long positions in the past few weeks. the process seems to have found itself back in favor.

little known pooch. on monday, general electric held an analyst gathering and reduced both sales and profit estimates for the 4th quarter. it received little attention from the media, but the stock isnt taking the news very well. just something for the bulls to note.

@Bob: earnings will be down in the next 2 quarters. It's almost a given.

@Jay: FDX is betting on weaker first half of 2013 and stronger second half. Plus lower fuel cost.

fdx also has a large cost reduction plan in place ex fuel. with margin expansion built into targets, it can hold eps goals despite slower economic activity

jeff, any concerns yet about the cliff resolution?

alanlevit, can you spell out Bob's co. please? Thx

@Bob: There is a new theme for 2013 that stocks can return double digit next year not due to earning growth but by multiple expansion. As the uncertainties around fiscal cliff, the Euro and China growth are abating, stocks deserve higher multiple even with flat earnings. Any comments?

sonny, if the feds put a stinky deal together to avert cliff and the fed pumps another trillion in liquidity into the system, stocks could rally into the spring. multiples are low relative to bonds and free cash flow is strong. business aint great, but profits are great b/c companies not investing and hiring. so its the old, no where to go but stocks game that bubbles bernak is looking for.

imho, that assumes a lot of things go right. like record corporate profits hold up. no recession. no cliff dive. no oil spike. etc

@robert: On the fiscal cliff, I have not seen anything to change what I wrote in my regular weekly article https://wallstreetallstars.com/indicator-update-time-for-some-clarity/

The biggest immediate concern is the various tax changes from the Bush era, the capital gain, dividends, the AMT, and the doc fix. All of these will disrupt tax planning and have an immediate economic effect.

@jjss: I thought Bob's company was JBL, but Jay said that didn't fit, because they are going to have double digit revenue in 2013. I bought a very small position yesterday and I'm going to hold it through earnings tonight. If I didn't have any right now, I wouldn't buy any until they report. Current price is around 18.5. They were as high as 24 in Sept; and 27 in March. Est. earnings for FY 2013 (Aug) is 2.55; Est. for 2014 is 2.92. Stock is very cheap, tonight we'll find out much of that cheapness is deserved.

@sonny: from your pixels to G*d's ears

Getting something constructive on deficit reduction would be a big help, and it seems close based upon the proposals we have seen. The market is reacting to the public posturing, which does not mean much. Please note that some who say that we will "go over the cliff" are referring to the deficit issues, not the tax issues. I also note that Stan Collendar still sees a 75% chance of cliff diving. While he does not cite any "inside" sources, he has a lot of experience on the Hill. My experience relates more to studying many decisions like this. I have been pretty accurate on predicting political outcomes.

@jeffmiller: It seems to me like the media is making a big deal about a deal before 1/1/13. It also seems to be that a deal in the first week (or two) of January would be fine. Personally, I think it's more likely to be early in January, since pledge signers will be voting for tax decreases in January, when the same tax levels would be tax increases in December. Any comments?

Jeff, do you agree with Jim Bianco? was just on CNBC...

nice work on JBL, Bob!

thanks. good quarter with the rarest of birds, decent revenue growth!

jbl revenue growth was 7.2%, but that was negatively impacted by their "high velocity" division, which they are running down on purpose for margin reasons. the businesses that represent the future are growing strong double digit. and it was more than i expected which pulled down revenue numbers

@alanlevit: On a substantive basis, an early vote by the new Congress would not be that much different. Obama has the power to delay changes in withholding, for example. On a psychological basis, many would fear the worst. Many have renounced the pledge, but who knows if it is enough? This is something that should pass with moderate votes from both parties.

@Mitchm: Bianco has been an excellent contra-indicator for at least the last eighteen months. He very creatively comes up with ideas for how bad things can be that no one else has thought of. This is typical of "bond guys." Those of us who have a variety of programs -- both long and short, stocks, bonds ETFs, are more flexible in the outlook.

@robert: So JBL was the right guess after all! I wish I'd had more than a token starter position, but I will be adding more tomorrow, hopefully around 19!

@Bob: Great call on JBL. I used to work with them when I was at Cisco.

@robert: 19 is begging to look like a pipe dream this morning. Where do you intend to add to your starter position in the ems company (or, perhaps, where did you add to it)?

I'm reading through the Jabil conference call (CC) right now. To back up what Robert wrote yesterday evening note this from the call "By the end of the year based on growth rates, we should see Diversified Manufacturing Services become 50% of our business". Currenty, DMS is 47% of the business and it yields 6% margins. The other two segments yield about 3% margins. By changing the mix to favor DMS, the CEO expects overall margins to grow from the current 4.1% to "the mid 4's". Bob, I'd very much appreciate it if I've got this wrong.

alan, you got it. that unit is the crown jewel. and it has ability to grow into 2/3 of company over time with decent revenue growth. i met with them last year and the value proposition to all types of manufacturers is is powerful. they reduce costs 20-30% and make an acceptable profit as well. many more products will be outsourced over time in auto, aero, machinery, and instruments.

btw, nyx on the buy screen yesterday. i passed. cant get em all.

alan, my basis is $17.50. i have not bought stock up here yet. stock may have another couple points, but i am hoping still for a cliff mess dip

@robert:

@robert: Stock is approaching 200 MVA of 20.7 today. If it gets there I'm going to have to sell at least part of my position back. It's IRA money so I can trade around as I wish. I wish I had this problem with all my stocks. Thanks much for the tip.

@robert: On the cliff mess, it will be very interesting to see market reaction if there is no resolution by Jan. 1. I'm beginning to think there will no be a sell off immediately as the market waits to see if these guys do something early in January. You and I aren't the only one waiting for a sell off to buy more.

@robert: I've noticed that CNBC has mentioned KMX a few times, but not much on JBL. I'm hoping this continues, or I may have to turn the sound on

they dont like tech so they ignore it. btw, check out the hdd stocks. bubblevision ignoring them, yet slamming the worst tech stock ever on regular basis.

so the knuckleheads at the fed picked a 3.1% gdp quarter to give birth to QEi. what a bunch of clueless bozos. now i know they say its all about employment. so tell me again how buying trillions of bonds creates economically justified employment positions? tell me ben! TELL ME!

Bob, about capture the 200 day: http://scharts.co/TawALK

mitch, clearly there is some upside for my fav tire and wheel stock. the stock overshot to the downside on valuation. if they deliver my 2013 est, stock could be 30-50% higher at still low valuations. ag and mining should thrive in 13, ag on record-ish farm income and mining on china recovery. its one of my best names down here at the low end of range.

Merry Christmas Bob! Btw, thoughts on soft cyclical's ?

buy screen down to 140 names, slight negative. sentiment yesterday from II still neutral. so rally not turning newsletter writers ragingly bullish. still hard to call next 5% move b/c we have risk from cliff but also decent momentum. i am not buying anything close to highs but buying starter positions in lagging stocks that are down and cheap.

still can add those at low end of range. i am avoiding those with too much air underneath price on chart

Sentiment getting a little complacent here. Could set us up for another pullback. If not near-term, I'd be cautious when the calendar flips. Go back and look at what happened after 12/31/07.

@jordan: agreed, feeling like some cash should be raised...

kim, my sales would be the more expensive, defensive names that were holding up from yield or stability. then when the next dip comes, add to the risk on names.

@robert: that's what i'm looking at, my PEP and GIS-type names...agree?

@Bob: Take a look at AMAT, Cyclical low, cheap, plenty of cash, good dividend. I heard they got more orders coming.

@sonny: I hope so, we're long AMAT from 12.50...

kim, yes. they have lower beta, but less upside in seasonal rally period.

investors finally getting the cliff issues? is dougie's boca bif whiffing at the cliff tiff?

top is often in when everybody buys because the have to, no because they want to. we saw some of that lately from bernanks financial repression

@robert: JBL giving up a lot today. I'm thinking about buying more. Where would you buy again?

@Bob: Any time your screen comes back with anything below 150, we are at a short-term high. That's a good indicator

Robert, what's your game plan for your April calls on TWI (If I'm recalling correctly; no pun intended)?

sonny, that has been true in the past. i have seen it as low as 60-70, but low 100s has been a poor time to add general market exposure

alan, back around $18 and change would be good, as i wrote ia ma hoping for a cliff dive from the cliff tiff.

jj, i am holding the twi with a basis in the high teens. no calls. never buy calls. the stock or nothing

if jeff is right and we get a deal, and the recovery is now 4th inning, remember last fall was 3rd inning, i might not get tha opportunity.

@robert: Despite the hand-wringing, the odds did not change much based on last night. We now know for sure that 30 GOP House members will not vote for any tax increase. We should have known that already. We also know that many Dems will not vote for changes to Social Security benefits -- things like chained CPI. Several have called this provision (offered by Obama) almost a deal breaker by itself.

seems like a stalemate to me jeff. i was expecting a stinky deal in mid january.

There is a compromise that would attract a majority from both parties in the House. We'll soon know

The compromise will not have as much deficit reduction as you would like, but it will avoid the immediate hit to the economy.

Meanwhile, Bob has recently provided a list of "instant winners" some of which are a little more buyable today.

Or at least they were. The "bob list" is showing good relative strength late in the day.

Plan B Jeff? LOL

someone to give us the "bob list" please as a Christmas present (many words in the chat)

jeff, thanks. oversold deep value has been bouncing last few months. that leads me to respect the risk-on aspect of the seasonal trade. dont expect these things to kill it in a down market, but in a small rally then can work big.

@Mitchm: Yes, Plan Bob is working a lot better than Boehner's method!