Best Quarter Ever
Research for Online Investors

by John Dalt

7/14/10

Intel Corp. (INTC) reported after the market close yesterday.  INTC CEO Paul Otellini called it their "best quarter ever."  The company earned $2.9 billion, or $0.51 per share.  Revenue rose 34% to 10.8 billion.  Retail sales data this morning showed slower consumer spending.

Retail sales dropped 0.5% in June, for the second straight month according to the U.S. Commerce Department.  Retail spending fell 1.1% in May.  Auto sales were soft for the month, as core retail sales (excluding autos) were only down 0.1%.  This number met investor’s expectations.  The market projected auto sale dollars better than these numbers.

The market was even when the Federal Open Market Committee (FOMC) minutes were released after lunch today.  The market was a loser the rest of the day, pulling back for a mixed close in the last three minutes.  The minutes showed the Fed expected the economy to grow at a slower rate.  The governors discussed the necessity of any new stimulus to keep the recovery alive.  Half of the Fed officials saw “risks to growth as having moved to the downside.”

Fed officials reduced their prediction of economic growth by 0.2% to a range of 3% to 3.5% this year.  The Fed believes the unemployment rate will stay at 9.5% the rest of the year, with a best case scenario of 9.2%.

The new United Auto Workers (UAW) President Bob King is picketing Toyota dealerships.  He is also protesting the closing of the Fremont, California plant that Toyota operated with General Motors.  This is the plant we mentioned in Tesla IPO on June 29.  Tesla (TSLA) bought GM’s share of the plant and are planning to build their new sedan there.

The UAW president says "We have made a decision at the UAW that to do the best job taking care of our membership we've got to be out there in the streets fighting for social and economic justice,"  King held a joint news conference with Jesse Jackson.  King says his “social and economic justice campaign” will begin with a march in Detroit on August 28.

Some would say that Detroit has had about all the "social and economic justice" they can stand.  The city is tearing down whole neighborhoods to remove the blight.

Your editor saw a headline that Jim Cramer of “Mad Money” on CNBC proclaimed “I think we’ve seen the lows for the year…and I’m a buyer, particularly if we get any pullback of 3% to 5%.”  I don’t want to pick a fight with Cramer, but he is a slight bit more optimistic than the markets seem to be.  We wrote to our Buy, Sell, Hold subscribers last night, “We expect a harsh pullback between now and Labor Day.  The longer and higher the market goes on this rally may determine the swiftness and severity of any selloff. Holding at these higher levels for a period of time will encourage investors to jump back into the market at 1010 because they won’t want to miss the low prices available.”

We do not believe now is the time to be brave.  The market is overbought and pushing against resistance.  Earnings have been good so far, but a bad report or economic news from overseas could derail this rally quickly.

To the mailbag:
ERROR, Deepwater Horizon accident was in 5000 ft. of water.  Your article indicated less than 1000 ft.---paid up subscriber D.E.

John’s reply:  You are correct, cognitive slip, I dropped a zero.  Thanks, I have reported here and corrected in our website archives.

My long time friend, Dick Powers, is the plaintiff's attorney suing the government to remove its moratorium. He won once before Judge Feldman, and, I suspect, he'll keep on winning .---subscriber J.R.

John’s reply:  Dick Powers was not mentioned in any of the resource articles, but I am sure there are a gaggle of attorneys involved.  We have now acknowledged him, wish him luck.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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