Thursday, August 7, 2008

Psychology of the Week's Remaining Economic and Earnings data

Thursday, August 7th brings Initial Claims for Unemployment for the week ending 8/02 at 8:30 ET. http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/claims.htm
Last week's revelation of over 40K workers added to the unemployment lines was unwelcome. The number came in at 448K on a running monthly basis, just plain ugly. Please refer to our Saturday piece "Positives and Negatives at Equilibrium" for more commentary. POTC does not see any quick relief in sight, except for the infrastructure plan we've been clamoring for in the last several weeks. Since lowering interest rates would equate to an economic 'suicide solution', only the Keynesian argument, embraced by ex-Pres candidate Huckabee, has merit. http://en.wikipedia.org/wiki/Keynesian_economics
Would many be opposed to a government stimulus package focused on building out U.S. infrastructure, better and newer bridges, roads, waste and water plants? That makes better sense to POTC than sending out $600 or $1,000 checks, agree? Before market earnings from: Corrections Corporation of America (CXW) Q2 2008, estimate for $.29 POTC feels these shares make sense in an environment with 5 year high unemployment: http://www.correctionscorp.com/about/
After market earnings from: Deckers Outdoor Corp. (DECK) Q2 2008, estimate for $.23, World Fuel Services Inc. (INT) Q2 2008, estimates for $.49
Friday, August 8th brings no market moving economic data. Before market earnings from: DrilQip Inc. (DRQ) Q2 2008, estimate for $67, Mirant Corp. (MIR) Q2 2008, estimate for $.54, OYO Geospace Corp. (OYOG) Q3 2008, estimate for $.54. We recommend buying shares of DRQ and OYOG on pullbacks, as the Obama drilling sentiment could grow legs when the House and Senate birds return from their migration patterns. DRQ and OYOG are just two companies positioned to benefit from drilling, so counting out the all important fossil fuels is not recommended on this Island. The Psychology of the Call team.

3 comments:

StockWatcher said...

Re: CXW, about 15% of their revenue comes from the illegal aliens detained. Considering both Obama and McCain might pave a path towards legalizing them, CXW might see a reduction in revenue.. However, as you point out, with a high unemployment rate and with the govt unlikely to spend more on building new prisons, they could benefit.
The Quarterly results just announced lower guidance for FY08 EPS.

Anonymous said...

Infrastructure build out is where it's at, agreed. Both candidates are scary, but Obama is completely wet behind the ars, McCain 10 years too old.

The Call Team said...

Great point regarding the illegal aliens stockwatcher. At this moment though, the unemployment rate rising trumps political promises, as neither party has a magic wand. We only highlighted CXW because it had earnings scheduled, and therefore added some commentary. We don't hold any shares, but do feel it is a pretty safe place to hide in a suspect market. Just throw it in your defensive folder along with MO, and as tobacco is stomped out, is it possible some of that institutional money finds CXW?
Thanks again stockwatcher ..