Wednesday, June 01, 2005

Market Update

Well, what's new today in the financial world? The Institute of Supply Management (ISM) index showed that while the manufacturing sector expanded in the latest month, growth has really slowed down. So, why did the stock market rally? Well, the sector's unexpected weakness gives the Federal Reserve more reason to slow down the monetary tightening.

If the Fed is really nearing the end of its tightening phase, then I am once again ready to pounce at a few select stocks in the financial sector. Maybe I'll start nibbling at Washington Mutual. Really not sure right now... will need to do some research. Also, I have a decision to make about one of my core holdings, Hibernia (HIB). They're being acquired by Capital One (COF), partly for cash and the rest in stock. I was big on HIB partly due to its sweet dividend. COF's dividend isn't so hot, so I'm trying to find reasons to exit.

eBay announced that they were buying (SHOP) for a hefty $620MM in cash. This is a full 20% premium over today's closing price. Again, not sure what to think of this. SHOP isn't profitable currently, and beyond that, I really don't know much about the company. As with most buyouts, the buyer's st will face near-term pressure. This might be my cue to exit the last leg of a very profitable EBAY trade.

Still short AMAT. Not too worried... yet.

Gaming is once again on the up and up. Harrah's (HET) closed above the $72 mark for the first time. And, all the other gaming stocks were up solidly today.

STU is also regaining its recent lost ground. It's been smoking in the last week or so. That company continues to generate some serious cashflow.

That's all for now.

No comments: