Buffett Bails on Bank of America
Pent up frustration over personal austerity gushed over during the holidays and resulted in strong sales numbers. It should be no big surprise that retail sales came in kind of weak for January. A little pullback in January was to be expected.
Also, don’t ignore the fact that gift card sales get counted when they are sold, not redeemed. I would also point out that many retailers are in the verge of hiking prices. Ralph Lauren (NYSE:RL), Levi’s, Steve Madden (Nasdaq:SHOO), and JC Penney (NYSE:JCP) have indicated that they will raise prices soon.
And one would think that these companies expect they will have no problem passing on higher prices into an environment of stable demand.
The one thing that kills me is when analysts blame the weak retail numbers on the weather. Like Russell Price, a senior economist at Ameriprise Financial, who told Bloomberg that “[t]he weather kept people shoveling snow rather than heading to the mall…”
I mean, the retail sales number for January compares this year’s sales growth to last January’s sales. Didn’t it snow last January? Comparing January sales from year to year includes weather, every year. It’s an apples to apples comparison. I don’t know why economists try to make it an apple to oranges comparison. But that’s what economists do.
*****England is getting an inflation shock today, as consumer prices are on pace for 4% annualized gain. Throw in housing costs and it’s 5%. But England has already said that it’s not raising interest rates right now.
The Consumer Price Index (CPI) for the U.S. due out on Thursday and expectations are for a 0.3% rise. But given the advance in gas and food prices, I’d expect this number to come in hotter. But of course, we don’t have to worry about housing prices boosting inflation numbers.
*****It’s been reported that Warren Buffett sold out of his Bank of America (NYSE:BAC) stock in December of 2010. BofA traded between $11.50 and $13.50 in December. It’s currently trading just below $15 a share.
Some of Berkshire Hathaway’s stake was bought in 2007. Even with the sweetheart deals Buffett orchestrated during the financial crisis, he lost money on this one.
It just goes to show you that even the best lose money sometimes.
We’ll see how Buffett does on Wells Fargo (NYSE:WFC), which he has been adding to.
*****We haven’t checked in with trading strategist Jason Cimpl of TradeMaster Daily Stock Alerts in a few days. Here’s what he’s telling his traders this morning:
I am not a bear, not even close, but I know how quickly gains can evaporate in this difficult rally…I recommended selling our all star position ALJ. You should be able to exit above $10 and take 50% from this trade off the table.
That is the second 50% gain in as many weeks - and I hope many of you put that reward towards your valentine.
There is some big economic news coming up this week. But I am reluctant to go into it because quite honestly, the market doesn't care about it. I will say this much, 70% of reported companies last quarter beat analyst estimates. Many of those beats were also from higher than expected sales. Top line growth has been a missing component to the rally, but last quarter we encountered better revenue growth.
But many companies also decreased forward estimates to account for higher costs in production because of increased energy and basic material prices. That sounds like inflation to me. And remember Ben Bernanke says we do not have inflation. This week's CPI and PPI numbers may tell a far different story. Be careful over the next two days, the dollar wants to make a big move and the inflation data could give it the juice it desperately needs. Of course, a strong move for the dollar would have equally drastic consequences for commodities.
Jason has put up some phenomenal profit numbers since this rally kicked off in late August. His TradeMaster Daily Stock Alerts members have banked two +50% gainers in the last two weeks. 15 of his last 20 positions have been winners. And his religious use of trailing stops to protect his readers’ money has kept losses to a maximum of 5%.
Jason just added a new position yesterday that may have a minimum of 25% coming in the short-term. You can get more info HERE.
