The Morning Market

Today should be a very quiet day on Wall Street. Appropriately, Hormel Foods (HRL) announced strong earnings on increased turkey sales. Keeping with the subject of turkeys, Patterson (PDCO) reported earnings of 32 cents a share, only a penny more than last year. Recently I wrote about how Patterson’s long history of 15%-20% earnings growth has come to an end. The company has forecast earnings of 38 to 40 cents a share this quarter. Last year, Patterson earned 36 cents a share. That’s not a confident outlook so I’m still weary of Patterson’s stock.
The market has been up 14 of the last 18 days, and yesterday was another good day. The S&P 500 was up 0.51% and the Buy List was up 0.18%. Unfortunately, health care stocks were the laggards and that weighed us down. Nevertheless, November has been an outstanding month for us. For the month, we’re up 7.13% and the S&P 500 is 4.49%.
I’ve had a lot of questions about how often I update the Buy List. I’m going to update the Buy List in the middle of December, and I’ll start tracking the new list on January 1. I won’t make any changes for the entire year. The updated Buy List will be significantly similar to this year’s Buy List.
This morning, Placer Dome (PDG) rejected the buyout offer from Barrick Gold (ABX). Research in Motion (RIMM) lowered its subscriber forecast for the quarter. The company said that this revision isn’t related to its recent legal troubles.
The Federal Reserve released the minutes from its last meeting. Although the minutes didn’t signal a major change of policy, futures traders have started to alter their forecast. The market is convinced that two more rate increases are coming, one in December and another in January. But now the futures contracts indicate that there’s a 30% chance of a rate hike in March, down from 58% on Monday. The yield curve is basically flat after about six months. That means that investors are not being rewarded for taking any time risk. That’s the key driving force of capitalism. Lenders are soon going to wonder: “why go long?” Once Wall Street is convinced that the rate hikes are behind them, a major rally could get underway.

Posted by on November 23rd, 2005 at 9:57 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.