WASHINGTON, March 8, 2013 – Wall Street is continuing its nearly unabated party this morning. All the averages are up, with the Dow up about 35 points as of 10:30 a.m. EST, after briefly blowing through its previous record high of 14,400. Today’s reason—as if this market really needs a reason—is that the official unemployment number is down and job creation is up.
According to Investors Business Daily, “Nonfarm payrolls ballooned in February, adding 236,000 jobs, according to Department of Labor estimates. That was a 50% increase over January’s unrevised number, 98% above the downwardly revised figure and 31% higher than the 180,000 new jobs forecast by analysts.”
Therein lies a problem for us. IBD accurately notes that the jobs number was a 50% increase over last month’s unrevised number. But the media and the Administration will be touting their phony 98% number, since the previous week’s estimates are almost always revised down before the current figures are reported. That’s why things are always reported to be improving, while in the real world, we’ve been in effective stasis for over five years.
Ah, but who cares? Details, details. QE’s 24/7 money printing routine is in full swing, so let’s kick those averages up another notch. As Yogi Berra says, “It ain’t over ‘til it’s over.” Otherwise, aside from the Marxist mourn-fest for Venezuela’s no-longer dictator, Hugo Chavéz today, things seem to be relatively quiet today.
Of course, going into the weekend, these could be Famous Last Words, as thug-ocracies like Iran and North Korea are moving ahead plotting murderous mischief 24/7. Some of these efforts could eventually succeed driving oil and much-beleaguered gold bullion into the stratosphere. But we’ll snug up our portfolios here and there and try to adjourn early for the weekend. Meanwhile, our current specifics follow.
Trading today’s market
On other fronts, DC area company U.S. Silica Holdings (SLCA), headquartered in Frederick, Maryland, is spiking higher this morning, adding to its two-week long tear after it reported a 9 cent-per-share earnings beat on February 26. Although we were, unfortunately, out of the stock at the time, we’d be looking to get back in on any decent pullback. That’s because SLCA is one of the top miners of the specific variety of sand required for fracking operations. So it’s not exactly a surprise that this stock has finally gained some traction, given the explosion of unconventional drilling that suddenly finds the U.S. on the brink of energy independence if only this Administration would get out of the way. We’ll look to get back in on any decent pullback.
We were up nearly 30% at one point yesterday in our small holding of Artisan Partners Management’s (APAM) IPO and flat on the secondary—the second one in six months—of KAR Auction Services (KAR). Having to play by Schwab rules, we can’t in good conscience get out of these two for 31 calendar days after purchase, so we’re watching today as flippers pare back APAM’s price by a buck or so—not bad for an IPO on the second day. So we’ll cross our fingers and hope the vultures don’t keep whittling for another 30 days, leaving at least some of yesterday’s kill for us to consume.
Actually, grisly metaphor aside, this stock may end up performing rather well in spite of the leverage buried in its balance sheet. If so, we may end up holding it for a good bit, as has been the case with other IPOs and secondaries this year.
Meanwhile, KAR’s latest secondary, after a tepid open yesterday, which we sort of expected, has steadied and is slightly up. This stock has actually shown some legs, so we may hang on here for longer than we’d planned.
We picked up a bit of bond insurer Radian (RDN) yesterday, since it pulled back from its post-secondary issue jump. Due to bad timing, we hadn’t jumped in on the secondary they offered a couple of weeks ago, but yesterday looked to be a good time to scale back in during the stock’s half-decent pullback. If it weakens further, we may scale in a little more. As we mentioned yesterday, via bonds, we’re about at our limit for speculative investments in the bond insurance area. But if any health whatever returns to this sector, future gains could be great.
Otherwise, we’re holding those boring MLPs and REITs, or scaling back in to the ones we left two or three weeks ago when they began to correct a bit. Fact is, we don’t want to miss the next round of fat dividends. Ditto utilities, which seem to be getting a bit healthier now. We did pull out of American Water Works (AWK), however, when the charts started to frown on us earlier this week.
That’s really it for now. Our snowstorm in DC proved to be another busted hype-fest by the weather dudes, and the weekend is starting to look fine. So our inclination is to enjoy it, as you should too. See you Monday.
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