Friday, October 26, 2012

Update ...

It is currently 12:16 AM (PT) on Friday morning and we thought to provide an update.  Overall, the equity market has dropped approx. 3.3% since the last time we posted (10/17/12).  Economic data has been very mixed as it appears that some of the latest housing data hasn't been indicating a robust recovery, as many were hoping. 
In addition, some widely followed companies have reported disappointing September quarter earnings.  Facebook (FB) was not one of them as it beat both on the top and bottom line.  It shot up 18%+ the day after earnings, closing at $23.23.  On Thursday, it gave some of it back and ended the day at $22.56.  We still value FB at $23/sh, as we have all along since the Company's much hyped IPO.
Although some big names such as AAPL and AMZN reported disappointing earnings on Thursday, it appears that much of the disappointments had been priced in.  Whether those companies will keep declining as they have since late Sept. and early Oct., remains to be seen.  We actually think that some of Friday's macro data would either put those stocks' downward trend into a higher gear, or they would help ease it a bit.  The Q3 annualized real GDP growth is one such economic data.  The Street is expecting 1.9%, while we're projecting only 1.5%, as mentioned on 10/9/12.  If the GDP print is better than expected, we'd probably see some short covering in those names and others. 
Lastly, the University of Michigan's consumer sentiment survey for October is also due out on Friday.  Economists have estimated no change in that index.  We note that we will also be cheering on the University of Michigan's football team on Saturday as they play Nebraska.

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