The Best of Kass
Among his posts this week, Kass discussed how one analyst's Google coverage missed the mark, what the latest data say about the U.S. economy and which coal stocks he's bullish on.
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Pimping on Wall Street
Originally published on Friday, April 13 at 8:33 a.m. EDT.
As an example, this morning Credit Suisse's Google(GOOG) analyst writes that Google's proposal for new Class C nonvoting shares, via a stock distribution, "is designed to sustain the voting control of its Founders. ... Given that we like management's strategy and long-term approach, we are not alarmed by the structure."
Google's move is another example of horrible governance procedures. Although Google is independent, it is a lot less independent that most companies.
At the time of publication, Kass had no shares in securities mentioned.
The Pause That Refreshes
Originally published on Thursday, April 12 at 9:31 a.m. EDT.
This morning's economic data were on the soft side but not so weak as to unhinge the U.S. stock market.
A market pause remains a healthy event and is providing me with an opportunity to selectively add long exposure.
Overall, the economic data signify a modest slowdown in the jobs expansion and a slight increase in pipeline inflation.
Initial jobless claims came in at 380,000 compared to expectations of 355,000 and to 367,000 the week earlier. This is the highest print since late January but still consistent with healthy monthly payroll growth of close to 200,000. There is some talk that there were issues with seasonal adjustments again. We should look for 150,000-175,000 jobs growth in April and May as some weather payback occurs.
From that point, I would expect monthly payroll growth to approach 200,000 (which would be consistent with +2.25% to +2.50% real GDP growth).
Core PPI was 0.1% above expectations and a like amount above February's print. Core intermediate PPI signals some increase in pipeline inflation, but given the still-wide manufacturing output gap and still-elevated unemployment rate, inflation is expected to remain benign.
Finally, the March trade deficit was about $5 billion below expectations and under February's release. This could modestly raise first-quarter 2012 real GDP forecasts to close to 2.8%-2.9%.