MY next-door neighbor has a grandfather clock, which has been in the family for 80 years and always gives the correct time. But yesterday, it stopped and nobody could make it start. Left with no choice, he picked up the six-foot-tall clock and staggered down the road with it to a repair shop. Of course, he could not see where he was going, and as he turned the corner he collided with another man and knocked him down flat on his back. The man dusted himself and shouted angrily, "Why can't you wear a watch like everybody else?"
My boss has an aquarium in his reception area, which is going to Pisces. Somebody broke in and stole all his tuna. One person could not have done it so it must have been an alliance. Eventually, the police found them stuffed inside the piano so the prime suspect is the piano tuna.
An American pastor has been found guilty of unusual sexual practices involving pastorized milk.
A dog goes into a hardware shop and asks for a job. The owner says, "We don't hire dogs. Why don't you join a circus?" The dog replied, "What would the circus want with a plumber?"
The angels came to God after he had finished the creation and asked why he favored the Jews. "You have given them a land of milk and honey, olives, dates and fruit of all kinds. They have Nobel Prize winners, artists and scientists. They are prominent in the film industry, banking and world politics." God responded, "You are quite right, but wait until you see the neighbors I gave them."
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As was widely expected, the Republicans lost control of the House of Representatives but even worse they lost the Senate as well. So, President Bush is a dead duck and the results are driving him quackers. Actually, most voters are happy with the result because the President's powers are clipped.
He cannot pass any bills unacceptable to the Democrats and they can't do so either because the President will exercise his right to veto. So for the next two years, there will be gridlock.
This does not affect the Federal Reserve, which is always nonpolitical, so Chairman Ben Bernanke is free to pursue whatever path he considers best. There could still be another rate hike because inflation in running at 2.4 percent, above his target of 1.5-2.0 percent.
Still, it is only a little above target, and with the economy slowing, inflation might be moderate. Around the middle of next year, Bernanke should start to reduce rates. Then, we will see a weaker dollar and a stronger gold price, as these two move in opposite directions.
China has indicated that with $1 trillion in foreign currency reserves (almost entirely in US Treasury bonds), it is planning to diversify. This means it will invest in euros, pounds, yen, gold, and oil.
This announcement caused gold to rise $19 in one day, and now other countries, such as European countries and Russia, have said that they are also planning diversification.
With companies such as Anglo-American exploring Manila Mining and Newmont Mining and other eager to follow, I am staying in the mining sector. There are only a few worth considering.
The dividend season is in full swing and, with the exception of Petron and AEV, most results exceeded expectations and pushed the Philippine Stock Exchange index to a nine-year high.
Unfortunately, I have been so busy that my newsletter goes out later and later, and my blood pressure is also at a nine-year high, so I will stop answering some of readers' e-mails. There are simply too many.
Banco de Oro announced nine-month profits up 23 percent, with the last quarter's profit up 53 percent. Equitable PCI Bank said its profits were 34 percent better and the merger with Banco de Oro is proceeding. Investors who did not accept the cash offer will receive 1.8 Banco de Oro shares for every one Equitable PCI share. There will not be any redundancies, but 100 branches will be moved to other areas; my bank manager has been assigned to Afghanistan.
PLDT announced a 27-percent increase in third-quarter profits to P10.4 billion, considerably better than analysts expected, and the share price is at an all-time high. In fact, it is exactly 10 times the price I recommended PLDT four years ago. Much of this is due to the strength of the peso, but even if you strip out foreign exchange gains, the core profit was still up 10 percent.
Globe Telecom produced excellent results with profits up 59 percent, and one foreign looking house upgraded the stock from a HOLD to a BUY. The next day, another foreign broker downgraded the stock from a BUY to a HOLD. Globe is now definitely doing better and earnings have risen on capital reduced by buybacks.
Ayala Corp. profit jumped 87 percent to P9.6 billion, exceeding last year's record. All its subsidiaries contributed, but profits from Ayala Land improved only five percent year-on-year. This was due to a one-time gain of P480 million; and excluding this, profits rose 27 percent. Ayala Land is on a historic P/E ratio of 54x, which looks expensive.
Philex jumped P0.40 to P4.60 after the Chairman predicted P3 billion in profits for the year. This is exactly in line with my own calculation and the shares are on a P/E of 5x.
Philex is hedging both copper and gold using put options and this protects it against any major changes in the price of these metals.
Apex Mining "B" shares made a chart breakout on Thursday at P6.80. I wrote this in my newsletter. On Friday, it remained unchanged for one-and-a-half hours and then jumped P0.60 to P7.40 on increased volume. It is nearing my yearend target.
Megaworld did not please shareholders with the announcement of a one-for-two rights issue and the stock dropped sharply from its high. The huge number of shares issued this year has a dilutive effect on earnings, so Megaworld has to keep up its sensational growth rate. The shares go ex-rights before the end of January.
Alliance Tuna went limit up the first day and almost limit up the second day. It has doubled its offer price.
Chemrez Industries is a much larger issue, so it will not go limit up. Nevertheless, it is a good company and the only one producing biodiesel for now.
This is a new technology in the Philippines and when produced from coconuts in the form of coco methyl ester, it is superior to biodiesel produced from other materials. An addition of only one percent reduces emissions and adds to the mileage a liter so buses, trucks and jeepneys should use it. Eventually, these vehicles will have to add two percent, which improves the results still further.
The shares should open at P5.20 and once people take quick profits, the price should move higher. Our research department has a one-year target of P8.30. It is too late to apply for shares and dealings start on Dec. 4.
The bond market has been incredibly strong. Whether it will continue depends on Daniel Craig's performance as 007 in Casino Royale. I was hoping to get the part.
mrbearbull@hotmail.com
Previous columns: Dow and Phisix hit new highs – 11/07/06 Dow breaks 12,000; Phisix breaches 2,600 – 10/24/06 US trade gap hits record $70 billion – 10/17/06 Slowdown on Wall Street – 10/10/06 Dow nears all-time peak – 10/03/06
