More Thoughts

I guess the TXN/NSM merger makes sense, but the price is way, way too high. It's an interesting merger, for sure, given complementary product lines (analog parts, Texas Instruments strong in mobile phones while Nat Semi is pushing into app processing for smartphones). Both have fabs to fill, so there can be some manufacturing cost synergy.

Other analog names will lift, but some are less likely to be targets. Especially MXIM and LLTC, which are great companies but are perpetually very expensively valued.

Euro Concerns Take a Break

Default is utterly predictable.

Seems to be little worry about Europe today, but this soon shall pass. The Wall Street Journal reported on Irish negotiations for a lower rate on bailout loans, but these seem to be little more than a miniature Band-Aid on the wound. Seems to me the financial burden on the Irish taxpayers and economy that default is inevitable. Absent a legal default, the economy will go underground, and tax revenue will fall far short of projections.

Same is happening in Greece, where today Der Spiegel reports that the IMF is admitting that its debt will need to be defaulted upon. IMF denies, naturally.

In last week's report, employment among women rose 247,000, while only 4,000 men were incrementally employed.

One of the quirks of last week's employment report is that the resurgence in hiring is mainly benefiting women. Employment among women rose 247,000, while only 4,000 men were incrementally employed. This could be a function of weakness in traditionally male occupations, such as construction, and strength in traditionally female jobs. Education and health care added the most positions at 45,000.

In the near term, any job is a good job, but longer term, the causes of this imbalance will need to be identified and rectified.

Higher corn prices means more planting and more fertilizer use.

Speaking of oil and oil substitutes, I'm hearing of fears of corn shortages coming, which of course will drive up prices further. Buyers at ethanol plants are building inventory because of these supply fears, which exacerbates the shortages. That plus rainy conditions may delay planting until mid-April.

Higher corn prices means more planting and more fertilizer use.

Inflation/dollar debasement is likely to remain an issue until the Fed starts raising rates.

Oil is approaching that magic $110 -- magic only because it is a round number -- at which point, people will start worrying about a run to $120.

My guess is that Libya suddenly resolves itself -- the rebels don't have the resources to fight a protracted war, but the world won't let Gadhafi win. When Libya settles down, oil will naturally sell off. I think the surprise will be that after that selloff, it will resume its upward ascent. There is a risk premium in it at the moment, to be sure, but the broader driver is inflation/dollar debasement, which is likely to remain an issue until the Fed starts raising rates.

A recovery - a real recovery - in the labor markets might actually signal a slowdown in corporate earnings growth - and a selloff in the stock market...But as long as that piece of paper/collection of electrons one calls a stock is simply a claim on earnings, and as long as companies are growing profits, the market can and will work its way higher.....