Two Stories that Piqued my Interest in the Weekend Edition of the Wall Street Journal.

Weekend business reading is one of my favorite activities even though at times it can be frustrating (stupid journalists) and can cause me lots of anxiety.  That said here are two “good news” stories that caught my interest, which relates to other blogs I have written.

The first story relates to the U.S. trade deficit for the month of December.  I have reproduced the second and third paragraph of this article, which states:

The U.S. deficit in international trade of goods and services shrank nearly 21% to $38.54 billion from a revised $48.61 billion the month before, the Commerce Department said Friday.  The decline was the biggest in nearly four years.

Oil exports hit a record high, while the amount of imported oil dropped to its lowest level since 1997.  Thanks to new technology, U.S. production of crude and natural gas has expanded, while consumers are using oil more efficiently.  Reduced imports of foreign oil, aside from lowering the nation’s energy tab, could boost the U.S. growth rate over time.

Back on June 27, 2012 I wrote this blog, “US Energy Self-sufficiency – Big Game Changer for Investors”.

One of my macro themes is the coming bull market for the US dollar, and US dollar based assets.  Energy self-sufficiency is a big piece of the puzzle for my macro point of view.  As you can see from the December U.S. trade deficit numbers this positive trend is continuing.

The way I see any trade deficit of any country, is a supply of a nation’s currency flowing out into the world, which is sold in the international marketplace.  Lessen the supply of this outflow by reducing the nation’s trade deficit; with demand (Capital Account) staying the same, the currency naturally appreciates.  This is good news for U.S. dollar based assets, including U.S. equities.

The second story involves Dell Inc.’s largest outside investor on Friday said it would vote against the proposed $24.4 billion deal to take the computer maker private.  The WSJ continues;

The shareholder, Southeastern Asset Management Inc., which says it owns approximately 8.5% of Dell’s shares outstanding, voiced its opposition to the leveraged buyout in a strongly-worded letter to Dell’s board.

“We are writing to express our extreme disappointment regarding the proposed go-private transaction, which we believe grossly undervalues the Company.” The letter said.

 We will not vote in favor of the proposed transaction as currently structured,” the firm continued.  “We retain and intend to avail ourselves of all options at our disposal to oppose the proposed transaction.”

Good!

Here is Friday’s model price chart of Dell Inc.  As you can see our model price calculation or fair market value is $17.01.

Dell Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Dell Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

For those interested, a daily updated chart of DELL subsequent to this post will be maintained on Facebook, here.

I wrote a blog last week saying Michael Dell and Silver Lake were under paying for Dell Inc. at $13.65 to take Dell Inc. private.  The buyout group needs the majority of shares outstanding, without the buyout group shares (including Michael Dell) to vote yes in order to be successful.

As I ended my blog, “It will be interesting to see what shareholders do in this situation.”

I guess we know!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s