Protectionism sells well in a climate of fear, but it’s hardly a base for economic policy. After US President Barack Obama’s announcement on September 11 of a 35% tariff on Chinese tires, he immediately downplayed the possibility that the measure will spark a trade war with America’s second largest trading partner. In an interview with Bloomberg News, the president argued that existing trade rule must be enforced to build support with lawmakers and the American public. The White House enacted the tariff in reaction to a petition by the United Steelworkers Union against China for flooding the US market with “entry level” tires.
Stock and stock option volume for Tempur Pedic (TPX) and Sealy (ZZ) popped up on the radar yesterday. Tempur Pedic’s stock price was up 11% yesterday and Sealy’s was up 6%. After hours, Sealy reported results which were in line with expectations. Sealy said in their conference call that they are beginning to see signs that consumers are beginning to recover from the recession.
OK, for those of you who can’t pass up the slot machines at Vegas, MercadoLibre (MELI) popped up on the stock and option volume radar yesterday. MercadoLibre is a company focused on the Latin America Internet e-commerce space. Mercado translated to English is “Market” and Libre translated to English is “Free”, so MercadoLibre’s name translated to English is “Free Market”.
The real beauty of the covered calls strategy is making money on a stock, even when the price of the stock doesn’t move. Yes, it’s nice to make the extra income for a covered calls position when the underlying stock increases in price and the position is rolled, but what really adds oomph to the covered calls strategy is the positions that make money when a stock goes nowhere or even drops slightly in price.
The Walt Disney Company (DIS) announced on August 31, 2009 that it would buy Marvel Entertainment Inc. (MVL) in a deal estimated to be worth $4 billion. The cash and stock deal may not immediately help Disney’s bottom line, but if its 2006 acquisition of Pixar Animation Studios (PIXR) is any indication, Disney will weave its marketing magic around Marvel’s huge library of characters to create a bona fide hit.
The economic recession, which began in December 2007, ended in July 2009 according to some market analysts. Not all economists agree that the recession is truly over, but the one thing they can all agree on is that recovery won’t be quick. The US economy shrank at a nearly 6% annualized rate from September 2008 to March 2009, so it will be a long time before real progress is felt. The shape of the recovery growth curve is likely to be an L or a wide U, although unexpected negative news could easily turn it into a W.