The full effects of the energy crisis and Katrina have yet to be felt, and today the nation's largest consumer-electronics retailer, Best Buy (BBY), said higher costs caused second-quarter profit to fall short of Wall Street's expectations. In addition, the company said that upcoming earnings would be hurt as well.
Retailers have been selling off over the last month, and it will be interesting to see what effect higher energy prices, especially home heating costs, will have in the month's ahead.
We are moving forward with our call on Natural Gas stocks. We are adding Chesapeake Energy (CHK)to the IA portfolio today with a buy limit of $33.
Chesapeake Energy (CHK) has been attracting some heavy insider buying by its Chairman & CEO, Aubrey McClendon. McClendon currently holds 16.8 million shares, and has purchased the majority of those shares under $30. I would dollar cost average into the stock, and use pullbacks (if they happen) around $30 to add to my position.
This morning, the misleading Producer Price Inflation (PPI) data was released. Of course, the numbers always try to show a positive spin by excluding food and energy. The August data showed a +0.6 pct for August versus the Wall Street consensus forecast of +0.7 pct. As always, they minimize the impact that food and energy has on the consumer. How retarded do they think we are?
The current seasonal cycle has been very kind to the market. This gives us some confirmation (and hope), that a grand finale of some sorts may actually happen before year end. If the Christmas selling season is a dud, the markets 2006 decline may start a little earlier than we had anticipated. Of course, when we initially made are forecast, we didn't have Katrina to factor in.
