No. of Recommendations: 1

I simply don't trust many sources that tout "record earnings", the statement itself it vague. A company could have record earnings by acquisition and now it carries a larger debt load, or issued a pile of new shares. The raw number is larger then any previous number but that doesn't mean good corporate health. Its no better then "new and improved" advertising.

Last I checked we have 9 AAA companies:
United Parcel
Automated Data Processing
Fannie Mae
Freddie Mac
Johnson and Johnson

Are these companies spending less then they have during previous expansions? Are all of these companies rolling in record profits and cash? Are these companies not issuing debt at a "typical" expansion pace?

The reason I'm being picky is that once we get down to individual companies and issues generalities don't play. I don't care what macro economists or big business reporters are noticing in the agragate. What I need to know is what is happening with specifc companies or the narrow universe of companies under study. "On the whole" is a useless, nuisance bit of datum.

We also need to take into consideration why these companies are AAA rated. They are AAA because they are consistently profitable, generate far above the needed cash flow to service their debt and have as dependable a future as can be reliably predicted. For the non-finance AAA companies they don't borrow in excess, they borrow when it makes financial sense, disciplined would be a good adjective.

As to restricted issues there is also a good reason for this, AAA's are only paying around 16bp more for a 10yr then treasuries. This is hardly an incentive to go rushing into AAA's particularly if you live in an income tax state. This leaves a limited market to sell into.

Off the top of my head:
JNJ has made several significant purchases this year, including pfizers health care line.
UPS is expanding its hub network in the Pacific
B - H has enough cash to purchase what it wants and has
Pfizer is shedding some units for strategic purposes
GE is so huge its always buying, selling, investing and developing something
ADP I have no top o' the head news for major or minor spending
Exxon continues to spend on exploration and on new wells.
Fannie and Freddie are financials it is their business to borrow and lend

The only way to know if any of this is atypical is to run the numbers. Yes Charlie we can use charts to plot trends if ya want. What is the typical cap ex, cap ex/profit, cap ex/cash flow, etc etc? What are the expected growth rates of cap ex, cash flow, profit?

Like case law, generalities brake down quickly when we get to the specifics of individual companies.

p.s. it would might be an interesting study to watch Pfizer which may come of the list.
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