Tuesday, October 03, 2006

cheap oil and nervousness about the democrats

In preparation to rotate out of MRVL, I have started a new position in Kimberly-Clark (KMB). It looks like the Democrats will be winning the House in November based on the insane sexual depravity of one of the Republican members of congress. These guys just stink. I think the country is fed up with the hypocrisy and complete lack of progress from this Republican administration.

When that happens, we'll see a poisonous business climate because the Democrats will mistakenly believe that their populist rhetoric is actually what people want. And we'll get a very unfortunate backlash against pharma and oil companies, which is unwarranted.

In preparation for this I am going into a secular play, Kimberly-Clark, which also happens to be levered to cheap oil. If investors are worried about soft vs. hard landing, the Democrats won't be doing anything to allay those fears. If anything they will be stoking them towards the hard landing camp. This is good for seculars. A hard landing is also good for cheap commodities. In conclusion, I think KMB works on both of these levels.

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