It's window dressing time - actually, that's been happening all week. The beefers run up selected stocks to grab a bit of fee cash or to make their portfolios look good. And new money comes in next week, so they pre-buy the stocks they like.
The unemployment claims number yesterday was down - under 300,000 - that's good news. No economic freefall is happening like the bears were predicting.
Gold is up this morning. Stocks have been consolidating since the Fed rate cut, forming bullish continuation patterns.
It's a bull market. Buy dips. Hold until something changes.
PS: Core PCE year over year inflation is 1.8%. Headline PCE year over year inflation is 1.8%. Inflation is dead and buried. "staggerlee" is walking on one leg, hehe ;-)
PPS: Chicago PMI firm at 54.2 for September. No collapse. Perma-bears were wrong. Fed did its job going neutral with core inflation in the "comfort zone". Inflation at 1.75% plus 2-3% real return = neutral range is 3.75 to 4.75% overnight funds.
Friday, September 28, 2007
Thursday, September 27, 2007
Long Term Investing
The Yale Endowment returned 28% for the fiscal year ended June 30. That's excellent and is the #1 endowment return. The manager, David Swenson, wrote a book about how the individual can invest similar to his methods - as much as possible. The book is "Investment Success" and I recommend it. My Krypto Fund has actually been managed similar to his suggested methods for about 15 years. It's done quite well and the massive diversification really paid off in the Nasdaq bubble and burst periods. So for long term pension money and most other long term money, I recommend following the Swenson methods.
Short term trading can provide much higher returns - 100% or more - BUT that's a really huge amount of work and stress and there are long periods when nothing works. I used to do that with much success, but now don't: too much stress and work and I don't need those returns anymore.
BUT you can make really good returns on a portion of your investment money by long term investing in selected strong groups and strong stocks. That's my Alpha Fund. I limit the amount I risk there to no more than 20% of my market investment assets. I actually limit it more now as the absolute amounts have gotten a bit scary for me.
The beefers sometimes knock a stock or group down as they rotate or get into a shorting binge. That's when a good entry, dip buy can work. For example, CSCO. That stock has been putting up good numbers and is in the fast growing Internet space - it's a leader. The stock has a fine uptrend. CSCO reported great earnings, the stock popped up and the beefers immediately started selling & shorting it. The beefers hit it with their shorts/rotation and "world is ending" mantra. So one could have bought it under 30 AFTER the great earnings were known. I and some commenters did that. Since then, CSCO has done fine and just popped to a new high out of a fine, ascending triangle base.
I'm just using CSCO as an example how the dip buys of good stocks in a bull market can print fine numbers for an actively managed part of your investment mix.
PS: the reason I used the beefers as a whipping boy for creating good entries is because ... often there really is NO real reason for a stock's pullback. The beefers really do cause these moves with their antics. Just sit back and wait and be patient to get a good entry you can hold for a year or so.
Short term trading can provide much higher returns - 100% or more - BUT that's a really huge amount of work and stress and there are long periods when nothing works. I used to do that with much success, but now don't: too much stress and work and I don't need those returns anymore.
BUT you can make really good returns on a portion of your investment money by long term investing in selected strong groups and strong stocks. That's my Alpha Fund. I limit the amount I risk there to no more than 20% of my market investment assets. I actually limit it more now as the absolute amounts have gotten a bit scary for me.
The beefers sometimes knock a stock or group down as they rotate or get into a shorting binge. That's when a good entry, dip buy can work. For example, CSCO. That stock has been putting up good numbers and is in the fast growing Internet space - it's a leader. The stock has a fine uptrend. CSCO reported great earnings, the stock popped up and the beefers immediately started selling & shorting it. The beefers hit it with their shorts/rotation and "world is ending" mantra. So one could have bought it under 30 AFTER the great earnings were known. I and some commenters did that. Since then, CSCO has done fine and just popped to a new high out of a fine, ascending triangle base.
I'm just using CSCO as an example how the dip buys of good stocks in a bull market can print fine numbers for an actively managed part of your investment mix.
PS: the reason I used the beefers as a whipping boy for creating good entries is because ... often there really is NO real reason for a stock's pullback. The beefers really do cause these moves with their antics. Just sit back and wait and be patient to get a good entry you can hold for a year or so.
Wednesday, September 26, 2007
The Beginning of the End
I think the economy has now moved beyond the "end of the beginning" of the Rich Man's Panic of 2007 to the "Beginning of the End."
The Fed did what it needed to do, to redress its mistake in not stopping at 5% in May 2006 and not cutting earlier this summer.
The vultures are raising big money to buy foreclosed homes at bargains. This will re-price housing in many speculative neighborhoods in California, Nevada, Florida and other places. That's how the commercial real estate recession of the early 1990s was cleared. Lenders should renegotiate loans to reduce their losses. Will they be that smart? Maybe, there is talk about that.
Per a recent WSJ, the peak in home mortgage ARM resets is on us. They fall in coming months.
Talk on Babblevision about "Asian decoupling" from the US is correct. I've need writing about the new "Asian Co-Prosperity Zone" for many months - years actually. It's becoming more and more evident. Self-reinforcing consumer and business demand can drive that zone much, much higher and the world economy, too. Exports to the US sparked it, no doubt. But the follow-thru is now intra-zone trade.
The GM strike is over. Futures are up. The markets were up on bad retail news yesterday. The Charts look fine - the Nazz 100 printed a second close over the old high, confirming the move.
It's a bull market. Buy dips.
The Fed did what it needed to do, to redress its mistake in not stopping at 5% in May 2006 and not cutting earlier this summer.
The vultures are raising big money to buy foreclosed homes at bargains. This will re-price housing in many speculative neighborhoods in California, Nevada, Florida and other places. That's how the commercial real estate recession of the early 1990s was cleared. Lenders should renegotiate loans to reduce their losses. Will they be that smart? Maybe, there is talk about that.
Per a recent WSJ, the peak in home mortgage ARM resets is on us. They fall in coming months.
Talk on Babblevision about "Asian decoupling" from the US is correct. I've need writing about the new "Asian Co-Prosperity Zone" for many months - years actually. It's becoming more and more evident. Self-reinforcing consumer and business demand can drive that zone much, much higher and the world economy, too. Exports to the US sparked it, no doubt. But the follow-thru is now intra-zone trade.
The GM strike is over. Futures are up. The markets were up on bad retail news yesterday. The Charts look fine - the Nazz 100 printed a second close over the old high, confirming the move.
It's a bull market. Buy dips.
Great Leaders
I was thinking about who were the truly great leaders of the United States over its history and came up with a simple list and concise reasons why I think these people deserve to be on it.
George Washington: without his timely leadership, the US probably wouldn't exist. He also stepped aside as military general and President, helping ensure civilian democracy would continue and no aristocracy would develop.
Thomas Jefferson: he provided intellectual leadership in bringing the early rural "common man" into the government and had the vision to make the crucial Louisiana purchase.
Andrew Jackson: he brought the western common man into the government and defeated the Eastern money interests in their efforts to dominate the nation. He also stopped early Southern secession-like efforts.
Abraham Lincoln: he saved the nation in its Civil War and led the abolition of slavery and the defeat of the expansionist slave states.
Ulysses Grant: his military leadership won the Civil War and his later leadership as Commanding General and later President helped maintain the victory by defeating southern reactionaries. He crushed the KKK and helped newly freed blacks gain effective freedom and voting rights. He also led the restoration of a gold-backed dollar which provided a sound financial base for the huge industrial expansion of the last half of the 19th century. [I provide more detail for Grant since his inclusion here is probably quite controversial.]
Theodore Roosevelt: he brought a "square deal" to the common man in the newly industrialized nation, leading efforts to prevent trusts from controlling the national economy. He also led the US into the world diplomacy and prevented nations like the Kaiser's Germany from reestablishing colonies in South America.
Franklin Roosevelt: he provided leadership for the people during the Great Depression, thus preventing fascist / communist movements from taking hold in the US. He also led early, prewar expansion of the US Navy and US air force that were cornerstones for the US military power in the entire later part of the century. [Yes, he did mess up much, too, and missed many opportunities, but he did enough to be "great".]
Ronald Reagan: he reversed the tide of creeping socialism in the US by promoting economic freedom and tax reform and reduction; his military expansion and firm leadership stopped the communist expansion that had begun again. This led eventually to the collapse of communism in the Soviet Union and the freedom for millions of people in Eastern and Central Europe.
PS: Why isn't James Polk included for the final continental southwest expansion? Because that was going to happen from the inevitable flow of the people and economy. Texas had already broken off from the corrupt Mexican military dictatorship and the rest would have happened no matter what Polk did. Jefferson's Louisiana purchase set the western expansion of the nation in motion.
George Washington: without his timely leadership, the US probably wouldn't exist. He also stepped aside as military general and President, helping ensure civilian democracy would continue and no aristocracy would develop.
Thomas Jefferson: he provided intellectual leadership in bringing the early rural "common man" into the government and had the vision to make the crucial Louisiana purchase.
Andrew Jackson: he brought the western common man into the government and defeated the Eastern money interests in their efforts to dominate the nation. He also stopped early Southern secession-like efforts.
Abraham Lincoln: he saved the nation in its Civil War and led the abolition of slavery and the defeat of the expansionist slave states.
Ulysses Grant: his military leadership won the Civil War and his later leadership as Commanding General and later President helped maintain the victory by defeating southern reactionaries. He crushed the KKK and helped newly freed blacks gain effective freedom and voting rights. He also led the restoration of a gold-backed dollar which provided a sound financial base for the huge industrial expansion of the last half of the 19th century. [I provide more detail for Grant since his inclusion here is probably quite controversial.]
Theodore Roosevelt: he brought a "square deal" to the common man in the newly industrialized nation, leading efforts to prevent trusts from controlling the national economy. He also led the US into the world diplomacy and prevented nations like the Kaiser's Germany from reestablishing colonies in South America.
Franklin Roosevelt: he provided leadership for the people during the Great Depression, thus preventing fascist / communist movements from taking hold in the US. He also led early, prewar expansion of the US Navy and US air force that were cornerstones for the US military power in the entire later part of the century. [Yes, he did mess up much, too, and missed many opportunities, but he did enough to be "great".]
Ronald Reagan: he reversed the tide of creeping socialism in the US by promoting economic freedom and tax reform and reduction; his military expansion and firm leadership stopped the communist expansion that had begun again. This led eventually to the collapse of communism in the Soviet Union and the freedom for millions of people in Eastern and Central Europe.
PS: Why isn't James Polk included for the final continental southwest expansion? Because that was going to happen from the inevitable flow of the people and economy. Texas had already broken off from the corrupt Mexican military dictatorship and the rest would have happened no matter what Polk did. Jefferson's Louisiana purchase set the western expansion of the nation in motion.
Tuesday, September 25, 2007
More of the Same
The charts look OK. Futures are lower this AM due to some weak sales data from Target & Lowe's. The weather excuse has quite a bit of "reality", though since it really has been warm & dry, hurting sales of winter clothing and lawn+garden supplies.
Beside, what do you expect in a mid-cycle slowdown? Booming sales ?? This is all expected. The last bits of inflation are being ground out, setting up a solid base to the next big move.
GOOG put in a second day over the old high, confirming the move. The Nazz 100 needs another day over its old high.
Often the market puts in major bottoms in October. I note, however, that frontrunning seems to move old seasonal plays forward a bit every year. The obvious example is the old January rally of the 1980s. That move has been drawn forward to December and then November. So waiting for a "clear" signal can be a loser.
I'm being patient. I have plenty of buying power if the beefers decide to push stocks lower.
It's a bull market. Buy dips.
PS: Thanks to mfl59, a commenter here, for suggesting to look at adding to RTP in the pullback to its 200 DMA in August. I added a good bit and that stock has moved up 100 pts. since, a 40% move in about six weeks. One can make great gains with dip buys in strong stocks.
PPS: I think I also need to thank frosty and someone else [mfl59?] for pointing out CSCO under 30 in August. Very good add. Thanks.
Beside, what do you expect in a mid-cycle slowdown? Booming sales ?? This is all expected. The last bits of inflation are being ground out, setting up a solid base to the next big move.
GOOG put in a second day over the old high, confirming the move. The Nazz 100 needs another day over its old high.
Often the market puts in major bottoms in October. I note, however, that frontrunning seems to move old seasonal plays forward a bit every year. The obvious example is the old January rally of the 1980s. That move has been drawn forward to December and then November. So waiting for a "clear" signal can be a loser.
I'm being patient. I have plenty of buying power if the beefers decide to push stocks lower.
It's a bull market. Buy dips.
PS: Thanks to mfl59, a commenter here, for suggesting to look at adding to RTP in the pullback to its 200 DMA in August. I added a good bit and that stock has moved up 100 pts. since, a 40% move in about six weeks. One can make great gains with dip buys in strong stocks.
PPS: I think I also need to thank frosty and someone else [mfl59?] for pointing out CSCO under 30 in August. Very good add. Thanks.
Monday, September 24, 2007
The Other "Overbuilt" Sector
The "business cycle" occurs mostly due to mistakes by people in overinvesting sectors - such as overbuilding plants, facilities, or even inventory. It's not a foregone event caused by some "god of business" sending a few bolts down to shake things up. People get group delusions about profits in a few sectors and ignore the actions of themselves creating correcting feedback. Eventually, due to time lagged responses, the sector finds itself in serious problems from overcapacity and drastic cuts are made, creating a "cycle" downturn.
So for this "cycle", one obvious overbuilt sector was residential housing in many regional markets. What other sectors are "overbuilt"?
First, the housing related sectors such as home mortgage lending and home mortgage brokerage and banking clearly had grossly excess capacity for a stable environment.
Second, I say the hedge fund industry had grossly excess capacity. Rich people greedy for "more" flocked like lemmings to the hedge funds. The industry provided a siren's song to entice them so the fund manager's could get a piece of those fat fees. Stories of trading funds with great profits, or "stable", "absolute" returns were the pitch by the flim-flam men.
So huge sums were invested in beefer trading funds, quant funds, and all sorts of hedge funds that invested in slices of mortgage and debt securities [CDO/CLO/CBOs]. Like fools, they leveraged those illiquid securities, "trusting" the big Street firms that "the markets are liquid". But that "liquidity" was from ... other hedge funds.
Like any "greater fool theory" asset bubble, eventually there aren't any more buyers. Or something occurs to make some question the value of the assets. That was the connection to the subprime loan markets. That caused all complex securities to be questioned. Now most are good paper. But in an "overbuilt" market, that didn't matter. The unwinding was vicious.
The Street firms provided no liquidity and the piranhas at GS and probably other firms shorted paper they had readily sold to their hedge fund clients. And they probably gave them margin calls, too. hence the asset-backed securities market collapse.
Too bad. That paper is "mostly" very high quality paper, but in a panic, rationality takes quite awhile to return.
A flow of funds pulled from trading hedge funds and pyramid leveraged debt funds into truly productive investments could really help the stock market get to much higher levels that are justified from corporate earnings.
PS: use of words like "cycle" are metaphors for events and changes in human society. A fine book I read in the 1970s and am currently re-reading, "Social Change and History", by Robert Nisbet, carefully elucidates the use of biological metaphors, such as "growth" and "cycle" in description of human society over its history beginning with the Greeks and to the modern era. I recommend it if you're interested in scholarly books. It's available on used book sites.
PPS: Not much going on so far - the charts are bullish. Dollar is down, gold is up. We''ll see if the UAW fools cause a strike at GM.
P^3S: I wonder if there's a contagious mental virus going around that drives women to blab on cell phones all the time? I drove to the post office on a little country road. Fresh air and beautiful scenery abounded. And a lady is walking her dog ... blabbing on a cell phone. At the post office, another lady is blabbing in her SUV parked out front. Amazing. What did they do before cell phones?
So for this "cycle", one obvious overbuilt sector was residential housing in many regional markets. What other sectors are "overbuilt"?
First, the housing related sectors such as home mortgage lending and home mortgage brokerage and banking clearly had grossly excess capacity for a stable environment.
Second, I say the hedge fund industry had grossly excess capacity. Rich people greedy for "more" flocked like lemmings to the hedge funds. The industry provided a siren's song to entice them so the fund manager's could get a piece of those fat fees. Stories of trading funds with great profits, or "stable", "absolute" returns were the pitch by the flim-flam men.
So huge sums were invested in beefer trading funds, quant funds, and all sorts of hedge funds that invested in slices of mortgage and debt securities [CDO/CLO/CBOs]. Like fools, they leveraged those illiquid securities, "trusting" the big Street firms that "the markets are liquid". But that "liquidity" was from ... other hedge funds.
Like any "greater fool theory" asset bubble, eventually there aren't any more buyers. Or something occurs to make some question the value of the assets. That was the connection to the subprime loan markets. That caused all complex securities to be questioned. Now most are good paper. But in an "overbuilt" market, that didn't matter. The unwinding was vicious.
The Street firms provided no liquidity and the piranhas at GS and probably other firms shorted paper they had readily sold to their hedge fund clients. And they probably gave them margin calls, too. hence the asset-backed securities market collapse.
Too bad. That paper is "mostly" very high quality paper, but in a panic, rationality takes quite awhile to return.
A flow of funds pulled from trading hedge funds and pyramid leveraged debt funds into truly productive investments could really help the stock market get to much higher levels that are justified from corporate earnings.
PS: use of words like "cycle" are metaphors for events and changes in human society. A fine book I read in the 1970s and am currently re-reading, "Social Change and History", by Robert Nisbet, carefully elucidates the use of biological metaphors, such as "growth" and "cycle" in description of human society over its history beginning with the Greeks and to the modern era. I recommend it if you're interested in scholarly books. It's available on used book sites.
PPS: Not much going on so far - the charts are bullish. Dollar is down, gold is up. We''ll see if the UAW fools cause a strike at GM.
P^3S: I wonder if there's a contagious mental virus going around that drives women to blab on cell phones all the time? I drove to the post office on a little country road. Fresh air and beautiful scenery abounded. And a lady is walking her dog ... blabbing on a cell phone. At the post office, another lady is blabbing in her SUV parked out front. Amazing. What did they do before cell phones?
Sunday, September 23, 2007
What Could Have Been
I wrote a few posts ago how the 20th century could have been completely changed with vigorous leadership in the right place at the right time. Here's another example. Later I'll point out how this mistake repeated itself rather precisely in the past 20 years. Maybe you'll guess as you read.
This is entirely copied from an article about Black Jack Pershing in "Military History" magazine, Oct. 2007, page 52.
***Copy begins***
[ref. the defeat of the German Army at Argonne in France, fall, 1918]
In the end, though, the Germans broke - and it was the end. By the close of the battle, they were left without a single reserve division in the sector, and Hindenburg himself later wrote that the Meuse-Argonne was "our most sensitive point" and that "the American infantry in the Argonne won the war." It may have been more a coup de grace than the decisive blow, but the war was over within days, much to Pershing's chagrin. Alone among the Allied war councils, he had insisted throughout on winning an unconditional surrender from Germany, not merely an armistice.
"We shouldn't have done it," he commented at the time. "If they had given us another 10 days, we would have rounded up the entire German army, captured it, humiliated it ....The German troops today are marching back into Germany announcing they have never been defeated....What I dread is that Germany doesn't know that she was licked."
It was a prescient insight. In 1944, while living out the final years of his long, pleasant retirement at Walter Reed Army Hospital, Pershing received a birthday message from another President Roosevelt that read in part, "None of us will forget that in 1918 you wanted to go through to Berlin. How right you were!" Such was the vindication of a leader who had taken care to understand both his allies and his enemies."
***End of copy***
So had Pershing's advice been followed, one of the key motivating arguments of Naziism - the "stabbed in the back" propaganda, would not have existed. And perhaps the willingness of the German army to enter another war would have not existed, either. Perhaps no World War II.
How did was this mistake repeated? Bush the Elder gave Saddam Hussein an armistice in 1991, instead of letting Schwarzkopf bag the entire Iraqi army. So it survived to bolster Saddam's regime. And about 12 years later, we were fighting it again.
Never let an enemy recover - finish it off completely.
This is entirely copied from an article about Black Jack Pershing in "Military History" magazine, Oct. 2007, page 52.
***Copy begins***
[ref. the defeat of the German Army at Argonne in France, fall, 1918]
In the end, though, the Germans broke - and it was the end. By the close of the battle, they were left without a single reserve division in the sector, and Hindenburg himself later wrote that the Meuse-Argonne was "our most sensitive point" and that "the American infantry in the Argonne won the war." It may have been more a coup de grace than the decisive blow, but the war was over within days, much to Pershing's chagrin. Alone among the Allied war councils, he had insisted throughout on winning an unconditional surrender from Germany, not merely an armistice.
"We shouldn't have done it," he commented at the time. "If they had given us another 10 days, we would have rounded up the entire German army, captured it, humiliated it ....The German troops today are marching back into Germany announcing they have never been defeated....What I dread is that Germany doesn't know that she was licked."
It was a prescient insight. In 1944, while living out the final years of his long, pleasant retirement at Walter Reed Army Hospital, Pershing received a birthday message from another President Roosevelt that read in part, "None of us will forget that in 1918 you wanted to go through to Berlin. How right you were!" Such was the vindication of a leader who had taken care to understand both his allies and his enemies."
***End of copy***
So had Pershing's advice been followed, one of the key motivating arguments of Naziism - the "stabbed in the back" propaganda, would not have existed. And perhaps the willingness of the German army to enter another war would have not existed, either. Perhaps no World War II.
How did was this mistake repeated? Bush the Elder gave Saddam Hussein an armistice in 1991, instead of letting Schwarzkopf bag the entire Iraqi army. So it survived to bolster Saddam's regime. And about 12 years later, we were fighting it again.
Never let an enemy recover - finish it off completely.
Friday, September 21, 2007
Money Management
I computed more accurate numbers on my Alpha Fund and it's gotten too large relative to my Krypto Fund due to the strong gains this year mentioned yesterday. I want to keep it at 25% of the Krypto Fund. So I have to sell some more stocks today to cut it back. I'm still very bullish - this is money management. If I let the Alpha Fund get too large, the swings it incurs as the market moves can get a "wee" bit scary [ hehe, using a little Scottish there ;-) ].
I looked at the groups in it and the oils have really moved up a lot and are now well overweight - they are 12%+ of the 25% even after the sales of Wednesday and I want them to be 10% of it. So I need to sell some big oils. I'll pick ones that I can get long term gain treatment for the partial sales. I still like them all, but money management discipline rules. I need to sell a wee bit of miners, too. I'll let half of my FCX go. I have long term gains (over 100%) on it and it's looking a wee bit extended, too. Babblevision pumped it, too, perhaps an omen of a pullback?
I gauged the inverse S&H pattern in the S&P 500 cash index that was confirmed yesterday: it measures to roughly 1600.
The drop in the dollar is going to punish nations that rely excessively on exports. All those nations need to develop more consumer demand and consumer-driven international trade. But one problem they have in places like Europe and China and Japan is demographics. All those nations are very "old" in the distribution of their populations. Old people just don't buy & use things like the young. China and Eastern Europe have lots of potential consumer growth, though, from the evolution from decades of suppressed demand from the communist past.
The futures are strong early AM. I don't see any news, so it might be option related or maybe the public continues to buy mutual funds.
ORCL reported strong earnings - the chart gave the correct picture. They usually do. I'm holding ORCL for a good while longer as these strong results play out.
PS: This big move in gold & silver has increased the value of my holdings in those so much I don't need to buy as much as I thought in October. So I'm selling half my gold futures and the silver futures I bought in the summer for good "sugar". Again, this is purely money management and keeping the asset allocations in my Krypto Fund correct (10% gold & silver - that's a lot).
PPS: I don't understand why people (other than perma-bears) can say the 30 year bond is showing more inflation risk or is a harbinger of disaster. The long term real rate of return on bonds is 3%. Year-over-year core inflation is about 2%. Higher mathematics shows that 2% + 3% = 5%. That's where the 30 year bond should be. There sure is a lot of babble on Babblevision lately.
P^3S: Sheesh ... these Babblevision talking heads are dumb. The reason the long bond yields are going up a bit is BECAUSE THE FED RATE CUT HELPS ELIMINATE RECESSION RISK. Recession risk is why the long term yields got so low. How stupid can they be! They don't even think before blabbing!
I looked at the groups in it and the oils have really moved up a lot and are now well overweight - they are 12%+ of the 25% even after the sales of Wednesday and I want them to be 10% of it. So I need to sell some big oils. I'll pick ones that I can get long term gain treatment for the partial sales. I still like them all, but money management discipline rules. I need to sell a wee bit of miners, too. I'll let half of my FCX go. I have long term gains (over 100%) on it and it's looking a wee bit extended, too. Babblevision pumped it, too, perhaps an omen of a pullback?
I gauged the inverse S&H pattern in the S&P 500 cash index that was confirmed yesterday: it measures to roughly 1600.
The drop in the dollar is going to punish nations that rely excessively on exports. All those nations need to develop more consumer demand and consumer-driven international trade. But one problem they have in places like Europe and China and Japan is demographics. All those nations are very "old" in the distribution of their populations. Old people just don't buy & use things like the young. China and Eastern Europe have lots of potential consumer growth, though, from the evolution from decades of suppressed demand from the communist past.
The futures are strong early AM. I don't see any news, so it might be option related or maybe the public continues to buy mutual funds.
ORCL reported strong earnings - the chart gave the correct picture. They usually do. I'm holding ORCL for a good while longer as these strong results play out.
PS: This big move in gold & silver has increased the value of my holdings in those so much I don't need to buy as much as I thought in October. So I'm selling half my gold futures and the silver futures I bought in the summer for good "sugar". Again, this is purely money management and keeping the asset allocations in my Krypto Fund correct (10% gold & silver - that's a lot).
PPS: I don't understand why people (other than perma-bears) can say the 30 year bond is showing more inflation risk or is a harbinger of disaster. The long term real rate of return on bonds is 3%. Year-over-year core inflation is about 2%. Higher mathematics shows that 2% + 3% = 5%. That's where the 30 year bond should be. There sure is a lot of babble on Babblevision lately.
P^3S: Sheesh ... these Babblevision talking heads are dumb. The reason the long bond yields are going up a bit is BECAUSE THE FED RATE CUT HELPS ELIMINATE RECESSION RISK. Recession risk is why the long term yields got so low. How stupid can they be! They don't even think before blabbing!
Thursday, September 20, 2007
The Charts
Unless I'm doing a mathematical asset allocation or making a major fundamental decision, I always look at the charts to get some guidance on the timing of a move that I am thinking about doing.
For example, I hold quite a bit of ORCL in the Alpha Fund. I've been wondering lately if I can get my target 30% in that stock over the next year. I'm up about 50% on half the position over about 18 months and about 30% on the other half over a year. So I've got long term capital gains treatment on all of it. The stock is about 21 and I need over 27 to get 30%.
Can that stock get there? Earnings are due today PM. Recent earnings growth is excellent with average quarterly year over year growth of 26% and good revenue growth, too. The PE is 20x. [I'm using data from http://www.dailygraphs.com/ - I subscribe to it.]. So if earnings growth continues, the stock is well undervalued. My growth valuation model gives a "fair" value of over 30 on conservative assumptions.
What does the chart say? The daily chart shows a bullish cup & handle near the break point. The weekly chart shows a bullish rough C&H, too. It's not extended and looks to be breaking into "blue sky" country. The monthly chart shows an uptrend out of a three year base. All these are good indicators. So I'm not selling now. I think 27-30 is possible as long as the company performs, which it has been doing.
The Indexes:
Ms. Market had solid buying yesterday, reportedly from public buying of mutual funds. That is excellent. Public mutual funds buyers are "real buyers" and can persist awhile. They've been missing from the market too long. Yesterday's solid move gave us the second close over the S&P 500's inverse H&S bottom pattern's neckline, confirming the move. There will be strong resistance at the old highs of 1555.90 and maybe at the prior 1540 peak, too. So some consolidation should occur.
The Russell 2000 confirmed the upside breakout over the ascending triangle.
Buy dips. It's a bull market.
YTD Performance:
The asset allocation moves I made in the Krypto Fund paid off. It's up year to date 7.9%, which is a high for the year. Gold and the real estate recovery helped a lot, too.
The Alpha Fund is also at YTD highs, +51.8%. The oils and miners have recovered and the banks are contributing now.
I've stopped trading commodities actively so will no longer mention that account. I just use it for gold & silver hedges or futures buys of physical gold & silver I want to take down, or for stock index trades now. I don't need the money or stress of trading commodities anymore.
PS: Babblevision is awash in bears this AM. "Sucker's rally" "Dead cat bounce" Talk about inflation when the facts show the trend in inflation is ... down ... and core yoy PCE inflation is ... under 2%. Lots of delusional bears. Good.
PPS: I cut back a bit at the close yesterday, taking some long term "sugar" [aka profits - LT gains] on some big positions. For example, I sold 20-30% of a few big miners and oils and AAPL. These are really big positions and I wanted to get down to about 150% net long again. I was very long ( 200%+ ) on the buying of the banks I did in this summer dip. I like to be only 150% long when we approach long term highs and beyond. Holding the rest - nothing has changed and I think they all go much higher. This was money management and I want more buying power if we get another dip in October.
For example, I hold quite a bit of ORCL in the Alpha Fund. I've been wondering lately if I can get my target 30% in that stock over the next year. I'm up about 50% on half the position over about 18 months and about 30% on the other half over a year. So I've got long term capital gains treatment on all of it. The stock is about 21 and I need over 27 to get 30%.
Can that stock get there? Earnings are due today PM. Recent earnings growth is excellent with average quarterly year over year growth of 26% and good revenue growth, too. The PE is 20x. [I'm using data from http://www.dailygraphs.com/ - I subscribe to it.]. So if earnings growth continues, the stock is well undervalued. My growth valuation model gives a "fair" value of over 30 on conservative assumptions.
What does the chart say? The daily chart shows a bullish cup & handle near the break point. The weekly chart shows a bullish rough C&H, too. It's not extended and looks to be breaking into "blue sky" country. The monthly chart shows an uptrend out of a three year base. All these are good indicators. So I'm not selling now. I think 27-30 is possible as long as the company performs, which it has been doing.
The Indexes:
Ms. Market had solid buying yesterday, reportedly from public buying of mutual funds. That is excellent. Public mutual funds buyers are "real buyers" and can persist awhile. They've been missing from the market too long. Yesterday's solid move gave us the second close over the S&P 500's inverse H&S bottom pattern's neckline, confirming the move. There will be strong resistance at the old highs of 1555.90 and maybe at the prior 1540 peak, too. So some consolidation should occur.
The Russell 2000 confirmed the upside breakout over the ascending triangle.
Buy dips. It's a bull market.
YTD Performance:
The asset allocation moves I made in the Krypto Fund paid off. It's up year to date 7.9%, which is a high for the year. Gold and the real estate recovery helped a lot, too.
The Alpha Fund is also at YTD highs, +51.8%. The oils and miners have recovered and the banks are contributing now.
I've stopped trading commodities actively so will no longer mention that account. I just use it for gold & silver hedges or futures buys of physical gold & silver I want to take down, or for stock index trades now. I don't need the money or stress of trading commodities anymore.
PS: Babblevision is awash in bears this AM. "Sucker's rally" "Dead cat bounce" Talk about inflation when the facts show the trend in inflation is ... down ... and core yoy PCE inflation is ... under 2%. Lots of delusional bears. Good.
PPS: I cut back a bit at the close yesterday, taking some long term "sugar" [aka profits - LT gains] on some big positions. For example, I sold 20-30% of a few big miners and oils and AAPL. These are really big positions and I wanted to get down to about 150% net long again. I was very long ( 200%+ ) on the buying of the banks I did in this summer dip. I like to be only 150% long when we approach long term highs and beyond. Holding the rest - nothing has changed and I think they all go much higher. This was money management and I want more buying power if we get another dip in October.
Wednesday, September 19, 2007
Back in the Saddle
Fed move:
I'm happy that Ben Bernanke reads my blog to get a daily dose of reality [ hehe joke ;-) ]. Here's the clue from the FOMC statement: "The Committee will continue to assess the effects of [the credit crunch] on economic growth prospects and will act as needed to foster price stability and sustainable economic growth." [my emphasis]. That's right out of their statutory mandate and it's about time that was recognized - it's been missing since May 2006.
This 50 bps cut corrects for two past Fed mistakes, viz., the 25 bps increase caused by Ben's tryst with Maria, and the error in August standing pat. So the Fed is playing catchup ball, BUT is still 25 bps behind. They need to cut 25 bps in October, too, to get the overnight rate to 4.5%. With core PCE inflation under 2%, an overnight rate over 4.5% is not justified and is still tight monetary policy.
Stocks:
The inverse H&S bottom pattern in the cash S&P that I've discussed awhile here is confirmed now with yesterday's volume move up through the flatish neckline around 1490. The Nazz comp shows a pattern of higher lows and higher highs. Ditto the Nazz 100. The Russell 2000 shows a volume break up out of an ascending triangle pattern.
The XLE shows an all time high print close. The XLF shows a break up on volume out of a ragged "W" or triangle consolidation pattern.
In all these cases, we really need today's close to confirm these patterns for two reasons. First, since beefer short covering might have caused the breaks and volume. Second, since the day after a Fed decision shows decisive big money actions most of the time.
Commodities:
Gold and oil are moving well. Oil's move is just recognition that the world economy is doing fine and oil supply is limited, so slow demand rationing is necessary. Gold is moving for two reasons: (a) beefers playing the dollar weakness, and (b) real long term physical demand and lower mining supply. I prefer playing oil with the stocks since the the commodity carrying costs can be substantial. Ditto gold, but for now I do have some long gold futures to lock in the price of the physical gold I'm planning to buy with new money in October.
The World:
European press shows a bit of a panic over the "subprime" business. They put on pictures of homes for sale in FL and thinks that's representative of the whole US. I think they are a bit surprised, though, that some of their banks buy US mortgage securities in big amounts. That's a reasonable concern.
Scotland:
We had a very enjoyable trip. I'll write more later. But the fried eggs I had in Scotland were the best that I've every had anywhere - super flavor. And the Aberdeen Angus beef was just wonderful, too.
PS: Nothing was mentioned in the FOMC statement about the dollar - the Fed has no statutory authority to consider the dollar. All those talking heads saying the Fed will or won't do something because of the dollar are just delusional eisegetes or are "talking their book".
PPS: The August CPI comes out this morning. A flat number or downtick in the year-over-year core CPI is good. An uptick will give the bears ammo to hit this move.
P^3S: Incredible. Babblevision puts on that fool Peter Beutel who was recently talking about oil collapsing, and now he's talking about higher prices. What a knave!
P^4S: Year-over-year core CPI was 2.1%, a downtick from 2.2% last month. Good news. Inflation is on life support for awhile. Good for the forces of light and goodness; bad for the dark side and the beefer bears.
P^5S: LIBOR fixed under 5% today - more good news. The world economic trajectory is on a fine path. It's a bull market.
I'm happy that Ben Bernanke reads my blog to get a daily dose of reality [ hehe joke ;-) ]. Here's the clue from the FOMC statement: "The Committee will continue to assess the effects of [the credit crunch] on economic growth prospects and will act as needed to foster price stability and sustainable economic growth." [my emphasis]. That's right out of their statutory mandate and it's about time that was recognized - it's been missing since May 2006.
This 50 bps cut corrects for two past Fed mistakes, viz., the 25 bps increase caused by Ben's tryst with Maria, and the error in August standing pat. So the Fed is playing catchup ball, BUT is still 25 bps behind. They need to cut 25 bps in October, too, to get the overnight rate to 4.5%. With core PCE inflation under 2%, an overnight rate over 4.5% is not justified and is still tight monetary policy.
Stocks:
The inverse H&S bottom pattern in the cash S&P that I've discussed awhile here is confirmed now with yesterday's volume move up through the flatish neckline around 1490. The Nazz comp shows a pattern of higher lows and higher highs. Ditto the Nazz 100. The Russell 2000 shows a volume break up out of an ascending triangle pattern.
The XLE shows an all time high print close. The XLF shows a break up on volume out of a ragged "W" or triangle consolidation pattern.
In all these cases, we really need today's close to confirm these patterns for two reasons. First, since beefer short covering might have caused the breaks and volume. Second, since the day after a Fed decision shows decisive big money actions most of the time.
Commodities:
Gold and oil are moving well. Oil's move is just recognition that the world economy is doing fine and oil supply is limited, so slow demand rationing is necessary. Gold is moving for two reasons: (a) beefers playing the dollar weakness, and (b) real long term physical demand and lower mining supply. I prefer playing oil with the stocks since the the commodity carrying costs can be substantial. Ditto gold, but for now I do have some long gold futures to lock in the price of the physical gold I'm planning to buy with new money in October.
The World:
European press shows a bit of a panic over the "subprime" business. They put on pictures of homes for sale in FL and thinks that's representative of the whole US. I think they are a bit surprised, though, that some of their banks buy US mortgage securities in big amounts. That's a reasonable concern.
Scotland:
We had a very enjoyable trip. I'll write more later. But the fried eggs I had in Scotland were the best that I've every had anywhere - super flavor. And the Aberdeen Angus beef was just wonderful, too.
PS: Nothing was mentioned in the FOMC statement about the dollar - the Fed has no statutory authority to consider the dollar. All those talking heads saying the Fed will or won't do something because of the dollar are just delusional eisegetes or are "talking their book".
PPS: The August CPI comes out this morning. A flat number or downtick in the year-over-year core CPI is good. An uptick will give the bears ammo to hit this move.
P^3S: Incredible. Babblevision puts on that fool Peter Beutel who was recently talking about oil collapsing, and now he's talking about higher prices. What a knave!
P^4S: Year-over-year core CPI was 2.1%, a downtick from 2.2% last month. Good news. Inflation is on life support for awhile. Good for the forces of light and goodness; bad for the dark side and the beefer bears.
P^5S: LIBOR fixed under 5% today - more good news. The world economic trajectory is on a fine path. It's a bull market.
Tuesday, September 11, 2007
Economic Momentum
Since I'll be on vacation in Scotland until September 19, I'll miss all the buildup and hype to Tuesday's Fed meeting. Shucks. So I have some general thoughts.
The markets have been in the "stomping elephants" phase for a few weeks - all those beefers are swinging big bets around trying to find the new trend as the old waterhole dried up. Economies are built on the decisions of billions of people worldwide - they tend to continue to do the same things unless shocked into rethinking. So I think the world economy will do fine and continue to grow unless new, hard shocks occur.
And with the increased economic freedom of billions as the old socialist regimes died or are dying, free people will work to improve their lives. That means solid economic growth. China, India, some South America nations and Eastern Europe are the growth engines for the world.
So barring the Fed fools or the ECB or other government dopes, like Congress, messing the world up, Ms Market should be very kind to us over time and treat us very well.
It's still a bull market.
PS: Next vacation I'll try to get a guest blogger. I just didn't think about it in time.
PPS: Babblevision has that dope, Peter Beutel, on - sheesh - he's been talking that oil is going to $30 since it was $50. What a fool! Or knave?
The markets have been in the "stomping elephants" phase for a few weeks - all those beefers are swinging big bets around trying to find the new trend as the old waterhole dried up. Economies are built on the decisions of billions of people worldwide - they tend to continue to do the same things unless shocked into rethinking. So I think the world economy will do fine and continue to grow unless new, hard shocks occur.
And with the increased economic freedom of billions as the old socialist regimes died or are dying, free people will work to improve their lives. That means solid economic growth. China, India, some South America nations and Eastern Europe are the growth engines for the world.
So barring the Fed fools or the ECB or other government dopes, like Congress, messing the world up, Ms Market should be very kind to us over time and treat us very well.
It's still a bull market.
PS: Next vacation I'll try to get a guest blogger. I just didn't think about it in time.
PPS: Babblevision has that dope, Peter Beutel, on - sheesh - he's been talking that oil is going to $30 since it was $50. What a fool! Or knave?
Monday, September 10, 2007
Another Monday
FYI, I will be on vacation in Scotland from Tuesday, Sept. 11 thru Tuesday, Sept. 18 and will not be able to make new posts. My fecund brain [ ;-) ] will probably become overloaded with ideas - I'll jot them onto index cards. I guess when the Fed makes up its mind on 9/18 I'll be in an airport or on a plane coming home. I'm staying long as I think they'll wise up and cut 50 bps. If they do, the economic trajectory should be fine.
Sighhhh. Bunkerman right again. I wonder if the WSJ reads my blog. This morning's paper has an article that "hedge funds" are messing up technical signals. In all modesty [ ;-) ] I've been pointing that out for months - maybe a couple of years. The article is a bit focused on one signal, but actually I think many or most are no longer valid or greatly corrupted.
Another WSJ article documents the weak labor market in the MidWest. This is more evidence that the Fed is completely out of touch. What the heck are they blabbing about a "high resource utilization" when unemployment in Michigan is ... 7.2%!!! More broader, unemployment in the five-state region [WI, MI, OH, IN, IL] is 5.7%. Fed fools live in cosseted DC suburbs on government paychecks. Sheesh, they need slapped round a bit!
This sure seems like the mid 1980s mid cycle slowdown when the MidWest was hurt by ... Volcker's Fed. Grrrrrrrrrrrr. Why is it always the common working man - often the MidWesterner - who bears the brunt of Fed mistakes? Maybe some resources should be freed up by laying off some DC bureaucrat?
Dubai to invest big $$$ in India and China. Sign of the new "Asian Co-Prosperity Zone?
I think the high LIBOR rates are OPEC and Russian petrodollars being held back from European bank deposits. This creates a shortage of Eurodollars. There are important, technical differences between a Eurodollar and a dollar in the US. The Fed creating dollars in the US does NOT necessarily create dollars in Europe. Eurodollars are mostly created continuously by the US current account deficit with oil being the largest. So if the holders of petrodollars buy T-bills instead of depositing the money in London banks, for example, the no Eurodollar is created. Hence a shortage of Eurodollars, especially for term lending, occurs. [Overnight Eurodollars can be created with match funds from US banks lending to Europe, but not term 30-60-90 day or longer funds as the US banks would not take the risk of the non-match funding.]
PS: Babblevision has a fine report from Fitch that corporate credit is very strong, surprisingly. Corporate cash flow is strong and maturites are well spaced. Another arrow for the bear backs ;-)
PPS: Uh oh, Babblevision is spotlighting gold, talking up a $850 target. Darn.
Sighhhh. Bunkerman right again. I wonder if the WSJ reads my blog. This morning's paper has an article that "hedge funds" are messing up technical signals. In all modesty [ ;-) ] I've been pointing that out for months - maybe a couple of years. The article is a bit focused on one signal, but actually I think many or most are no longer valid or greatly corrupted.
Another WSJ article documents the weak labor market in the MidWest. This is more evidence that the Fed is completely out of touch. What the heck are they blabbing about a "high resource utilization" when unemployment in Michigan is ... 7.2%!!! More broader, unemployment in the five-state region [WI, MI, OH, IN, IL] is 5.7%. Fed fools live in cosseted DC suburbs on government paychecks. Sheesh, they need slapped round a bit!
This sure seems like the mid 1980s mid cycle slowdown when the MidWest was hurt by ... Volcker's Fed. Grrrrrrrrrrrr. Why is it always the common working man - often the MidWesterner - who bears the brunt of Fed mistakes? Maybe some resources should be freed up by laying off some DC bureaucrat?
Dubai to invest big $$$ in India and China. Sign of the new "Asian Co-Prosperity Zone?
I think the high LIBOR rates are OPEC and Russian petrodollars being held back from European bank deposits. This creates a shortage of Eurodollars. There are important, technical differences between a Eurodollar and a dollar in the US. The Fed creating dollars in the US does NOT necessarily create dollars in Europe. Eurodollars are mostly created continuously by the US current account deficit with oil being the largest. So if the holders of petrodollars buy T-bills instead of depositing the money in London banks, for example, the no Eurodollar is created. Hence a shortage of Eurodollars, especially for term lending, occurs. [Overnight Eurodollars can be created with match funds from US banks lending to Europe, but not term 30-60-90 day or longer funds as the US banks would not take the risk of the non-match funding.]
PS: Babblevision has a fine report from Fitch that corporate credit is very strong, surprisingly. Corporate cash flow is strong and maturites are well spaced. Another arrow for the bear backs ;-)
PPS: Uh oh, Babblevision is spotlighting gold, talking up a $850 target. Darn.
Friday, September 7, 2007
Fun Friday?
The beefers might romp and kick the market around today, as the employment number might give them a chance. Here's why:
A high number of new jobs implies a stronger economy and less chance of a Fed rate cut.
A low number implies a weak economy and possible negative economic momentum.
In either case, I would expect real buyers to pull bids and wait. So beefer shorts can press the market down without resistance.
A middle number - that's 25,000 to 75,000 this month in my humble opinion - will keep the real buyers in the game and might take us up as the beefer shorts cover.
Oil is strong. Gold is strong. Gasoline demand is about equal to 2006 lately. Perhaps the public is slowly cutting a little.
Elmer is blabbing to sell his book & get speaker fees. Sheesh.
It's obvious the economy is and has been slowing for months. Unemployment is a lagging indicator. Fed policy takes months to have an effect. If they were private sector people with a bonus at stake, they'd have already cut based on the inflation data.
But the Fed officials draw a government paycheck and are out of touch with the common man. They have a statutory mandate to maintain maximum employment with price stability. Part 2 has worked. Will they fail on part 1?
My iPhone is working out well. I like it. I put all my stocks into it yesterday, so could check the prices & charts [yes, charts!] on the sheep field :-)))
I just touch the screen to pick a stock and it's chart comes up for various time periods - day, month 3 months, year, and more. Very nice!
I have a lot to learn to use it better, BUT I am not suffering from buyer's remorse.
Hmmm and Steve Jobs is giving me $200 back since I bought it within 14 days of Wednesday. Great!!!
PS: I wonder if some of the OPEC and Russian petrodollars that I have speculated here about being withheld from the Eurodollar markets are being redeployed into gold? Gold sure is strong. I know it's the beginning of physical demand season. I'm just wondering if the Eurodollar weakness is another sign of some other demand showing up.
PPS: Horrible jobs numbers and big negative revisions in prior months. Sighhhh. The Fed is proven wrong again. AGAIN they forgot their cuts have a lagging effect and they are now three months behing the curve.
P^3S: The Fed should have began cutting in June or even earlier. I don't understand how they can get their butts kisses by so many talking heads and be soooooooooooo wrong.
P^4S: The employment is a lagging indicator, so they are so behind it's sickening.
P^5S; So the Fed gets an "F" for benchmark #2. Uh, I think some of THEM should be laid off.
P^6S: Uh, if you can't guess, I'm VERY ANGRY with the Fed. They have screwed up again and are hurting the common man.
A high number of new jobs implies a stronger economy and less chance of a Fed rate cut.
A low number implies a weak economy and possible negative economic momentum.
In either case, I would expect real buyers to pull bids and wait. So beefer shorts can press the market down without resistance.
A middle number - that's 25,000 to 75,000 this month in my humble opinion - will keep the real buyers in the game and might take us up as the beefer shorts cover.
Oil is strong. Gold is strong. Gasoline demand is about equal to 2006 lately. Perhaps the public is slowly cutting a little.
Elmer is blabbing to sell his book & get speaker fees. Sheesh.
It's obvious the economy is and has been slowing for months. Unemployment is a lagging indicator. Fed policy takes months to have an effect. If they were private sector people with a bonus at stake, they'd have already cut based on the inflation data.
But the Fed officials draw a government paycheck and are out of touch with the common man. They have a statutory mandate to maintain maximum employment with price stability. Part 2 has worked. Will they fail on part 1?
My iPhone is working out well. I like it. I put all my stocks into it yesterday, so could check the prices & charts [yes, charts!] on the sheep field :-)))
I just touch the screen to pick a stock and it's chart comes up for various time periods - day, month 3 months, year, and more. Very nice!
I have a lot to learn to use it better, BUT I am not suffering from buyer's remorse.
Hmmm and Steve Jobs is giving me $200 back since I bought it within 14 days of Wednesday. Great!!!
PS: I wonder if some of the OPEC and Russian petrodollars that I have speculated here about being withheld from the Eurodollar markets are being redeployed into gold? Gold sure is strong. I know it's the beginning of physical demand season. I'm just wondering if the Eurodollar weakness is another sign of some other demand showing up.
PPS: Horrible jobs numbers and big negative revisions in prior months. Sighhhh. The Fed is proven wrong again. AGAIN they forgot their cuts have a lagging effect and they are now three months behing the curve.
P^3S: The Fed should have began cutting in June or even earlier. I don't understand how they can get their butts kisses by so many talking heads and be soooooooooooo wrong.
P^4S: The employment is a lagging indicator, so they are so behind it's sickening.
P^5S; So the Fed gets an "F" for benchmark #2. Uh, I think some of THEM should be laid off.
P^6S: Uh, if you can't guess, I'm VERY ANGRY with the Fed. They have screwed up again and are hurting the common man.
Thursday, September 6, 2007
Sheep Herding
I'll be taking my two Kelpies to sheep herding class this morning :-))
They just love it - I think since they were bred for it, actually herding might excite lots of neural and emotional activity for them. It's quite physically demanding, too.
Gold is up again - closing in on $700. I like the lack of press attention. Maybe this is the big one?
Countrywide laying off people - uh, weren't they bragging about hiring to gain "market share" as few weeks ago?
Hmm, that reminds me. Here's my "never trust" list:
Never trust a man with a very good tan in a suit ;-))))
Never trust a company that is building a new, gold plated corporate HQ.
Never trust a company with a headquarters in NY, NJ or CT that is not in finance or media or advertising. The CEO is more interested in his social life than the business.
There might be more, but that's all I can remember now.
Miners are up on takeover talks.
PS: back for a while. Sky & Krypto are really getting good at the sheep herding. Sky was reading how the sheep turned their heads and then moved to cut them off. He was using a clever serpentine motion to push the "mob" around. And he's learning his circling commands - they need to know the clockwise command "go by" and the counterclockwise command "way". Sky's actually a bit better than Krypto. They both did the "down" at a distance while distracted, too.
They just love it - I think since they were bred for it, actually herding might excite lots of neural and emotional activity for them. It's quite physically demanding, too.
Gold is up again - closing in on $700. I like the lack of press attention. Maybe this is the big one?
Countrywide laying off people - uh, weren't they bragging about hiring to gain "market share" as few weeks ago?
Hmm, that reminds me. Here's my "never trust" list:
Never trust a man with a very good tan in a suit ;-))))
Never trust a company that is building a new, gold plated corporate HQ.
Never trust a company with a headquarters in NY, NJ or CT that is not in finance or media or advertising. The CEO is more interested in his social life than the business.
There might be more, but that's all I can remember now.
Miners are up on takeover talks.
PS: back for a while. Sky & Krypto are really getting good at the sheep herding. Sky was reading how the sheep turned their heads and then moved to cut them off. He was using a clever serpentine motion to push the "mob" around. And he's learning his circling commands - they need to know the clockwise command "go by" and the counterclockwise command "way". Sky's actually a bit better than Krypto. They both did the "down" at a distance while distracted, too.
Wednesday, September 5, 2007
Hungry Bears
As expected, we're seeing the bears attack overnight in Japan and in the early futures here.
The WSJ has a planted story about debt conduits for asset backed commercial paper related to Citibank. The writers really don't understand those assets. If the commercial paper can't be sold due to a liquidity crunch, the line of credit funds it, But the assets backing the CP are then just rolled off to repay it and no new assets are added. Since the assets are high quality, short term receivables with good credit cushions, there really isn't a risk to the liquidity lines.
[skeptics: yes, I know about planted stories - I did a few of them myself many moons ago.]
Some terror alerts, too, in Europe.
I think the ADP jobs number might be significant this morning. A very low number or a negative number would both encourage the bears and provide more support for a Fed ease.
A WSJ story shows how female & minority goups can be paid off, too: they oppose taxing their own hedge fund managers' pay as compensation. Sheesh. A old cleaning lady pays taxes at 45% including social security taxes and the rich woman beefer manager wants to be taxed at 15%. Despicable. [You can substitute "black" for "woman" in the above comment if you wish.]
LIBOR [aka London Interbank Offered Rate] has a high spread over the US fed funds overnight rate and short term Treasury bill rates. There is a shortage of Eurodollars in Europe. What is causing it? I think that perhaps OPEC or Russia and other oil producing nations might be pulling petrodollars out, or maybe China is not lending in the Eurodollar market, out of concern over European banks.
The S&P cash chart looks like a fine inverse H&S with two closes over the neckline break. I'd have preferred more volume. The beefers will probably hit it. Wait for dips to buy if you need to get invested.
The Russell 2000 looks like a W bottom and a small bullish cup & handle. Another close over 800 is needed to confirm.
Buffet's BNI is cheap. If I wasn't so loaded up and saving my last buying power for more big cap fins, I'd buy some.
The Nazz 100 is still moving after breaking the neckline of its inverse H&S a few days ago. Looks a bit extended, but those stocks can do that awhile. My big cap techs are AAPL, GOOG, ORCL and CSCO in order of position size.
The Nazz comp has the same pattern: recent break of neckline of an inverse H&S. Ditto Dow Jones Industrials.
I'll borrow from Churchill regarding this correction and "subprime" "crisis": It's not the end or even the beginning of the end, but it's probably the end of the beginning.
The markets look ahead. So when the "end" of the "crisis" can be foreseen, that will be the end of the correction. I think it's close. As mentioned before, many people have recent experience in the commercial real estate and mortgage crisis of the early 1990s so know how to do this residential subprime restructuring. Plenty of bottom-fishers are lurking to grab cheap assets.
So it's still a bull market. Buy dips. Hold longs for the next big move up.
PS: High levels of job cuts in Challenger, Gray report for August. Many cuts in financials.
PPS: low ADP jobs number, only 38,000 jobs in August. The Fed must cut NOW!
The WSJ has a planted story about debt conduits for asset backed commercial paper related to Citibank. The writers really don't understand those assets. If the commercial paper can't be sold due to a liquidity crunch, the line of credit funds it, But the assets backing the CP are then just rolled off to repay it and no new assets are added. Since the assets are high quality, short term receivables with good credit cushions, there really isn't a risk to the liquidity lines.
[skeptics: yes, I know about planted stories - I did a few of them myself many moons ago.]
Some terror alerts, too, in Europe.
I think the ADP jobs number might be significant this morning. A very low number or a negative number would both encourage the bears and provide more support for a Fed ease.
A WSJ story shows how female & minority goups can be paid off, too: they oppose taxing their own hedge fund managers' pay as compensation. Sheesh. A old cleaning lady pays taxes at 45% including social security taxes and the rich woman beefer manager wants to be taxed at 15%. Despicable. [You can substitute "black" for "woman" in the above comment if you wish.]
LIBOR [aka London Interbank Offered Rate] has a high spread over the US fed funds overnight rate and short term Treasury bill rates. There is a shortage of Eurodollars in Europe. What is causing it? I think that perhaps OPEC or Russia and other oil producing nations might be pulling petrodollars out, or maybe China is not lending in the Eurodollar market, out of concern over European banks.
The S&P cash chart looks like a fine inverse H&S with two closes over the neckline break. I'd have preferred more volume. The beefers will probably hit it. Wait for dips to buy if you need to get invested.
The Russell 2000 looks like a W bottom and a small bullish cup & handle. Another close over 800 is needed to confirm.
Buffet's BNI is cheap. If I wasn't so loaded up and saving my last buying power for more big cap fins, I'd buy some.
The Nazz 100 is still moving after breaking the neckline of its inverse H&S a few days ago. Looks a bit extended, but those stocks can do that awhile. My big cap techs are AAPL, GOOG, ORCL and CSCO in order of position size.
The Nazz comp has the same pattern: recent break of neckline of an inverse H&S. Ditto Dow Jones Industrials.
I'll borrow from Churchill regarding this correction and "subprime" "crisis": It's not the end or even the beginning of the end, but it's probably the end of the beginning.
The markets look ahead. So when the "end" of the "crisis" can be foreseen, that will be the end of the correction. I think it's close. As mentioned before, many people have recent experience in the commercial real estate and mortgage crisis of the early 1990s so know how to do this residential subprime restructuring. Plenty of bottom-fishers are lurking to grab cheap assets.
So it's still a bull market. Buy dips. Hold longs for the next big move up.
PS: High levels of job cuts in Challenger, Gray report for August. Many cuts in financials.
PPS: low ADP jobs number, only 38,000 jobs in August. The Fed must cut NOW!
Tuesday, September 4, 2007
Summer's Over
The CEO of DeutcheBank says it has no further undisclosed exposure to subprime, the asset backed commercial paper market is stabilizing, and credit markets are returning to normal. The stock is up solidly in Europe.
W "might" be making progress in North Korea. We''ll see. It's not over till it's over - I really dislike politicians making premature claims of success.
I suggest we pay attention to the Party Congress in Red China in October. We all might learn something about how that government is actually run. Those familiar words, "Politboro", "Central Committee" and the like have already been in the press. Is it a developing peaceful nation or is it something else? Pay attention to what is actually said and done, and don't succumb to western wishful thinking ... that is, be an exegete, not an eisegete ;-)
Golly, wheat is over $8 - this is more 1970s redux. Oh well, I had that one but got out what I got tired. A missed opportunity. :-(
Oil seems to have rejected $70 on the downside. Oil stocks are well off their highs. XLE closed over its 50 DMA and over the break point of a small bullish cup and handle formation.
XLF has a ragged inverse H&S or W formation. All that volume at the recent low suggests that was a turning point.
The S&P did make a close over the downward neckline of its inverse H&S pattern with higher volume [not absolutely high]. I'd like to see a second close here.
The woods are full of bears and they want food. So an attack is likely. Wait for dips to add - they'll give you one.
PS: Gold is at 688 this morning; approaching $700 and no one's noticing. Good!
W "might" be making progress in North Korea. We''ll see. It's not over till it's over - I really dislike politicians making premature claims of success.
I suggest we pay attention to the Party Congress in Red China in October. We all might learn something about how that government is actually run. Those familiar words, "Politboro", "Central Committee" and the like have already been in the press. Is it a developing peaceful nation or is it something else? Pay attention to what is actually said and done, and don't succumb to western wishful thinking ... that is, be an exegete, not an eisegete ;-)
Golly, wheat is over $8 - this is more 1970s redux. Oh well, I had that one but got out what I got tired. A missed opportunity. :-(
Oil seems to have rejected $70 on the downside. Oil stocks are well off their highs. XLE closed over its 50 DMA and over the break point of a small bullish cup and handle formation.
XLF has a ragged inverse H&S or W formation. All that volume at the recent low suggests that was a turning point.
The S&P did make a close over the downward neckline of its inverse H&S pattern with higher volume [not absolutely high]. I'd like to see a second close here.
The woods are full of bears and they want food. So an attack is likely. Wait for dips to add - they'll give you one.
PS: Gold is at 688 this morning; approaching $700 and no one's noticing. Good!
Monday, September 3, 2007
Could the Cold War Have Been Avoided?
In the first post of this series of four [See August 4, 2007], I argued that the Cold War could have been greatly shortened had the US and Britain not appeased Stalin. The second post (August 24, 2007) contained supporting statements from high Soviet officials for that theory, but those statements also suggested that the appeasement began earlier. In the third post (August 27, 2007) documented examples of this early "appeasement": for the British it was really a betrayal of Poland, for the US it was indecisive leadership.
So what about the Cold War? Could it have been avoided? A follower of the philosophy of Tolstoy would say , "no", it was the inevitable consequence of the flow of history and millions of small decisions of millions of people in a stream of life.
Nothing done at Yalta could have prevented it - the ground gains of the Reed Army gave Stalin his ability to dominate Eastern Europe and to begin to project communist ideology around the world. At that point, Tolstoy was right.
As a gedanken ["thought"] experiment, suppose (1) that Franklin Roosevelt dies in January 1945 after inauguration, is succeeded by Harry Truman (who did not like Stalin and was very decisive), and (2) the US A-bombs had been built & proven at the same time. So Truman drops the bomb on Berlin, kills all top Nazis causing the German Army to surrender in place. Stalin, fearing the US A-bomb, does NOT occupy more of Eastern Europe and permits true democratic governments to form. [Stalin's postwar fear of the US is documented in the memoirs of Khrushchev who was personally involved at the highest levels.]
Yes, this requires very fine timing and precise changes. That shows that Tolstoy's thinking have much to say to it in the larger scheme of European historical developments of the 20th century.
Here's a simpler gedanken experiment. Replace Franklin Roosevelt with Teddy Roosevelt. They were very distant relatives - fifth cousins; interestingly, Teddy was the uncle of Eleanor Roosevelt, too. Teddy was a vigorous personality with a strong interest in projecting the US into world affairs. He disliked the German tyrant in World War I.
So a President Theodore Roosevelt in 1936 and 1938 might have given the British and French enough backbone to stop Hitler early. Or barring that, his vigorous support and principals might have stopped any backsliding from the Atlantic Charter. That could have provided the early resistance that Soviet officials said might have stopped Stalin from expanding. The Cold War would have been confined to the Soviet Union alone as it already existed in the 1930s and died along with Stalin in 1953.
So perhaps Tolstoy was wrong. One strong leader might have prevented the World War II, the Cold War and Stalin's expansion into Eastern Europe. "Perhaps" is all we can say.
One more gedanken experiment: Let Teddy Roosevelt win the election as President in 1912. When World War I begins, he brings the US into the war quickly, perhaps upon the sinking of the Lusitania in 1915. [He is know to have favored an early US entry into the war.] The US mobilizes and has enough troops in Europe in 1917 to defeat decisively the Germans BEFORE the Bolshevik Revolution in fall 1917. He dominates the peace conference and prevents a harsh peace from being imposed on Germany. The combination of the decisive military defeat and the fair peace prevent the German bitterness that provided Hitler with fertile ground to grow the Nazi party. No Nazis, no Bolsheviks, no Hitler, no Stalin, hence no Mao ... on and on.
So one strong leader at the right time and place "perhaps" could have changed the ENTIRE 20th century.
Gedanken experiments in world affairs can illuminate much about history and about how current leadership might both have influence or have little. Is W a captain leading a ship or a cork in a stream? We might no know for years, but I think that great opportunities were squandered by him.
So what about the Cold War? Could it have been avoided? A follower of the philosophy of Tolstoy would say , "no", it was the inevitable consequence of the flow of history and millions of small decisions of millions of people in a stream of life.
Nothing done at Yalta could have prevented it - the ground gains of the Reed Army gave Stalin his ability to dominate Eastern Europe and to begin to project communist ideology around the world. At that point, Tolstoy was right.
As a gedanken ["thought"] experiment, suppose (1) that Franklin Roosevelt dies in January 1945 after inauguration, is succeeded by Harry Truman (who did not like Stalin and was very decisive), and (2) the US A-bombs had been built & proven at the same time. So Truman drops the bomb on Berlin, kills all top Nazis causing the German Army to surrender in place. Stalin, fearing the US A-bomb, does NOT occupy more of Eastern Europe and permits true democratic governments to form. [Stalin's postwar fear of the US is documented in the memoirs of Khrushchev who was personally involved at the highest levels.]
Yes, this requires very fine timing and precise changes. That shows that Tolstoy's thinking have much to say to it in the larger scheme of European historical developments of the 20th century.
Here's a simpler gedanken experiment. Replace Franklin Roosevelt with Teddy Roosevelt. They were very distant relatives - fifth cousins; interestingly, Teddy was the uncle of Eleanor Roosevelt, too. Teddy was a vigorous personality with a strong interest in projecting the US into world affairs. He disliked the German tyrant in World War I.
So a President Theodore Roosevelt in 1936 and 1938 might have given the British and French enough backbone to stop Hitler early. Or barring that, his vigorous support and principals might have stopped any backsliding from the Atlantic Charter. That could have provided the early resistance that Soviet officials said might have stopped Stalin from expanding. The Cold War would have been confined to the Soviet Union alone as it already existed in the 1930s and died along with Stalin in 1953.
So perhaps Tolstoy was wrong. One strong leader might have prevented the World War II, the Cold War and Stalin's expansion into Eastern Europe. "Perhaps" is all we can say.
One more gedanken experiment: Let Teddy Roosevelt win the election as President in 1912. When World War I begins, he brings the US into the war quickly, perhaps upon the sinking of the Lusitania in 1915. [He is know to have favored an early US entry into the war.] The US mobilizes and has enough troops in Europe in 1917 to defeat decisively the Germans BEFORE the Bolshevik Revolution in fall 1917. He dominates the peace conference and prevents a harsh peace from being imposed on Germany. The combination of the decisive military defeat and the fair peace prevent the German bitterness that provided Hitler with fertile ground to grow the Nazi party. No Nazis, no Bolsheviks, no Hitler, no Stalin, hence no Mao ... on and on.
So one strong leader at the right time and place "perhaps" could have changed the ENTIRE 20th century.
Gedanken experiments in world affairs can illuminate much about history and about how current leadership might both have influence or have little. Is W a captain leading a ship or a cork in a stream? We might no know for years, but I think that great opportunities were squandered by him.
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