European stocks are down quite a bit this morning and some asset allocation programs seem to be pushing US stock futures down a lot, too. S&P futures are down about 18 pts as of 5AM ET.
Gold is up $20 to around $840. Oil is up to about $98.6. The Euro is up to 1.468; the pound to $2.10
There doesn't seem to be any significant news yet. ECB tough talk is driving the Euro up.
Longer term, I think Persian Gulf and Russia money is moving into euros and gold to diversify. They spend most of their money in Europe, so it makes sense. There is talk of Chinese diversification, too. For that to happen, China must de-link from the dollar.
For decades the US with its free markets and low regulation has been a great place to invest. That is good, but it also led to an overvalued currency that hurt exports. That has been and is still correcting itself before our eyes. Exports are surging, export industries and jobs are growing. So far US consumer prices are not strongly affected as many imports are from countries with dollar links like China. Basic materials and oil are priced in dollars.
Let's see how the ECB reacts. They need to step up and provide Euros to meet demand. This will maintain the global money supply growth as the flow of dollars overseas contracts.
NOTE: I will be traveling to NYC later this morning until Friday around noon. So posts might be sparse. I should be able to post a blog tomorrow, but not Friday until later in the day. Good luck. Be wary - beefers are stomping the mud in search of a new waterhole.
PS: This looks like a euro-panic. Euro-beefers or big euro-investors are probably doing big asset alloctions out of dollar, US stocks.
Wednesday, November 7, 2007
Tuesday, November 6, 2007
Tracking
Quite a lot of recent market action is just beefer ping pong aka elephants stomping at the water hole. But some signs of real buying and selling do exist.
1. Clearly real sellers are moving out of the big banks. I suspect that growth & income funds are scared and selling a good bit to shift into other dividend payers like utilities. I also suspect that beefer shorts are magnifying this move. Notice the strength in the Dow Utilities index.
2. The weakness in the Russell over the past four week indicates that beefers are bailing out of that sector as a potential savior for their year end fees. The Russell is a favorite playground for them.
3. The strength in the Nazz 100 whilst all the turmoil has been occurring shows real buyers there, too. Big cap tech sells big money over seas, so perhaps that's the source of the real buyers, there: exports growth. But I suspect some amplification by beefers there, too.
4. The Dow transportation index has been roughly flat for weeks. If a recession was being forecast by major players, one would think that would be going down. It's not.
Interestingly, I heard a French analyst on Babblevision early who said the Euro was overvalued by 50%. Yes, 50%. He thought parity was fair value. I think the Euro strength is due to Persian Gulf money and Russian money who spend lots in Europe. Also, some of those have reasons to avoid the US$ and its banking system, viz. terrorist and organized crime connections.
Gold is about $820 as I write and oil is around $95.50. The all-time high for gold is around $850 for a closing price, but I think the intraday high was closer to $900. I'll do more research as it is getting closer.
The economic trajectory is strong and continuing onward. So it's a bull market, despite all the froth. Over time this fear should dissipate and the up trend continue.
I have sheep herding today so will be out from about 8AM EST thru 1PM EST.
PS: Back. Oil $97. Gold $825.
PPS: Sheesh. Gasparino says Dick Grass's favorite movie was Borat. That movie sucked - I turned it off after about 30 minutes.
P^3S: The S&P cash is looking like a W bottom pattern is forming. Cracking 1520 and holding two days would set it up. There must be a lot of beefer shorts out there - they could get hurt.
1. Clearly real sellers are moving out of the big banks. I suspect that growth & income funds are scared and selling a good bit to shift into other dividend payers like utilities. I also suspect that beefer shorts are magnifying this move. Notice the strength in the Dow Utilities index.
2. The weakness in the Russell over the past four week indicates that beefers are bailing out of that sector as a potential savior for their year end fees. The Russell is a favorite playground for them.
3. The strength in the Nazz 100 whilst all the turmoil has been occurring shows real buyers there, too. Big cap tech sells big money over seas, so perhaps that's the source of the real buyers, there: exports growth. But I suspect some amplification by beefers there, too.
4. The Dow transportation index has been roughly flat for weeks. If a recession was being forecast by major players, one would think that would be going down. It's not.
Interestingly, I heard a French analyst on Babblevision early who said the Euro was overvalued by 50%. Yes, 50%. He thought parity was fair value. I think the Euro strength is due to Persian Gulf money and Russian money who spend lots in Europe. Also, some of those have reasons to avoid the US$ and its banking system, viz. terrorist and organized crime connections.
Gold is about $820 as I write and oil is around $95.50. The all-time high for gold is around $850 for a closing price, but I think the intraday high was closer to $900. I'll do more research as it is getting closer.
The economic trajectory is strong and continuing onward. So it's a bull market, despite all the froth. Over time this fear should dissipate and the up trend continue.
I have sheep herding today so will be out from about 8AM EST thru 1PM EST.
PS: Back. Oil $97. Gold $825.
PPS: Sheesh. Gasparino says Dick Grass's favorite movie was Borat. That movie sucked - I turned it off after about 30 minutes.
P^3S: The S&P cash is looking like a W bottom pattern is forming. Cracking 1520 and holding two days would set it up. There must be a lot of beefer shorts out there - they could get hurt.
Monday, November 5, 2007
Monday Morning Rambles
Chuck Prince "retires" - C announces more write offs due to "subprime" . They say they held $50 billion of that paper at the end of Q3. The write off is around $11 billion. The stock is up about .67 in European trading.
Futures are down as of now [6 AM EST]. Hong Kong got smashed.
Oil is down a bit as is gold.
Nothing much in the news about the "real" economy. Friday's jobs number was quite good. Recent PCE inflation numbers are good. So the moderate growth trajectory seems to be continuing.
New England defeated the Indianapolis Colts in an exciting football game yesterday. I watched that game and part of the San Diego-Minnesota game. These fast, agile running backs are really exciting. Football has missed those for a few years in my memory. But I admit I'm not a heavy viewer.
I set up a Las Vegas trip for mid December. And I have to travel to NYC Wednesday noon thru Friday noon. I've asked a person to guest blog on Thursday and Friday. We'll see.
Sky is really amazingly good in sheep herding for a 10 month old puppy. He's now herding 10 big sheep in a big field - no nearby fence. He loves it and and does remarkably well, according to the instructor. Perhaps he's the best he's seen at this age. So I think that sheep herding will be a regular sport with us. Sky will probably be ready for trials next summer.
PS: C is trading down in Europe now.
PPS: It's darkest before the dawn. I'll probably hide in my bunker today - expecting shelling.
Futures are down as of now [6 AM EST]. Hong Kong got smashed.
Oil is down a bit as is gold.
Nothing much in the news about the "real" economy. Friday's jobs number was quite good. Recent PCE inflation numbers are good. So the moderate growth trajectory seems to be continuing.
New England defeated the Indianapolis Colts in an exciting football game yesterday. I watched that game and part of the San Diego-Minnesota game. These fast, agile running backs are really exciting. Football has missed those for a few years in my memory. But I admit I'm not a heavy viewer.
I set up a Las Vegas trip for mid December. And I have to travel to NYC Wednesday noon thru Friday noon. I've asked a person to guest blog on Thursday and Friday. We'll see.
Sky is really amazingly good in sheep herding for a 10 month old puppy. He's now herding 10 big sheep in a big field - no nearby fence. He loves it and and does remarkably well, according to the instructor. Perhaps he's the best he's seen at this age. So I think that sheep herding will be a regular sport with us. Sky will probably be ready for trials next summer.
PS: C is trading down in Europe now.
PPS: It's darkest before the dawn. I'll probably hide in my bunker today - expecting shelling.
Sunday, November 4, 2007
Early Totalitariansm
Reading about the French Revolution in the fine book, "Europe: A History" by Norman Davies, I was stuck by the description of the Jacobin phase of the French Revolution. This period and government had most of the aspects of a totalitarian system: revolutionary ideology, need for expansion, an endless stream of victims for terror, systems of spies and informers, "laws" that made everyone a criminal, rule by a core elite or one man, etc.
I was surprised how well that period fit Hannah Arendt's description of Totalitarianism. So far I'm unable to come up with earlier examples of Totalitarianism. If anyone has suggestions, I'd appreciate them.
I was surprised how well that period fit Hannah Arendt's description of Totalitarianism. So far I'm unable to come up with earlier examples of Totalitarianism. If anyone has suggestions, I'd appreciate them.
Saturday, November 3, 2007
Instincts
Often my instinctive, non-articulable "feeling" toward a situation of a problem has proven correct over the years. I suppose many "feelings" have been wrong, but I don't remember those ;-)
Here are three instances.
In the late 1990s, I was discussing Sandy Weill with acquaintances at a NYC club bar. The WSJ article had just appeared where his favoritism towards his daughter at Citibank had been unveiled. I stated that the story inferred he was untrustworthy. My fellow debaters/drinkers vehemently disagreed. Several years later, the Jack Grubman - Worldcom case proved me correct.
A couple of years ago, Weill's performance at Citibank was being discussed in a chat room. I posted that he had really done nothing but engage in merger-itis as the long term chart of C proved. The stock had gone nowhere for the time he controlled the company. I was challenged that he "built up the company". Now we see widely accepted in the business press that he just created a mess. And the mess will likely soon come apart as Chuck Prince is resigning.
About 33 years ago, I gave a talk on the mass of galaxies. I had learned much galactic dynamics in an advanced graduate course, including the mystery of the rotation curves of galaxies and the unseen virial mass of clusters of galaxies. Putting 2 and 2 together, I knew that a uniform, very heavy distribution of "dark matter" would explain both. So I gave a short talk on the problem and solution in another graduate course where the question had come up. Being rather young [I was just a junior in college], I was unable to answer quite a few of points that captious* fellow students tossed up. A few years as a graduate student myself and a teaching assistant, later I assigned a scattering theory problem to students to illustrate how some types of matter would be unobservable. In recent years, the existence of a uniform field of "dark matter" in the universe is now accepted by astrophysicists. Its makeup is still unknown.
So one must respect one's instincts, provided they have led one well in the past.
*see Thurday's word of the day
Here are three instances.
In the late 1990s, I was discussing Sandy Weill with acquaintances at a NYC club bar. The WSJ article had just appeared where his favoritism towards his daughter at Citibank had been unveiled. I stated that the story inferred he was untrustworthy. My fellow debaters/drinkers vehemently disagreed. Several years later, the Jack Grubman - Worldcom case proved me correct.
A couple of years ago, Weill's performance at Citibank was being discussed in a chat room. I posted that he had really done nothing but engage in merger-itis as the long term chart of C proved. The stock had gone nowhere for the time he controlled the company. I was challenged that he "built up the company". Now we see widely accepted in the business press that he just created a mess. And the mess will likely soon come apart as Chuck Prince is resigning.
About 33 years ago, I gave a talk on the mass of galaxies. I had learned much galactic dynamics in an advanced graduate course, including the mystery of the rotation curves of galaxies and the unseen virial mass of clusters of galaxies. Putting 2 and 2 together, I knew that a uniform, very heavy distribution of "dark matter" would explain both. So I gave a short talk on the problem and solution in another graduate course where the question had come up. Being rather young [I was just a junior in college], I was unable to answer quite a few of points that captious* fellow students tossed up. A few years as a graduate student myself and a teaching assistant, later I assigned a scattering theory problem to students to illustrate how some types of matter would be unobservable. In recent years, the existence of a uniform field of "dark matter" in the universe is now accepted by astrophysicists. Its makeup is still unknown.
So one must respect one's instincts, provided they have led one well in the past.
*see Thurday's word of the day
Friday, November 2, 2007
Beefer Madness
As a victim of irreversible senescence* I remember seeing that old movie, "Reefer Madness", from high school that was used to scare us from using marijuana. We had heard about it and its laughable claims, so enjoyed it immensely. The movie was sort of pointless for me, living in an isolated small town in Ohio. I never smelled it until my first day as a freshman at Harvard when the redolence** of an adjacent dorm room caused me to ask a NYC kid what it was.
Yesterday was another recurrence of beefer madness. Any recent beefer buys of big banks were dumped into the street as one analyst suggested the C dividend, though well-covered by earnings, might be cut. Panic selling. XOM was dumped citing production declines. Uh ... Boone has been saying for a long time that finding more oil was hard. Anyone paying attention would know that a "B" rated security has a 30-50% likelihood to default over its lifetime, yet reports of possible risk to junk rated retailers is "news". Sigh. And any CDO already includes such cumulative default risks in its ratings.
Even though beefers are at four year lows in net long positions, they dumped stocks mindlessly and shorted with abandon to protect their YTD numbers. Signs of the beefer: huge ETF trading, outsized moves by the Russell and S&P midcaps, huge drops in recent gainers.
There was a bit of news. WSJ reports the head of BS is a pothead and uses illegal Cuban cigars, hence supports the tyrant Castro. Today's WSJ reports Merrill Lynch used hedge funds to hide losses. SEC investigations for both. No surprises.
Recent economic data is either good [GDP, inflation] or OK [ISM mfg].
Today's employment numbers are important. One reason the Fed moved to neutral was the revision of that negative jobs number. Let's see if they were right or got faked out again.
I have large longs in BAC, WB and C now. I might add more. I'll buy more JPM on any decline. I think the dividends are safe and the mortgage and CDO turmoil will eventually lead to more profitable business for these institutions. I still think I'll make over 30% on these over a year.
Words of the Day:
*senescence [$10] - noun from the intransitive verb, "senesce", meaning "to grow old". the adjective is "senescent". Here's another sentence using that word - [referring to concepts of the decline of mankind applied to the Dark Ages] "... and that man's weakened mind ... is an infallible sign of the senescence of the species ..." {"Social Change and History", by Robert Nisbet, p 101}
**redolence [$10] - a noun from the adjective, "redolent" meaning (1) having or emitting fragrance: aromatic; (2) suggestive : reminiscent
Yesterday was another recurrence of beefer madness. Any recent beefer buys of big banks were dumped into the street as one analyst suggested the C dividend, though well-covered by earnings, might be cut. Panic selling. XOM was dumped citing production declines. Uh ... Boone has been saying for a long time that finding more oil was hard. Anyone paying attention would know that a "B" rated security has a 30-50% likelihood to default over its lifetime, yet reports of possible risk to junk rated retailers is "news". Sigh. And any CDO already includes such cumulative default risks in its ratings.
Even though beefers are at four year lows in net long positions, they dumped stocks mindlessly and shorted with abandon to protect their YTD numbers. Signs of the beefer: huge ETF trading, outsized moves by the Russell and S&P midcaps, huge drops in recent gainers.
There was a bit of news. WSJ reports the head of BS is a pothead and uses illegal Cuban cigars, hence supports the tyrant Castro. Today's WSJ reports Merrill Lynch used hedge funds to hide losses. SEC investigations for both. No surprises.
Recent economic data is either good [GDP, inflation] or OK [ISM mfg].
Today's employment numbers are important. One reason the Fed moved to neutral was the revision of that negative jobs number. Let's see if they were right or got faked out again.
I have large longs in BAC, WB and C now. I might add more. I'll buy more JPM on any decline. I think the dividends are safe and the mortgage and CDO turmoil will eventually lead to more profitable business for these institutions. I still think I'll make over 30% on these over a year.
Words of the Day:
*senescence [$10] - noun from the intransitive verb, "senesce", meaning "to grow old". the adjective is "senescent". Here's another sentence using that word - [referring to concepts of the decline of mankind applied to the Dark Ages] "... and that man's weakened mind ... is an infallible sign of the senescence of the species ..." {"Social Change and History", by Robert Nisbet, p 101}
**redolence [$10] - a noun from the adjective, "redolent" meaning (1) having or emitting fragrance: aromatic; (2) suggestive : reminiscent
Thursday, November 1, 2007
The Day After
Futures are down this morning, as are European stock markets. This might be a correction of yesterday's enthusiasm or a re-thinking. I re-thought my initial annoyance of the Fed for not listening to me ;-)
To prove I am not an ingrained captious* commentator, I will say that "perhaps" the Fed made the correct move. One analysis that I heard of the Fed's actions was that they did not see much risk of a recession now. That "might" be correct. That would also explain yesterday's big move up. Much pressure on stocks had been due to recession-mongering by the bears. If the recession is fading like so many other bearish delusions, then much higher stock prices are justified.
Gold hit $800 yesterday intraday. Oil traded over $96 overnight.
An analyst downgraded C, saying they have a shortage of capital and have to cut the dividend. I'll have to check that out - since they are still profitable, I'm not sure how that makes sense.
Some important economic data come out today - the ISM manufacturing index is most significant to me. If it's under 50, then the Fed timidity will seem a bit more likely to be wrong.
Seasonal strength is upon us. Real buyers have money to put to work. The trend is up. It's a bull market. Buy dips. But be wary and pay attention !
*Captious is the Word of the Day. Captious: adj. given to finding fault or raising petty objections. I first saw that word reading Erasmus's famous work, "Praise of Folly". Here's how he used it re the Stoic philosophers - "... seeing they're so captious and far keener-eyed to pick out their friends faults than an eagle ..."
PS: WSJ story shows BSC leader Cayne as a .. prima donna jerk. No surprise.
PPS: C will probably go down until Chuck Prince goes. The WSJ article showed that his pal, Rubin, out of touch, too. He has to go, too.
To prove I am not an ingrained captious* commentator, I will say that "perhaps" the Fed made the correct move. One analysis that I heard of the Fed's actions was that they did not see much risk of a recession now. That "might" be correct. That would also explain yesterday's big move up. Much pressure on stocks had been due to recession-mongering by the bears. If the recession is fading like so many other bearish delusions, then much higher stock prices are justified.
Gold hit $800 yesterday intraday. Oil traded over $96 overnight.
An analyst downgraded C, saying they have a shortage of capital and have to cut the dividend. I'll have to check that out - since they are still profitable, I'm not sure how that makes sense.
Some important economic data come out today - the ISM manufacturing index is most significant to me. If it's under 50, then the Fed timidity will seem a bit more likely to be wrong.
Seasonal strength is upon us. Real buyers have money to put to work. The trend is up. It's a bull market. Buy dips. But be wary and pay attention !
*Captious is the Word of the Day. Captious: adj. given to finding fault or raising petty objections. I first saw that word reading Erasmus's famous work, "Praise of Folly". Here's how he used it re the Stoic philosophers - "... seeing they're so captious and far keener-eyed to pick out their friends faults than an eagle ..."
PS: WSJ story shows BSC leader Cayne as a .. prima donna jerk. No surprise.
PPS: C will probably go down until Chuck Prince goes. The WSJ article showed that his pal, Rubin, out of touch, too. He has to go, too.
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