Wednesday, April 30, 2014

IT"S ABOUT TAXES, JAKE



In our recent post, "Wonder Why?"we mentioned the tax savings these companies get when moving off shore. In many cases it's bigger than big.

Congress in its infinite wisdom is constantly after China to strengthen it currency, the yuan, to help close the trade gap between the two nations. In economic parlance it's known as beggar thy neighbor. In a broader sense it very similar to countries that have lower corporate tax basis.

Attracting businesses is what its all about whether its the state of Texas or a country like Ireland or Canada. 

The Pfizer-AstraZeneca deal is much in the news now and rumors about such a mega deal were afloat on the street for a while before it hit MSM.  Here's more on the subject from Reuters.
http://www.reuters.com/article/2014/05/01/us-usa-tax-mergers-idUSBREA4003G20140501



WWP MODE

 
Watch, wait and plan mode is how the Wall Street Journal described today's Fed announcement about what investors have come to know and fear as the Fed's tapering program.

Once upon a time in the Land of Monetary Policy there was QE, otherwise known as Fed speak for quantitative easing or let the ink on the printers fly. And fly it did. There are many kinds of highs in life. But for politicians and Wall Street denizens it's liquidity and easy money.

Any threat to that dynamic duo and it 's turn off the fans before you know what starts to fly. So the Fed played a little good cop bad cop announcing earlier in the day growth in the economy barely budged in the first quarter and following it up saying it will continue to pare back its bond and mortgage-back securities purchases in May.

http://online.wsj.com/news/articles/SB10001424052702304178104579533861135944336?mod=WSJ_hp_LEFTWhatsNewsCollection&mg=reno64-wsj 

BOGUS


We've been harping about the bogus inflation crap coming from the Fed and its cronies in MSM for a long time now.

We don't want to confuse anyone with basic simple stuff like utilities, trash collection and a whole host of everyday stuff like food and energy; that would be too pedestrian. And, oh yea, property and sales and professional fee taxes, they're not part of one's increased costs of existing either.

Here in California the Freeway electric bulletin board signs now warn about a recently increased cell phone fine of $161-plus, a 30-percent-plus, to borrow the idiom of bureaucrats who cook this stuff up, hike for the infraction.

Maybe we're being a bit un-child like here for not appreciating more the now-you-see-it-now-you don't legerdemain. It's so magical.

http://davidstockmanscontracorner.com/memo-to-dr-yellen-on-the-low-flation-myth-inflation-seen-and-not-seen/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+AM+Wednesday

GLOOM DOOM PUSHBACK


Some gloom, some doom and some pushback.

Normally, we'd post this under voices where we usually put market strategists and their economic meanderings. But Faber is fun to hear and to read.

And the guy from the Times makes a valid point. His comment implies the gloom and doomsters manipulate the market for personal gain. That's interesting and raises an interesting question: What does Wall Street with its horde of bankers like Goldman Sachs do, sell lollipops?

http://blogs.marketwatch.com/thetell/2014/04/30/crashy-marc-faber-its-too-late-to-buy-u-s-stocks-now/

Tuesday, April 29, 2014

THE MAGICAL WORD



This is a four-letter word we've alluded to before and, in our humble opinion, at least one reason the Fed is behind the curve.

Jobs. Yes, they're out there and this is not the first sign. Again, if Fed Chair Yellen, as she recently did, questions the accuracy of the Fed's models to adequately track prices is correct why would jobs be any better. The truth is they ain't.

The truth is the Fed is trying to muddle its way through a situation they muddled up to begin with. From Japan to the EU to the US as more and more of these economic soothsayers keep worrying about more deflation the less likely that's what's in store. As even Keynes pointed out: nine times out of 10 the most feared never happens. 

http://www.businessweek.com/articles/2014-04-24/labor-shortages-pop-up-in-many-u-dot-s-dot-cities


WHAT HAPPENED?



We'll call this for want of a better term an interesting discussion that took place earlier today from a panel of three prominent American economists. Make of it what you you want. Our take, again for want of a better term, is a big yawn. Furthermore, it's just one more example, prominent economists or no, of "your guess is as good as mine."

http://blogs.marketwatch.com/thetell/2014/04/29/roubini-rogoff-taylor-debate-the-global-economy-live-blog/

WONDER WHY?




A few years ago it was a Connecticut firm that sought to move off shore. Reason: To save on costs, a euphemism for tax bill.

Politicians on the left and right rallied to call the 100-plus year old company's move a bunch of names including ''un-American." The  firm finally backed down and stayed in one of the highest tax states.

 Now two more huge companies want to move their headquarters, Toyota and Pfizer, for reasons we'll leave you to figure out since elected official apparently can't or, worse yet, don't want to.

 http://online.wsj.com/news/articles/SB10001424052702304163604579530162313579896?mod=WSJ_hps_sections_health&mg=reno64-wsj

http://www.cnbc.com/id/101625195






Monday, April 28, 2014

TWO GOALS DIFFICULT CHOICE

The European Union gets about 40% of its natural gas and 20% of its oil from Russia, not a good position to be in when you're doling out sanctions 

Talk about biting the hand that feeds you. Europe is noted for its environmental activists and for years many countries there have been trying to clean up their greenhouse act. A noble goal to be sure. But so is trying to stay warm during frigid winters


One of the big greenhouse bogey men for decades has been coal, that thick-smoke-producing cheap energy industries worldwide depended on for years. Japan after it's Fukashima nuclear disaster is now considering coal to supply some of its energy needs. And China with its own energy problems, according to most reports, is one of the worlds largest importers of coal.


And there are others including India looking at coal. Though most environmentalists won't admit it, alternative sources ain't the answer for a variety of reasons too numerous to discuss. 


(See http://ourfiniteworld.com/2014/04/23/eight-energy-myths-explained/.) Germany and Poland mine lots of the stuff. Coal is cheap as in the cheapest source of energy despite what many will say.

We're not predicting anything, but don't be too surprised if this turns out to be another chapter in what goes around comes around.

http://www.minyanville.com/sectors/energy/articles/Coal-Increasingly-Seen-As-Option-For/4/28/2014/id/54745



RANDOM READS

New Sanctions
http://www.cnbc.com/id/101620246

High Yield Bonds Still Above Waterline
http://www.bloomberg.com/news/2014-04-28/junk-bond-skeptics-squeezed-as-jpmorgan-sees-tears-in-15.html

Earnings Hit
http://www.usatoday.com/story/money/business/2014/04/27/american-companies-latin-america-currency/8166739/

Hubris? You Decide
http://blogs.marketwatch.com/thetell/2014/04/28/bull-market-wont-die-until-a-recession-hits-rbc/

Higher Beef Prices
http://www.theguardian.com/environment/2014/apr/28/california-drought-cattle-ranchers-water-beef

The Way The Brain Works
http://online.wsj.com/news/articles/SB10001424052702303725404579461722158151180?



Sunday, April 27, 2014

SAY GOODBYE TO ROMA


Homeless people are seen sleeping in front of St. Peter's Basilica at the...
The glory that was once Roma.

Italy is one of the European Union's periphery nations like Greece and Portugal. As one of the richest institutions in the world, the Catholic church, prepares to canonize two still very-much-with-us former popes in a gala festival, Roma and the rest of the nation continues to crumble. And the madness continues.

It's a canonization MSM worldwide will be all over, a morally-bankrupt media covering a bankrupt nation.

Read the full story.
http://www.spiegel.de/international/europe/new-mayor-in-rome-seeks-to-prevent-further-decline-in-city-a-965806.html


QUESTIONS?


Here's a story that should improve your confidence in the Fed and new Chair Janet Yellen.

Some no doubt will see it as a positive, an admission of what they don't know, not a bad human trait to have in most cases. Just not this one. Yellen is a new chairperson, not a new member of the inner circle. Nor is she new to the world of politics. She's a wonk. One could easily suggest so much for the value of experience.

If in truth she is correct and their econometric mumble-jumble is offbeat, what's that say for the policies they've been conducting for the past several years? It's just a question. It doesn't deserve an answer unless you're a serious investor.

If as she postulates their models fail to predict price moves, could they possibly be understating inflation? Just another question. Famed investor Michael Price once said, it's not so much the answers you get. It's the questions you ask.

http://www.bloomberg.com/news/2014-04-25/yellen-concerned-fed-model-fails-to-predict-price-moves.html

SO MUCH FOR PEACE DIVIDENDS

Federal Spending Per Household Is on the Rise

Federal spending per household is projected to grow by 22 percent over the next decade, after adjusting for inflation. Federal spending per household more than doubled from 1962 to 2003. Spending grew by 17 percent just over the past decade.
INFLATION-ADJUSTED DOLLARS (2013)


Federal Spending Per Household Is on the Rise

Back in 1989 when the Berlin Wall crumbled there was much talk about the peace dividend.

Industrialized nations would have more of the filthy lucre to spread around purportedly on so-called good things. After all, so the story went, the military-industrial complex soaked and sopped up huge chunks of GDP. In other words, government money.

It was viewed as a waste of good government money. And whatever the purpose, wasting good government money is always characterized as a no-no unless you're the government wasting it.

Well, like a lot of things in life, something went awry on the way to the savings. Those same governments--as they nearly always do--found other ways to waste the would-be windfall. And now that the Ukraine mess has captured the public spotlight, interest in new military weaponry for defense is perking up from some most unusual places.

We'd say go figure, but that would to be too..... 

 http://online.wsj.com/news/articles/SB10001424052702304788404579522843679136218?KEYWORDS=saab+news&mg=reno64-wsj

 http://online.wsj.com/news/articles/SB10001424052702303825604579516962265054526?KEYWORDS=saab+news&mg=reno64-wsj



WEEK PENDING

A lot on the coming week agenda. This is just a partial list of what we're paying attention to. If you find it helpful, fine. If not, we still wish you successful investing.

--March pending existing-home sales out
--The dragster, ECB President Mario Draghi, speaks in Germany
--Mr. Irrational Exuberance, Sir Alan Greenspan, commandeers the podium in New York
--The FOMC sans news conference announces its policy
--FOMC two-day interest-rate meeting begins
--A host of companies--Exxon, Kraft, Kellogg, to name a few,  roll out their earnings 
--March personal income numbers out
--April non-farm payrolls report on Friday
--Nationsl ISM manufacturing index the day before.

As always, keep your eye on what the punditry expects and what actually happens, knowing of course that these folks hold something we don't--a revisionist hole card.

A BIG ENERGY STORY


We have been long energy for some time. Coming into this year energy was supposed to be a no-show as far as many pundits were concerned.

Supply was plentiful, geopolitical turmoil and economic demand with concern about a China slowdown and EU deflation captured much of the MSM's attention. Meanwhile, some continue to believe energy is the big story.

And a big part of that big story, at least indirectly if not more so, is the Ukraine situation. Will it spread or be contained? Here's one view.

http://t.ritholtz.com/bigpicture/#!/entry/containing-ukraine,535ad6cb025312186cfd0dc9



Saturday, April 26, 2014

YOU GOTTA LOVE 'EM


 Ron Insana.jpg
You gotta love Ron Insana, the CNBC financial commentator and author (Who among these television talking financial heads hasn't yet written a book about investing?).

The guy's insane. Could be all those bright lights.

He wants investors to accept another one of the Fed's cockeyed inflation indicators, the PCE, used to gauge inflation. Even the formal name should send doubts scurrying up your spinal cord--personal-consumption expenditure deflator.

At your next cocktail soiree we challenge you to take your drink, chime the glass a few times to get everyone's attention, then hold the tip of your tongue between your dominate hand index finger and thumb and repeat out loud as fast as you can three times: personal-consumption expenditure deflator. If that don't do it, we'll send you a prescription for some stronger medicine.

According to Insana--and don't get us wrong; he's probably a well-meaning, nice guy-- this indicator says current inflation is less than 1 percent. And, as he goes on, to get a fix on equity valuations you simply subtract the PCE ( less than 1 percent) from 20 to get a fair market value P/E. So here we go: 20 minus less slightly less than 1 equals 19 point something less than something less than 1. 

He then cites new Fed Chair Janet Yellen as on the record to hold her interest-rate-hiking trigger finger until unemployment settles somewhere between 5.2 and 5.6 percent. If the exactitude here scares you, just breathe deeply 100 times while sitting in the lotus position in your pajamas for five consecutive days while watching Good Morning America for its intellectual content.

His next bit centers on 2007 when the Fed hiked interest rates 17 times in 18 months. The implied assumption here--and we all make them--is the catalyst has to be same. It doesn't. 

The real question is how high were interest rates when the cranking started and how high did they have to go before reaching the tipping point? In short, what were the norms then and what are they now?

Nearly all agree that this has been an abnormal era of low interest rates and easy money. In 2007 the Fed titrated the rates like a bunch of mad chemists in a lab searching for the correct formula. And in the end they found it.  

A few years ago a business associate lost a seven-figure job for doing what everyone else had and was still doing. Personalities and individual likes and dislikes aside, he made an incorrect assumption. Investors make them all the time. If I buy the stock it's got to go up. 

Many of today's media mouths in one breath give lip service to the belief that history never exactly repeats itself and in the next breath roll out reams of linear data to buttress their point as why it won't or can't happen yet.  

So in Insana's linear world, though he would most likely deny it, it will take a similar wind to blow this stock market Humpty Dumpty off the wall.

Insana concludes by pointing out the common guy in the streets ain't in yet. Interpretation: MSM and Wall Street have much more shilling to do. 
http://www.cnbc.com/id/101614178


NEVER GET DISCOURAGED



It's the weekend.

Markets are closed, we're just coming off a big victory Friday evening in Ontario, California and the warm California sun is out after a rainy, windy night.

Never get discouraged. Normally we'd say something like: "Critics be damned!" But we promised our dear deceased mother never to take The Lord's name in vain.

Never get discouraged about being turned down or rejected. Let me give you just two examples from Film Land. Yea, we're talking about Hollywood, a place people love to love and love to hate at the same time.

The perennial Xmas classic starring Jimmy Stewart and Donna Reed, "It's a Wonderful Life, "was an unparalleled financial flop." How big a flop? Well, the studio never bothered to even hold onto its rights. And that's why for years it ran hundreds of times every Xmas season because nobody had to pay anything to screen it. The film lost money, lots of money and critics panned it for being too "sappy and overly sentimental."

The other classic now considered by many as the greatest film ever made is "Citizen Kane" starring Orson Wells, Joseph Cotten and Everett Sloan. Critics called it "too dour and overly long." Today it's viewed as a "stunning example of film making."

A little inflation side note, Sloan by the way, one of the better characters actors of the era, reportedly received 2,400 in 1941 dollars for shaving his head for his role.

So there you have it, the rest of the story as the late radio personality Paul Harvey use to say. Never get discouraged. And, for certain, don't take the so-called experts too seriously. Most are too dour and overly long.


as

FAIRNESS




We like to think of ourselves as even-handed as in that rare of rarest commodities today, fairness.

In the Good Book it recommends moderation in all things. That might be more than a stretch when it comes to today's Wall Street, bankers and politicians of all stripes. We'd like to say at least we gave it the old college try, but that's about as inflated as all those college GPAs.

So here's another take on the current economic situation fresh off the wire.

http://www.businessinsider.com/the-economic-growth-cycle-2014-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

METAPHORS


If you like metaphors, here's one.

Part of the student loan mess that is now a big bubble searching for a spot to go snap, crackle and pop should show anyone who cares to check: A good thing gone too far can become a bad thing.

A recent article in a major journal noted an increase during the recession of people of all ages applying for and receiving student loans to live off not attend school. Some might call it fraud. We just call it hopeless, jobless and broke, three attributes one needs today to qualify for a student loan.

Like water easy money will find its own level and that level is not always a good or an intended one. Massive liquidity and zero interest rates, sound familiar?

MSM and the other apologists aside, growth is slowing despite the huge money infusion as evidenced by a flattening yield curve. The S word as in spreads becomes critical here. The real estate market's  drop in new mortgages and new housing starts, among numerous other indicators, should tell you something.

As economist David Stockman recently noted, "It  don't snow in San Jose." So forget all the Wall Street warbling about winter. It's the line with least resistance. And forget, too, crack cocaine and the big H, this is a global economy high on easy money and low interest rates.

It's a party hardly anyone wants to end. Show me someone who loathes retrenchment and I'll show you an elected official. Cold Turkey Day when it arrives is much like karma--a beach!


RANDON READS

Forget A Nunnery Get These Tips
http://buzz.money.cnn.com/2014/04/26/shakespeare-investing-tips/?iid=Lead

Words In Picture
http://davidstockmanscontracorner.com/since-2000-feds-balance-sheet-up-8x-real-median-income-down-8/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Saturday+9+AM

The Keystone Pipeline Affair
http://www.bloomberg.com/news/2014-04-24/how-obama-shocked-harper-as-keystone-frustrator-in-chief.html

More Sanctions
http://www.reuters.com/article/2014/04/26/us-ukraine-crisis-idUSBREA3O16720140426

What You Don't Know
http://www.marketwatch.com/story/is-your-bank-robbing-you-2014-04-25


Friday, April 25, 2014

MEDIA PUBLIC ENEMY




A word about gold.

Gold is the antithesis of paper assets.

It's not a media favorite. Surprise, surprise. And after essentially a 12 year run-up in price of nearly 900% that turned sour in 2013, main stream media with unbridled glee likes to pounce on the yellow stuff and anyone who touts its value every chance it gets.

People who follow or recommend gold are referred to as gold bugs. But hundreds of analysts and market seers, many of whom blatantly fudge their data, aren't referred to as equity freaks.

Corporations often massage their earnings numbers and analysts covering them frequently look the other way. It's called the cost of doing business or, better yet, the cost of cooperation.

Goldman Sachs lets it be known that gold will likely end the year around $1050 an ounce, a forecast unchanged from the one it put out at the beginning of 2014. The 2013 sell off came ready ordered for MSM. Higher gold prices would signal higher interest rates and higher interest rates would suck some air out of any hoped-for recovery central bankers pray for.

Half of Europe led by the dragster, Mario Draghi, is clamoring for a little inflation to inflate all the debt away. The key here is a little inflation. Gold money competes with paper asset money, a real no-no to MSM.

MOUTHPIECE



When you're a multi-billionaire like Warren Buffett, the so-called Omaha Sage and one of the planet's richest Homo sapiens, you easily slide into the role of mouthpiece.

Buffett's been for some time a mouthpiece for the Democrat Party, higher taxes and a leading opponent against the Canadian-US natural gas pipeline. All not without intended good-personal-gains reasons.

His opinion on equities has been revered by mainstream media folks for decades. Seventeen thousand adoring fans traipse to an isolated prairie setting annually to worship at his and his longtime compatriot, Charlie Munger's, Midwest equity hoedown. 

So when the Omaha octogenarian utters in a television interview his beliefs about equity valuations you can bet it's a mouthpiece ploy that goes far beyond protecting the valuation of his empire. It's calming, homespun manna for the masses from the Big Equity Bopper himself. Reassuring to be sure: There's no water on board the Good Ship Global Financial Bubble. 

So just relax.

Thursday, April 24, 2014

BIG PHARMACEUTICAL SUMMATION


 Here's as good a summation of big pharmacy and what's happened there over the past several years as you'll find on the Internet or anywhere else for that matter.

Can't blame Obama care for everything. Most things, yes, but not everything. There's always Bush II, Clinton, Bush I, Carter, Ford, Nixon, Kennedy and Roosevelt, to be brief and a bit picky.

The word metric should bubble to mind. If you think you're not a metric, you've got your head buried somewhere where the sun never shines. Metric is the new buzz word of the business world particularly the world of health care. And just to be thorough we won't leave out another bureaucrat favorite, outcomes.

One warped Washington politician a while back--we believe he was of the Democrat persuasion--ranted want he wanted was not equal opportunity for all but equal outcomes. His solution to income inequality so we gathered.   
 http://www.thefiscaltimes.com/Blogs/Age-Reason/2014/04/24/Time-Upgrade-our-Pharma-Companies-New-Century


THEY'VE BEEN TALKING THE TALK



Mario Draghi and his band of ECB bankers have been talking the talk for some time now.

Much of it has had the patina of if-we-keep-doing-this-long-enough maybe it will all just go away and somehow,  miraculously, the EU economy will grow its way to the end of what's been a very dark economic tunnel for what is still a fledgling union still held together by ceiling wax, yarn and spit.

Put up or shut time draws nigh. And the Ukraine situation ain't helping one bit. Maybe that too has been part of Putin's plan, assuming he has one. Either way, Draghi can't keep dragging this out.

If you look closely at Draghi and most of the other major central bank leaders over the past several years, you'll detect, either directly or indirectly, the DNA of Goldman Sachs. Goldman Sachs is Wall Street.

http://online.wsj.com/news/articles/SB10001424052702304518704579521100806846852?mod=World_newsreel_4

More on Draghi.  
http://www.testosteronepit.com/home/2014/4/20/draghis-bold-push-for-creeping-defaults-and-real-wage-cuts-i.html






ENERGY MYTHS: A HARD, SOBER LOOK

http://gailtheactuary.files.wordpress.com/2012/03/world-energy-consumption-by-source.png 
We cannot operate our economy on renewables alone, in part, because the quantity is far too small. Creation of new renewables and maintenance of such renewables is also fossil fuel dependent.

 One of the best websites we know to get the real skinny on energy is where this chart is from. The mesmerizing media likes to deceive folks into thinking that given all the fracking, natural gas, LNG terminals being built and such we are a nation indivisible under boundless energy independence. Not so. And this makes no allowance for the anti-fracking freaks and all the other environmentalists parading around out there.

Still another media canard: We can easily transition to these cleaner, newer sources of energy. Last time anyone looked there are now seven billion souls on planet earth. And those are the ones we know about. Maybe over time you've been enamored with government counting techniques, but we haven't. The truth is nobody knows for sure how many of us there are anymore than any market guru knows for sure when the next economic tsunami will hit. Here's the link to the full read.

http://ourfiniteworld.com/2014/04/23/eight-energy-myths-explained/





RANDOM READS

A Doc Speaks Up
http://www.testosteronepit.com/home/2014/4/23/doctors-perspective-perils-and-pitfalls-of-corporatized-medi.html

Buffett Speaks Out
http://www.reuters.com/video/2014/04/24/buffett-not-worried-by-valuations?videoId=312705508&videoChannel=5

Big Pharma's two Sides
When I was a young man my father gave me a piece of advice worth recalling in these mixed-up, quilted hodgepodge of a financial world days. "Just remember, son, there's always two sides to two sides."
http://www.businessinsider.com/the-ft-rips-bill-ackmans-new-deal-apart-2014-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

One Man's View Of Ukraine
http://www.bloombergview.com/articles/2014-04-24/how-to-lose-in-ukraine

Inflation Textbook Style
http://www.businessinsider.com/textbook-price-inflation-2014-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

MORE ON UKRAINE



Government troops and pro-Russian separatists clash in eastern area of Ukraine.

http://www.theguardian.com/world/2014/apr/24/ukraine-government-troops-move-against-pro-russian-separatists-live-updates

WELCOME MARKET PESSIMISM



If you're an optimist, we'll, you're looking for what else--optimism.

If you're a contrarian investor you should be looking for pessimism. The late John Templeton, one of the better investors of all time, called it "maximum pessimism."

Templeton founded a group of funds in the 1930s which in his later life he sold to Franklin, the huge fund group in northern California investors now know as Franklin Templeton. Story has it that in 1939 after WWII  broke out, with borrowed money he bought 100 shares of 104 stocks on the then New York Stock Exchange selling for $1 or less.

Thirty-four of the 104 companies were in bankruptcy at the time. A few years later when he took his profits, only four of the bankrupt firms were worthless. Now that's maximum pessimism. Templeton was a value guy.

Templeton wasn't the only successful mutual fund owner to sell his firm to Franklin. Michael Price, another value guy who is still very much around and whom the business school at the University of Oklahoma's named after, did the same in the 1990s.

If there's such a thing as a pantheon for astute investors both of these gentlemen should be there. So here's a question. Looking around today do you see any maximum pessimism and if so where?

UKRAINE HEATING UP AGAIN

Chess match goes on as threat of more western sanctions talk picks up.

http://online.wsj.com/news/articles/SB10001424052702304518704579519163277080276?mod=WSJ_hp_RightTopStories&mg=reno64-wsj

TELL TALE SIGNS



Lipstick on your collar or pine tar on your neck. They're both tell tale signs.

Years ago a one-time business associate went home one night after partying with lipstick on his collar and more recently a noted Major League relief pitcher was dumb enough to get caught twice with pine tar, this time on his neck. Both in a fortnight and both times against the same team.

Cheating at the top is hardly novel. Call it fudging if it makes you feel better. In this building it's called central banking.


Wednesday, April 23, 2014

THE SMELLY TRUTH



Leroy "Satchel" Paige one of the greatest Major League Baseball pitchers ever was noted for saying: "Never look back 'cause something might be gaining on you."

If you think of those living on a fixed income and the little guys of the world as the guy in the kayak and that huge shark as central bankers, politicians and Wall Street types, you'll appreciated this link.

http://www.marketwatch.com/story/whats-that-fishy-smell-the-feds-corrupt-policies-2014-04-23?link=MW_popular

RANDOM READS

Low Risk, High Volatility
http://www.psyfitec.com/2014/03/low-risk-high-rewards-low-volatility.html

On Again For Brazil
http://www.bloomberg.com/news/2014-04-22/pimco-s-love-affair-with-brazil-rekindled-after-rejection.html

New Housing Starts Down
http://www.marketwatch.com/story/is-it-time-to-freak-out-about-housing-2014-04-232

Six Day Winning Market Streak Foiled
http://www.reuters.com/article/2014/04/23/us-markets-stocks-idUSBREA360QI20140423

How Empires End
http://davidstockmanscontracorner.com/how-empires-collapse-one-complicit-participant-at-a-time/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+AM+Wednesday

RUSSIA'S COMMODITY RESOURCES

From Business Insider a great chart.

http://www.businessinsider.com/chart-of-the-day-russia-commodities-2014-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

BEWARE OF BONDS


You've no doubt heard this before. Bonds, especially the high yield kind, look bubbly. Things usually have a way of going on longer than most expect. Preceding the subprime mess there were lots of people calling attention to it. But it's about timing, itchy-sticky timing.

Most of these people were early, too early to get any attention because, like many things, the mess  had a momentum all its own. Then one fine day.....the momentum changes and the only thing left is the mess.
http://www.cnbc.com/id/101604362

Tuesday, April 22, 2014

PLEASANT UNPLEASANT READ


http://bernie.cncfamily.com/img/blinders.gif

There are too many good points in this post to miss if even you only remotely subscribe to the idea that the current band of bandits running this global economic freak show are as clueless as a dead fish.

Hoodwinked into accepting a lower standard of living is right up there with it's patriotic to consume until you're consumed by the low man. It will take more than the Great Rotation. Sell your gold and other commodity-based holdings at your peril. Blinders are for horses.
 http://davidstockmanscontracorner.com/the-global-economy-is

BUBBLE BONDS

 large image of an I savings bond, $100 denomination
For want of a better term we'll just call it encouragement.

That's the real purpose of lower interest rates--get things moving again as in borrowing and spending. In government parlance it's called tax and spend. They're both shards from the same cloth.

The recent stand-in-line response for Greek and Puerto Rico bonds should come to mind. Yield-starved investors and Wall Street Wolves lined up to get them, the former for the yield, the latter to dump at a profit.

No matter how they try to change it, this is still the same old Yin-Yang Avenue we've all been down before.  Where you see one, you know the other isn't far behind. It's like the line in the old Frank Sinatra tune:

"Love and marriage go together like a horse and carriage. And this I'll tell you, brother; you can't have one without the other."
http://fivethirtyeight.com/features/the-potential-bubble-the-federal-reserve-cares-most-about/

HIGHER MARKET LOWER VOLUME?

The market rallied today coming off its near correction in the Nasdaq and small caps, but the real question remains: What, if anything, does it mean or forebode?
Have Traders Called It Quits on Irrational Stock Market? Read more: http://www.minyanville.com/special-features/wall-of-worry/articles/wall-of-worry-us-economy-federal/4/22/2014/id/54676#ixzz2zejxFJQf
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Meanwhile, the S&P climbed higher for the 6th straight session and the argument between the bulls and the bears continues.
http://www.usatoday.com/story/money/markets/2014/04/21/is-stock-market-correction-over/7859325/ 


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REAL ESTATE VERSUS GOLD

Real estate versus gold, the rich against the poor. Here's an interesting read about the subject. The bottom line it's about making money and where and why people choose the investments they do. It's a bit more complicated or befuddling than one would suspect.
http://t.ritholtz.com/bigpicture/#!/entry/the-rich-buy-real-estate-the-poor-want-gold,535661b6025312186cfaacba

MARKET OVERVIEW



Our bulletin board take on the market.

--next entry point if S&P 500 pulls back to its 200-day moving average around 1,700 level.

--earnings aren't great, but not horrible either. Coke (KO) and GE, two laggards in this market, rallied after reporting. Look for more of the same.

--big caps (value) still rule and have a ways to go

--starting the year energy was supposed to be a no-show. but check out the gas prices over the past 5 weeks at your local pump or the futures contracts, up 1.1% earlier this week and up 11% so far this year. Gasoline futures are a leading not lagging indicator 

--we continue to be long energy as US refineries export more overseas. Media obsessed with fantasy of lower energy prices...delay of Canadian pipeline no accident.

--bond yields still no threat to equities and won't be until 10-year bond yields 3.5%

--joe public still scared and out of the market, thinking real estate safer investment. JP won't be back in until froth on the beer much greater.

--higher interest rates when they hit will help financials

--cyclicals, materials look good here as Fed gets further behind the curve.

--while back warned about number of IPOs hitting market, many with no earnings. Much of water cooler-cocktail palaver at time about these IPOs printing money for investors.

--this bull market now 61 months young, longest in recent years 64 months, only '82-'87 and '96-2000 longer...difference is rates going up then and Feds pulled the punch bowl from the party.

--that will happen here too, but the market will see it first.

--10% from here puts S&P near 2,000 mark, quite doable before pullback.

Monday, April 21, 2014

JUST DON'T TELL GEORGE


Hey! What did they expect? It was New York money. Bacteria have been around since the beginning of time, way before the Father of Microscopy, Van Leeuwenhoek (1632-1723), developed the microscope.

Around our house growing up mother always warned never put money in your mouth or your fingers without washing them after you've handled it. This is just another example of boring and bored media mesmerizing. The fact is bacteria preceded the media, most likely a good thing. 

http://online.wsj.com/news/articles/SB10001424052702303456104579489510784385696


MORE ON THE UKRAINE



International politics are hardly known for their clarity. Clear as mud might be a better description given all the high jinks these players resort to. Here's an informative article on some of today's goings-on in an attempt to perhaps let peace ring out.

http://www.minyanville.com/sectors/global-markets/articles/Maybe-Putin-Did-Blink-on-Ukraine/4/21/2014/id/54655?refresh=1

IF YOU DON'T LOOK



Walk into any Major League Baseball park in the old days and you'd probably hear something like this: "Programs, programs! You can't tell the players without a program."

Well, if you haven't been looking you can't read the road signs either. They're at it again.

http://www.businessinsider.com/us-mortgage-lending-is-starting-to-ease-2014-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

ABSOLUTE CERTAINTY

Somewhere along our path we recall seeing a sign in a chest surgeon's office that said something to the effect that nothing is more uncertain than the state of absolute certainty. From Bloomberg here's some more economic fodder for the premise that the Fed is already behind the curve.

Too many people are looking for more deflation. One side of the Good Vessel Deflation is getting crowded.

“After a slow December and January and some weather-related impact in February, we are beginning to see retail conditions improve,” Paul Toms, chief executive officer of Hooker Furniture Corp. in Martinsville, Virginia, said in an April 16 earnings call. “The overall economy seems to be more resilient and able to shake off bad news, there’s a firmer foundation under key indicators for our industry like housing, employment, the stock market and consumer confidence.”

http://www.bloomberg.com/news/2014-04-21/gain-in-u-s-leading-index-points-to-second-quarter-rebound.html

THE ENTRAIL CROWD


In ancient Rome predictions of future events would sometimes be based on an examination of the entrails of a sacrificial animal.

Most have heard of the in-crowd. But there's another group perhaps not so well known we call the Entrail Crowd.

Simply stated, these are those economic seers who read their econometric babble and come up with forecasts. Not much has changed notwithstanding the electronic evolution. Accuracy, in most cases, turns out to be missing more often than those unfortunate children with their pictures on milk cartons.

Just make sure in this case your investments are not the sacrificial prey.

http://blogs.marketwatch.com/capitolreport/2014/04/21/seventy-two-economists-polled-and-exactly-zero-see-economy-contracting-this-year/

SHORT TRUCE



Easter Sunday didn't keep things from heating up in the eastern Ukraine as gunfire broke out at one check point.
http://www.businessinsider.com/ukraine-rebels-call-for-russian-intervention-2014-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29



Sunday, April 20, 2014

DEMAND FOR TIPS

In a few weeks one of the most famous sports sayings will once again be in the headlines at the Indianapolis 500: "Gentlemen, start your engines."
 
 A while back we unloaded most of our TIPS at a nice profit when the yields were getting weaker than new born kittens. Is this a wake-up call or just another false start? You be the judge.

Bloomberg: - The U.S. sale of $18 billion in five-year Treasury Inflation Protected Securities drew the strongest demand ever from a class of investors that includes foreign central banks.
Indirect bidders bought 58.4 percent of the securities at the TIPS sale. That compared with an average of 42.3 percent at the past 10 auctions. The bid-to-cover ratio, which gauges demand by comparing the amount bid with the amount offered, was 2.7, matching the highest level since December 2012. The notes sold at a yield of negative 0.213 percent, below the negative 0.162 percent average forecast of five of the Fed’s 22 primary dealers in a Bloomberg News poll.

“The stats were off the charts,” said Stanley Sun, a New York-based strategist at Nomura Holdings Inc., a primary dealer, said in a telephone interview.
The five-year breakeven rate (a rough measure of implied inflation expectations) jumped as a result.

BUBBLE LAND UK STYLE ?


Interesting read about the UK real estate market.

In the US banks are now softening their requirements for mortgages because most of the low, easy picked fruit has been picked in another case of bankers rewarding bankers. Fees and penalties have been hiked. Next?

So get thee prepared; this is just another step in the ever-on-going cycle. Know that there's plenty inflation around, deflation is a non-entity, costs are rising, labor shortages cropping up and wages are about to follow.

Years ago a famous cartoon character was famous for always repeating: "What me worry?" Well, rising wages will bring forth the worry worms in droves.

So what as an investor are you going to do about it? How and where and why are you going to hedge your positions?
http://soberlook.com/2014/04/a-uk-housing-bubble-or-something-else.html