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

YOU GOTTA LOVE 'EM

 
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

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.

http://www.marketwatch.com/story/peter-schiff-reckless-fed-may-push-gold-to-5000-2014-04-25?pagenumber=2

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.

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

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