There's the old tale about the three monkeys: see no evil, hear no evil and fear no evil.
And then there is this, the variance of opinions among current members of the Federal Reserve Board. It's sure to calm investor nerves. It just make one feel so much better to know that these watchers of the public trough have their economic acts so smoothly in place.
In a previous life they could have all been weather forecasters.
http://money.cnn.com/2013/06/24/news/economy/federal-reserve-qe3/index.html?iid=HP_LN
_____________
Higher Interest Rate Impact
One of the things you want to ask yourself is what impact higher interest rates will have on energy prices.
We've been talking energy for a while now. It's been one of the forgotten commodities in the equity rally that started at the first of the year and all the palaver about future US energy independence. This might well be a place you want to take a: "Not-so-fast approach."
It could turn out to be a unexpected opportunity to make some serious money.
________________
Monday, June 24, 2013
Sunday, June 23, 2013
SHAKE, RATTLE AND DUMP
Below is a link to an article that will rattle some bond investors. It also emphasizes something we've been alluding to for some time and just mentioned in yesterday's post, Treating Lab Numbers.
It's called fiscal accountability or letting a financial fever run its course. Fevers spike to help fight off unwanted bugs. More often than not fevers spike owing to excesses. It's one of the most basic built-in protection mechanism the human body has. Most are self-limiting and will do just fine without human intervention.
Too bad the same can't be said for recessions.
http://www.cnbc.com/id/100836919
It's called fiscal accountability or letting a financial fever run its course. Fevers spike to help fight off unwanted bugs. More often than not fevers spike owing to excesses. It's one of the most basic built-in protection mechanism the human body has. Most are self-limiting and will do just fine without human intervention.
Too bad the same can't be said for recessions.
http://www.cnbc.com/id/100836919
Saturday, June 22, 2013
TREATING LAB NUMBERS AND OTHER BRIEFS
In medicine one of the first things you're taught is never treat a lab number. Treat the patient.
The Bernanke-led Fed continues to treat a lab number, 6.5% unemployment. So Big Ben, beyond a feel-good factor, what's the magic in that number versus, say, 6.3 or 6.6 or 5.9? When you don't allow recessions to run their course, you're treating artificial economic numbers.
When Bernanke announced last week his proposed timeline for slowing down QE, he was playing the calendar game not the market game. They're different. The real market's based on the economy, the real economy.
Like all those New Year's resolutions people make every year, they're calendar events. And truth be told most fail. Bernanke's trying to slide one past you here. The lab number is artificial--6.5% unemployment--in an economy where job-force participation is at record lows.
What's really worrying Big Ben is the bubbles his QE-based plan are creating in paper assets and housing. There's really not much to toast here despite all the Wall Street celebrating up until last week.
As one Wall Street wag recently noted, "Housing is the bright spot. But even it is staring down the muzzle now of higher interest rates."
So here's the bottom line. We all know the danger associated with unintended consequences. But often overlooked by many are the dangers of intended ones.
___________
Spin and hype are four-letter words.
Politicians love to spin, MSM hype. These are givens. So how does one make sense of the market's reaction to what Big Ben Bernanke spewed forth this past week? The short answer is one doesn't.
The long answer is just look for disparities, opportunities. If everyone wants something usually it's either overpriced or over-hyped. Bargains are not often found sleeping on the new high list, notwithstanding what the technical or momentum crowd will tell you, though they have their point.
You find the bargains often on the new low list among the unwanted and discarded. There are about to be more of those coming on the market soon. As always do your homework. ________
What do you get when you open a mall in South China twice the size of the US's Minnesota Mall of America? A vacancy rate of 99% since opening in 2005.
___________
So where's the pain in all this?
Well, two places to look, and there are others like energy and gold mining, are both bonds--junk and municipals.
In the muni market, according to the WSJ weekend edition, quoting one fund manager: "Everybody wants a bid and nobody's looking to buy."
Other signs are several big public offerings in New York and California among others were postponed. Both of these once-over bought markets will correct and start coughing up higher yields that will entice some yield-starved investors start to hunting once the volatility dies down.
______________
The Bernanke-led Fed continues to treat a lab number, 6.5% unemployment. So Big Ben, beyond a feel-good factor, what's the magic in that number versus, say, 6.3 or 6.6 or 5.9? When you don't allow recessions to run their course, you're treating artificial economic numbers.
When Bernanke announced last week his proposed timeline for slowing down QE, he was playing the calendar game not the market game. They're different. The real market's based on the economy, the real economy.
Like all those New Year's resolutions people make every year, they're calendar events. And truth be told most fail. Bernanke's trying to slide one past you here. The lab number is artificial--6.5% unemployment--in an economy where job-force participation is at record lows.
What's really worrying Big Ben is the bubbles his QE-based plan are creating in paper assets and housing. There's really not much to toast here despite all the Wall Street celebrating up until last week.
As one Wall Street wag recently noted, "Housing is the bright spot. But even it is staring down the muzzle now of higher interest rates."
So here's the bottom line. We all know the danger associated with unintended consequences. But often overlooked by many are the dangers of intended ones.
___________
Spin and hype are four-letter words.
Politicians love to spin, MSM hype. These are givens. So how does one make sense of the market's reaction to what Big Ben Bernanke spewed forth this past week? The short answer is one doesn't.
The long answer is just look for disparities, opportunities. If everyone wants something usually it's either overpriced or over-hyped. Bargains are not often found sleeping on the new high list, notwithstanding what the technical or momentum crowd will tell you, though they have their point.
You find the bargains often on the new low list among the unwanted and discarded. There are about to be more of those coming on the market soon. As always do your homework. ________
What do you get when you open a mall in South China twice the size of the US's Minnesota Mall of America? A vacancy rate of 99% since opening in 2005.
___________
So where's the pain in all this?
Well, two places to look, and there are others like energy and gold mining, are both bonds--junk and municipals.
In the muni market, according to the WSJ weekend edition, quoting one fund manager: "Everybody wants a bid and nobody's looking to buy."
Other signs are several big public offerings in New York and California among others were postponed. Both of these once-over bought markets will correct and start coughing up higher yields that will entice some yield-starved investors start to hunting once the volatility dies down.
______________
Friday, June 21, 2013
A LOOK AT REAL ESTATE
As nearly everyone knows real estate is an important cog in the US economic recovery cycle.
Here's an interesting graphic. Consider it like an overlay.
http://www.marctomarket.com/search/label/Great%20Graphic
Here's an interesting graphic. Consider it like an overlay.
http://www.marctomarket.com/search/label/Great%20Graphic
INTERESTING CHART
Here's an interesting chart on gold versus equities from Visualizing Economics.
As the commentary notes the government officially controlled the price of gold for a time. What is unknown is how long have governments been unofficially controlling its price?
http://us7.campaign-archive2.com/?u=2255a3ccd536bad1df6704870&id=b8bf31666b&e=00dd041c9f
As the commentary notes the government officially controlled the price of gold for a time. What is unknown is how long have governments been unofficially controlling its price?
http://us7.campaign-archive2.com/?u=2255a3ccd536bad1df6704870&id=b8bf31666b&e=00dd041c9f
BRIEFS
The market spoke today. Bond yields spiked in anticipation of a stronger second half, the real idea behind Bernanke and crew ending the QE madness.
Bonds don't like the threat of rising interest rates. A stronger second half, should it happen, means less deflation and less deflation can spell rising inflation.
The bond market's been in a bullish gear for a long time. That in itself shouldn't be misconstrued. But at some point regression to the mean might again become meaningful. Bull markets usually take on a life of their own and usually go on longer than most think.
During the QE madness banks have been privy to what essentially is free money. It was money they were suppose to lend out for the sake of the general market to help stimulate a recovery not play the carry game with.
Boys may boys as the old saying goes and banks will be banks. Making money on the spread is the real business of banks, especially the Wall Street kind. If you bother to check, bonds and stocks for the past few years have been moving in opposite directions.
Thursday's sell off in both may signal the beginning of the end of that.
What this most likely means for investors is rising volatility. The VIX, an index that reportedly gauges investor angst, was up nearly 30% and CNN Money's Fear and Greed index slumped back into negative territory.
In commodities those denominated in US dollars like oil and gold took a hit with oil falling below $95 a barrel as the money seeking a safer harbor poured into the dollar pushing it higher against it trading partners.
A stronger dollar would suggest an anticipated rebound for the US in the second half. If that happens things could indeed get interesting.
__________
The Return of Volatility
If you're a believer the sell-off might start you to consider some of those issues we've mentioned in previous posts. Conventional wisdom states a stronger dollar won't be good for US firms that make most of their money overseas. The hyped-up news about surplus US energy supplies might also provide opportunities that many aren't expecting.
Familiarity may breed contempt, but volatility often times begets opportunity.
__________
Bonds don't like the threat of rising interest rates. A stronger second half, should it happen, means less deflation and less deflation can spell rising inflation.
The bond market's been in a bullish gear for a long time. That in itself shouldn't be misconstrued. But at some point regression to the mean might again become meaningful. Bull markets usually take on a life of their own and usually go on longer than most think.
During the QE madness banks have been privy to what essentially is free money. It was money they were suppose to lend out for the sake of the general market to help stimulate a recovery not play the carry game with.
Boys may boys as the old saying goes and banks will be banks. Making money on the spread is the real business of banks, especially the Wall Street kind. If you bother to check, bonds and stocks for the past few years have been moving in opposite directions.
Thursday's sell off in both may signal the beginning of the end of that.
What this most likely means for investors is rising volatility. The VIX, an index that reportedly gauges investor angst, was up nearly 30% and CNN Money's Fear and Greed index slumped back into negative territory.
In commodities those denominated in US dollars like oil and gold took a hit with oil falling below $95 a barrel as the money seeking a safer harbor poured into the dollar pushing it higher against it trading partners.
A stronger dollar would suggest an anticipated rebound for the US in the second half. If that happens things could indeed get interesting.
__________
The Return of Volatility
If you're a believer the sell-off might start you to consider some of those issues we've mentioned in previous posts. Conventional wisdom states a stronger dollar won't be good for US firms that make most of their money overseas. The hyped-up news about surplus US energy supplies might also provide opportunities that many aren't expecting.
Familiarity may breed contempt, but volatility often times begets opportunity.
__________
Thursday, June 20, 2013
A LITTLE DIFFERENT APPROACH
There's a lot of talk in the investment world about charts, fundamentals, technical analysis and the like. Terms like momentum, trends, profit taking, price-to-earnings ratios, yield curve are just a few.
If you look closely nearly every area in life or line of work has its own vocabulary. To be even modestly successful it's one we all must learn at least something about.
Another important area many believe is called behavioral finance, a kind of catch all term about how we humans interpret all those pieces of data. In short, it's a summary about how we humans behave when dealing with greed and fear, success and failure, disappointment and triumph.
We don't claim it will make you another Warren Buffett. But even pure number cruncher types, despite their claims to the contrary, have emotions and those emotions lead to words and those words precede thoughts and actions.
If you look closely nearly every area in life or line of work has its own vocabulary. To be even modestly successful it's one we all must learn at least something about.
Another important area many believe is called behavioral finance, a kind of catch all term about how we humans interpret all those pieces of data. In short, it's a summary about how we humans behave when dealing with greed and fear, success and failure, disappointment and triumph.
We don't claim it will make you another Warren Buffett. But even pure number cruncher types, despite their claims to the contrary, have emotions and those emotions lead to words and those words precede thoughts and actions.
WATCH YOUR WORDS
Our
thoughts are often worse than we are.
George Eliot
Most of us are familiar with
self-talk. If you’re not, you should be. It’s something all of us do every day,
carrying on a private conversation with ourselves in our head. A few of us even
do it out loud.
Every time you make a mistake
and cry out something like, “You dummy!’ or even worse, that’s one form of
self-talk. Most self-talk goes on more
privately, between just you and yourself kicking it around in your mind.
Psychologists say we have nearly 20,000 thoughts a day but are only aware of
about 2,000. It’s also been called self-coaching. Check out the literature and
you’ll even find books about it.
Lots of you won’t believe
what we’re saying here. That’s okay. Folks didn’t believe Columbus when he
suggested the world may not be flat or Galileo either. The path of history is
littered with examples of people and things once thought not to be credible
only to find out later they were.
Keep in mind that lots of people try things
just to prove they won’t work for them. That’s their problem, not yours. As an
old chemistry professor used to say, “Render unto Caesar what is Caesar’s.” If
it doesn’t work for you, fine. But that doesn’t mean it won’t work for others.
Nor does it mean because it worked for others and not you it doesn’t work or
isn’t real.
In journalism there is an old
saying: “The pen is mightier than the sword.” Since we all today live in the
electronic age we might have to substitute computer for pen. But you get the
idea, the power of words. Confucius, when asked what would be the first thing
he would change if he became Emperor of China, replied that he would reinstate
the precise meaning of words. For what it’s worth, it doesn’t sound as if a lot
of today’s lawyers or politicians would’ve ever voted for Confucius.
Think if you will for a
second about these words. Words become thoughts and thoughts become the basis
for all personal transformations. Words have power. A kind word can build, a
harsh one destroy. Words become thoughts and thoughts become ideas and ideas,
good or bad, often get carried out.
It’s an established medical
fact that the body is roughly 80 percent water. It’s an established fact that the
body’s seemingly hard, solid bones are really porous with canals for blood
vessels and nerves. Marrow, a relatively soft material in bone is actually
responsible for creating blood cells. Even given the millions of blood cells
floating around in the human body, blood is still mostly water. The vital
organs that make up and help regulate the body are mostly comprised of, you
guessed it, water.
So once again appearance
proves deceiving. We admire rock hard six packs, rippled muscles, strong, firm
bodies. Firm for most of us is in and flab is out. But if you extract all the
solid material in a human body it wouldn’t amount to more than a small heap not
several feet but less than a few inches high. The rest is water.
Someone once observed that
the strongest thing in your body is your thinking. It can also be your weakest.
Shakespeare noted that there is little either bad or good but thinking makes it
so. Roman Emperor Marcus Aurelius put it a little differently: “The soul
becomes dyed with the color of its thoughts.” Most of us are aware of the
biblical admonition about reaping and sowing. You can’t plant corn and expect
to get water melons, genetically modified grains notwithstanding.
Several years ago when I was
doing internal medicine I saw lots of patients every day with a variety of
aches and pains from sore backs to arthritic joints to heart and stomach
problems, to name a few. Many of them in complaining about their conditions
would without the slightest hesitation unleash a fury of expletives on the
particular area bothering them. Some of these names you would not level at
your mother-in-law let alone worst enemy. But here they were calling their
painful elbow a dirty so-and-so or their agonizing headache a lousy, rotten
this or that.
Over time I began casually
asking some of them how they would respond if anyone spoke to them that way.
Despite the blank looks and an occasional leer, the most frequent answer, the
one that always surprised me the most was: “I never really thought about it
that way before.”
My response was always the
same: “Maybe you should start.” Storms rile up the seas just as a lack of wind
creates calmness. If the human body is 80 percent water, it’s subject to the
same forces.
So watch your words. Choose
them carefully, especially when you’re talking to yourself. Words affect your
attitude and attitude influences your performance, in an out of the gym.
___________
Wednesday, June 19, 2013
BRIEFS
Who is the current biggest lame duck?
Well, if your Home Depot co-founder and billionaire investor Kenneth Langone, it's Big Ben Bernanke. Langone made his comment on CNBC recently.
More than once Bernanke has hinted at his desire to step down after he finishes his second term as Fed chairman. And judging from President Obama's recent comments on the Charlie Rose show, Oama is not jumping up and down to reappoint Big Ben.
Obama's treatment of Bernanke caught the attention of observers who claim it unfair and not deserving of Bernanke's service.
________
Well, if your Home Depot co-founder and billionaire investor Kenneth Langone, it's Big Ben Bernanke. Langone made his comment on CNBC recently.
More than once Bernanke has hinted at his desire to step down after he finishes his second term as Fed chairman. And judging from President Obama's recent comments on the Charlie Rose show, Oama is not jumping up and down to reappoint Big Ben.
Obama's treatment of Bernanke caught the attention of observers who claim it unfair and not deserving of Bernanke's service.
________
BIG BEN
Big Ben spoke today.
The Fed left things alone, to put it plainly. Some pundits are saying rates won't get changed until at least 2015. That could turn out to be true. But the market, as it always does, will have the last say.
And the market has already started raising rates.
Bernanke repeated his previous palaver, claiming tapering doesn't amount to hiking interest rates.
Below is a statement from the FOMC.
"To support continued progress toward maximum employment and price stability, the committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens," the FOMC said.
The Fed may push this as an example of more transparency. But the market may interpret it differently.
The Fed left things alone, to put it plainly. Some pundits are saying rates won't get changed until at least 2015. That could turn out to be true. But the market, as it always does, will have the last say.
And the market has already started raising rates.
Bernanke repeated his previous palaver, claiming tapering doesn't amount to hiking interest rates.
Below is a statement from the FOMC.
"To support continued progress toward maximum employment and price stability, the committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens," the FOMC said.
The Fed may push this as an example of more transparency. But the market may interpret it differently.
Tuesday, June 18, 2013
THE THREE MUSKETEERS
So like the three musketeers, which is it: one for all or all for one?
According this researcher since 2009, it's all three driving the market.
http://blogs.wsj.com/moneybeat/2013/06/18/the-rally-in-three-charts-hint-its-not-all-about-the-fed/?mod=WSJBlog&mod=MarketsMain
According this researcher since 2009, it's all three driving the market.
http://blogs.wsj.com/moneybeat/2013/06/18/the-rally-in-three-charts-hint-its-not-all-about-the-fed/?mod=WSJBlog&mod=MarketsMain
Subscribe to:
Posts (Atom)