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  • Finance 0

    Silver Linings Playbook

    Last July, I wrote the following: “Collectively, these factors [negative earnings/sales growth, widening credit spreads, flattening yield curve, weakness in cyclicals, etc.] point to an equity market that is increasingly fragile and in the past one that was about to become much more volatile. The response from market participants today: “no one cares.” Volatility is low, stocks are still acting like a 6-month CD, and monetary policy is easy. All true, but investing is about the future, not the past. No one knows when the Minsky moment of this cycle will occur, but a necessary precursor is low volatility and the illusion of stabilit...
    On February 13, 2016 / By
  • Finance 0

    E Talking Numbers: India’s Sensex

    With the Sensex down near 24% from its peak, its worth looking at what the numbers have to say. Markets tend to peak when valuations are expensive, and animal spirits high. They tend to bottom when valuations are cheap, and animal spirits low. However, markets tend to become cheap only when recession risk is perceived as high. And I don’t see recession risk as being high. I am happy to up my allocation to equity when animal spirits are very low, and have been low long enough to drive valuations down from expensive to neutral.   The Sensex trades at 16.6X trailing 12 month earnings. That compares with a long-term average of 17.9 (median...
    On February 13, 2016 / By
  • Finance 0

    Art And Shipping Bellwethers Send An Ominous Signal For Markets And The Economy

    This week two companies had some very interesting things to say about their respective markets that have implications far beyond their individual niches. First, AP Moller-Maersk, owner of the largest container shipping company in the world, said it saw, “massive deterioration,” in its business last quarter, even, “worse than in 2008.” Next, Sotheby’s most recent London art auction was held on Tuesday where the company saw sales fall by nearly 50% from the very same auction last year. Furthermore, the famed auction house is now seeing former buyers turn into forced sellers. Investors should pay close attention to these two ominou...
    On February 13, 2016 / By
  • Finance 0

    Two Shining Opportunities In Today’s Fear-Driven Market

    Do you feel like there’s been no place to hide in 2016!? The S&P 500 is down 11%. Eight of its nine sectors are firmly in the red. And two-thirds of individual stocks have already slipped into a bear market. As the list of stocks hitting new lows grows by the day, the smell of fear in investor’s behavior is getting stronger and stronger. And that means panic behavior might be just around the corner. So today I want to show you how to profit from fear and panic, rather than succumb to it. I want to show you how to rise above the “caveman mentality” that stands between you and investing success. You see, individuals tend to m...
    On February 13, 2016 / By
  • Finance 0

    Market Chaos Subsiding? Dollar Correction Over?

    The outlook for the dollar in the week ahead is not about economic data or the FOMC and ECB minutes. It is about the stability of the global capital markets.  Many are looking for an event or official action that will stop the rout that is of historic proportions to start the year. We too have been thinking about what it would take to stop the rot. However, none of the frequently mentioned events, like an agreement to cut oil output, or for a coordinated policy response by the major countries, are particularly likely. Nevertheless, perhaps the selling has been a bit like a fire than can exhaust itself. If market speculation that the sover...
    On February 13, 2016 / By
  • Finance 0

    Bloomberg Columnist Explains Why Fed Pays Interest On Excess Reserves – Very Poorly

    A question on paying interest on excess reserves came up during Janet Yellen’s recent congressional testimony. Bloomberg writer Peter Coy offered this Q&A on a Fed Practice that Mystifies Congressmen. However, Coy blew many of the answers. Coy: Federal Reserve Chair Janet Yellen ran into a bipartisan buzzsaw today over why the Federal Reserve is paying interest to banks on the trillions of dollars in reserves that they hold at the Fed. She tried repeatedly to supply the central bank’s reasoning but didn’t seem to make a dent.Here’s an explanation of the Fed’s position, which didn’t exactly come through in the sound bites und...
    On February 13, 2016 / By
  • Finance 0

    How Meaningful Was Friday’s Stock Rally?

    The Charts Speak For Themselves Video Length: 00:31:31...
    On February 13, 2016 / By
  • Finance 0

    Nobody Knows Normalization

    Podcast: Play in new window | Play in new window (Duration: 13:16 — 6.1MB) DOW + 313 = 15,973 SPX + 35 = 1864 NAS + 70 = 4337 10 Y + .10 = 1.75% OIL + 2.77 = 28.98 GOLD – 9.40 = 1238.00 The Nikkei Stock Average finished down 11% for the week, its biggest weekly percentage drop since October 2008. Yesterday, the index ended off 4.8% at 14,952, the lowest since October 2014. The Nikkei is down 21% year-to-date. Japanese Prime Minister Shinzo Abe held a meeting with his top financial diplomat yesterday, as well as the BOJ’s governor, following a report that the “architect of Abenomics” called for a Group of 20-wide response to th...
    On February 13, 2016 / By
  • Finance 0

    E Talking Numbers: S&P 500

    With the S&P 500 down 12.6% from its peak, its worth looking at what the numbers have to say. Markets tend to peak when valuations are expensive, and animal spirits high. They tend to bottom when valuations are cheap, and animal spirits low. However, markets tend to become cheap only when recession risk is perceived as high. And I don’t see recession risk as being high. I am happy to up my allocation to equity when animal spirits are very low, and have been low long enough to drive valuations down from expensive to neutral.   The S&P trades at 17.5X trailing 12 month operating earnings. That compares with a long-term average of...
    On February 13, 2016 / By
  • Finance 0

    E Bottom Fishing For Value

    Investors need a strategy, be it value, growth, or income. My stock performance (as tracked from TradingIdea) centres around finding value. Bottom Fishing for Value now has over 400 followers. The Bottom Fishing for Value Ideas strategy returned 312.2% ROI. In the week, a sell call was issued for all the momentum stocks. VMWare (VMW), Splunk (SPLK), and RackSpace (RAX) will likely underperform the market. Valuations are deeply unfavorable for these technology firms. Customers cut back spending in the last quarter. Business will eventually improve, but not in the next quarter or two. 2016 will bring uncertainty for these firms. VMWare i...
    On February 13, 2016 / By