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Finance 0
Consumer Confidence Plunges Below Any Economist’s Estimate; Consumers Shock Economists
Consumer confidence is the third miss by economists in a single day. Please consider the Bloomberg Consensus Estimate for Consumer Confidence. Consumer confidence has fallen back noticeably this month, down more than 6 points to a much lower-than-expected 95.2. This compares very poorly with the Econoday consensus for 103.0 and is even far below the Econoday low estimate of 100.5. The weakness, ominously, is the result of falling assessments of the jobs market, both the current jobs market and expectations for the future jobs market. The second quarter, which is expected to be much stronger than the weather-depressed first quarter, isn... -
Finance 0
Big Surprise; Greece Demands An Emergency Meeting With The Euro-Group
As expected, Greece was able to make the 750M EUR payment to the International Monetary Fund last Tuesday but in order to get its hands on the cash, the country had to force all of its public service departments to fork over the remaining cash they had left. Source As we were warning in a previous article, even though the Greeks were able to pay the 200M EUR interest payment and 750M EUR principal payment, its future after these two repayments was absolutely unsure. Over the next three months, Greece will have to cough up an additional 7B EUR and as you can imagine, it just doesn’t have the money. It doesn’t even have a fraction of that ... -
Finance 0
Grand Slam
I confess to being baffled by the strength of Denny’s over the past year or two. That bafflement, combined with the chart, compelled me to short it a few days ago at $10.72.... -
Finance 0
Fall In Capacity Utilization Reflects The Effective Demand Limit
The Effective Demand limit upon the economy is not a very visible concept in the econo-blogosphere. Yet, it represents a limit upon the utilization of labor and capital toward the end of a business cycle. When real GDP reaches its effective demand limit, normally we would see capacity utilization peak and start to fall. Capacity utilization has now fallen for 5 months straight with the new data released today. So does this continued fall in capacity utilization reflect the effective demand limit? From my own measure using profit-maximization estimations… yes. Here is a graph which plots employment (1 – unemployment rate) with capacity ... -
Finance 0
Currency Misalignment: A Reprise
As the Congress debates currency manipulation [1], it occurs to me useful to reprise my earlier primer on currency misalignment (first published in March 2010), where misalignment is one component of some definitions of currency manipulation. Currency misalignment can be determined on the basis of the following criteria or models: Relative purchasing power parity (PPP) Absolute purchasing power parity The “Penn Effect” The behavioral equilibrium exchange rate (BEER) approach The macroeconomic balance effect The basic flows approach An equilibrium approach I have discussed several of these approaches in the past [0] [1], but a review ... -
Finance 0
Semiconductor M&A Heating Up: 3 Stocks To Watch
Consolidation in the semiconductor sector has increased over the last few years, but that hasn’t really caught our attention because the size of deals was small — so small, in fact, that the acquirers were not even required to furnish too many details. There are several advantages to small deals: they have cheaper valuations, don’t require too much cash outlay or disclosure and are easier to integrate. Integration is a major issue for semiconductor players because it’s not just a question of a culture match, but also the merging of product roadmaps including in some cases, manufacturing complexities (for example On Semiconductor... -
Finance 0
Am I Investing Or Speculating…?
“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative. “ Benjamin Graham The year was 2008, I was 25 years old at a Thanksgiving dinner with some family and friends. If you remember 2008 was the year the “Great Recession” took hold of the market and everyone started paying attention to the stock market. It was a very scary time and we were very close to going over the cliff in many respects. I had just been promoted to portfolio manager at a small investment fund, and because of my mother, everyone at the din... -
Finance 0
Am I Investing Or Speculating…?
“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative. “ Benjamin Graham The year was 2008, I was 25 years old at a Thanksgiving dinner with some family and friends. If you remember 2008 was the year the “Great Recession” took hold of the market and everyone started paying attention to the stock market. It was a very scary time and we were very close to going over the cliff in many respects. I had just been promoted to portfolio manager at a small investment fund, and because of my mother, everyone at the din... -
Finance 0
Empire State Manufacturing Weaker Than Economists’ Expectations
The Empire State Manufacturing survey came in today weaker than the Bloomberg Consensus Estimate, but at least the economists got the leading +- sign correct. The first indication on May conditions in the manufacturing sector is soft, as indications have been all year. The Empire State index came in at 3.09, below what were already weak Econoday expectations for 5.00. Shipments look respectable at 14.94 but are way ahead of new orders, at only 3.85, and even further ahead of backlog orders which are in deep contraction at minus 11.46. Employment growth is down as is the 6-month outlook, both pointing to a lack of optimism. Price reading... -
Finance 0
Lower Earnings, Higher Stock Prices: The Voting Machine
“The stock market is a voting machine rather than a weighing machine. It responds to factual data not directly, but only as they affect the decisions of buyers and sellers.”- Graham and Dodd, Security Analysis Earnings drive stock prices, so says investing lore. As earnings rise, stock prices move higher. As earnings fall, stock prices move lower. If it were only that simple. With the S&P 500 hitting new all-time highs, earnings should be exploding higher. To the contrary, for the 2nd consecutive quarter, they are moving lower. With 92% of companies reported, S&P 500 earnings have declined 13% in the first quarter of 201...
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