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Daniel R Moore  

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  • Watch Out For The Buyback Taper [View article]
    Your numbers are accurate with regard to the total buy-back activity at CAT. My analysis is based on the fully diluted share count before and after various points in time to see if shares are truly being taken off the market. Usually the executive and employee options boost the share count through time, off-setting buy-backs. This has not happened across many of the companies over the past 15 months as the data shows, including CAT.
    Jun 4, 2014. 01:48 PM | 1 Like Like |Link to Comment
  • Watch Out For The Buyback Taper [View article]
    I listed JPM in the group of both profit and revenue challenged, but it is pretty clear they are in regulatory purgatory, and at the same time in a protected class. Any analysis of this particular sector right now is a special case. Historically buying back large bank shares at below book value is a sound practice - and in this case had to meet heavy regulatory scrutiny.
    Jun 4, 2014. 01:35 PM | 2 Likes Like |Link to Comment
  • SandRidge Mississippian Trust II - Still Value Priced Post Q1 Earnings Results [View article]
    This article is outdated; most recent research was put out in March 2014 based on the 10-K. I believe it is now behind a pay for barrier. However, you can access a PDF copy on my web-site at

    My present valuation is $7 per share, which the units are trading above. The steep reset in the valuation is based on the on-going poor drilling results. A law firm is also investigating the potential for a lawsuit for breech of fiduciary responsibility by the general partner (SD).
    May 21, 2014. 07:12 PM | Likes Like |Link to Comment
  • Nervous Investors Move To Bonds Just Like Belgium? [View article]
    I agree with your insights, and have come to a similar conclusions on bond investment in my own portfolio.

    As to when the distortion will unwind, at this point I am more inclined to look for political rather than economic triggers for the ignition point. I think the economy will be the excuse, not the cause. Based on this view, as I stated in another response, there is good reason to believe the current path will be followed at least until 2016, at which time a political battle may invoke a change. Could the mid-terms upset the apple cart? It may be why some of the big money is moving to a neutral position.

    As always, I appreciate your insightful comments.
    May 20, 2014. 02:48 PM | Likes Like |Link to Comment
  • Nervous Investors Move To Bonds Just Like Belgium? [View article]
    I think it could last all the way to the 2016 election based on current government financing needs. After that, the borrowing need starts to ramp up very quickly unless there is a fiscal change - which would most likely mean some market pricing adjustment depending on its nature. I also believe that the current drop in rates is temporary relative to the first of the year, and would not be surprised if rates begin to edge back toward 3% on the 10 year and 4% on the 30 by the time the Fed truly stops buying Treasuries, currently projected for the end of the year.
    May 19, 2014. 07:34 PM | 1 Like Like |Link to Comment
  • Nervous Investors Move To Bonds Just Like Belgium? [View article]
    I don't disagree that there may be a bit of blind luck involved; but then again, the levers being pulled are a steroid version of the second term Clinton fiscal and monetary policy. There is history from which to gauge expected results.

    This idea of the Fed gifting back interest payments to the Treasury as an economic stimulus is where I believe the illusion is coming from. Buying the high coupon Treasury debt off the market and holding it on the Fed balance sheet with the intent of lowering the government's interest bill is creating an unsustainable illusion to me. The tide will turn when the entitlement programs need cash, but the funding is only forthcoming at market rates, or not at all. The whiplash could be fast and furious.
    May 19, 2014. 01:56 PM | 2 Likes Like |Link to Comment
  • Nervous Investors Move To Bonds Just Like Belgium? [View article]
    To me, it is all about trying to find outliers that are trading at price levels close to historical norms. Not all PFDs are a good buy, and some have caught the same over priced contagion.

    Currently I don't expect long rates to be able to jump through their historical averages within the next several years as long as the current Fed program remains intact, or until there is a financial system break that stops the ability of the Fed and other central banks to enter the market and buy up Treasuries. I think the latter break-down is coming, but most investors will get the message the day after it happens. For this reason, I like investments that will continue to pay cash flow that is close to historical norms, if you can find them, in order to utilize the cash generated as conditions change. If the scenario does materialize in which Treasuries move up in yield down in price simultaneously with a drop in equity prices, the middle ground is likely to be where the least amount of money is lost; in which case you become relatively better off.
    May 19, 2014. 01:42 PM | Likes Like |Link to Comment
  • Nervous Investors Move To Bonds Just Like Belgium? [View article]
    Pattern noted. The amount added by Belgium equals the amount of the taper in the U.S. over the last several months. As I noted in a response to a reader comment above, this looks like a coordinated move through the IMF's Brussels location. If true, it is a sad day that the IMF, set up for post WWII reconstruction, is now having to loan money to the United States.
    May 19, 2014. 07:54 AM | 3 Likes Like |Link to Comment
  • Nervous Investors Move To Bonds Just Like Belgium? [View article]
    I don't disagree with the possibility that Russian holdings may have been moved to Belgium. However, the total does not add up. Far more has flowed into Belgium than has exited Russian holdings in directly reported areas. To me, an anomaly so blatant as this one in a U.S. Treasury report deserves a better explanation than the one given in the footnotes. (this report comes from the Executive office, not the Federal Reserve)

    The increase seems more likely to be tied to the IMF. One of the two headquarter addresses is:

    Brussels Office
    8 Boulevard de Berlaimont
    1000 Brussels, Belgium
    May 19, 2014. 07:45 AM | 2 Likes Like |Link to Comment
  • Will Japan Create Inflation Or Just Export Deflation? [View article]
    It has taken longer than I expected, but the biggest threat to stocks right now is the deflation driven correction that should materialize as the withdrawal of the monetary illusion progresses. Large hedge funds scaling back leverage and returning to a neutral book (see Teper) is a signal that fast money is trying to front run the expected scenario. The rush out of high duration, negative cash flow growth tech and small cap stocks is also a signal that liquidity is expected to dry up in the near term. Geopolitics is also a headwind, as Russia is trying to form a non-dollar alliance which is putting a real strain on the future of the over extended Fed policy.
    May 16, 2014. 10:45 AM | Likes Like |Link to Comment
  • Market Winds Are Shifting - Time To Assess The Signals [View article]
    Thank you for directing me to this information. Joesph Calhoun's contributions are very thorough and professionally refreshing.

    I too review the current times against the 1937 crash from time to time. I am confident that Janet Yellen wants to avoid having a "Marriner Eccles moment." By that I mean she is likely to do everything she can to avoid tightening banking reserves when deflationary winds are still present, as history reflects was the case in 1937. Will the Reverse Repo market be a way around the $2T+ excess reserve overhang and allow the monetary illusion to continue? Stay tuned.
    May 11, 2014. 09:40 PM | 1 Like Like |Link to Comment
  • Market Winds Are Shifting - Time To Assess The Signals [View article]
    I appreciate your comments on the jobs data, and I too as many readers understand the internals on the report are weak. They have been for years.

    However, the opening of the article is focused on the perspective that trying to gauge the relative value of the stock market, and make a trade based on the jobs number whether you think it is good or bad, is probably not a very sound investing approach. I call it trading noise. The market is already factoring in the employment picture in the current valuation. My opinion based on factors that I do see as highly correlated to the value of the market, is that stocks are expensive currently due to 1) a high level of Fed driven cash liquidity in the market; 2) companies are not expanding and therefore the quantity of shares on the market relative to the liquidity level is disproportional driving stock values up (asset price inflation); and 3) the federal government is not, on a relative basis, supplying a higher level of Treasuries into the market because of the current "somewhat" constrained fiscal policy (don't confuse the analysis as a political position). All this said, the factors that would predict a major breakdown in the market are not presently evident, unless your premise is that we are going to enter a deflation driven market collapse due to negative current expenditure growth at the Federal government level.

    I see a market beginning to shift, and I suspect it is because these factors are about to undergo a change over the next year. In the end, I see the stock market valuation through the upcoming period having very little correlation to what happens on the employment front. If anything, as I wrote in the article, it is likely to be a trailing indicator of the end result.
    May 9, 2014. 11:28 AM | 1 Like Like |Link to Comment
  • Market Winds Are Shifting - Time To Assess The Signals [View article]
    And where is the money going to go - cash to fund the U.S government at 0% interest rates? Or maybe very expensive DOW or S&P500 indexes on a historical basis relative to earnings which continue to decline year over year. There are not many places to hide in world where the Fed is creating a monetary illusion, but I suggest those who want to hedge the value they perceive they currently have in their investments, they buy low and sell high - not visa verse.
    May 8, 2014. 08:59 AM | Likes Like |Link to Comment
  • Market Winds Are Shifting - Time To Assess The Signals [View article]
    European stocks show up as a better relative alternative to U.S. equities presently. European focused energy stocks, or large cap oil companies with greater exposure to Europe is where I see value. That is one of the rationales behind why I like BP, in addition to its fundamental undervaluation compared to the group as a whole.
    May 8, 2014. 08:54 AM | Likes Like |Link to Comment
  • Market Winds Are Shifting - Time To Assess The Signals [View article]
    You make an excellent point by bringing up the reverse repo "experiment" that the Fed is currently actively discussing as the means of managing the large amount of "excess" reserves they have pumped into the U.S. financial system. Here is an excerpt from a WSJ article on the topic which explains what may happen:

    "The Fed is experimenting with another rate called a reverse repo rate. This rate appeals to officials because they can move it around without worrying about the level of reserves in the banking system. But switching to it wouldn’t be simple. Abandoning the fed funds rate could cause huge headaches because so many financial contracts are tied to it.Traditionally, the Fed has moved the fed funds rate up or down to tighten or loosen credit in the banking system. But the fed funds rate could be difficult to manage in the future. The rate is driven up or down by the level of reserves in the banking system and the Fed has flooded the system with reserves since 2008, loosening its grip on the rate."

    In a nutshell, the Fed is looking for a way to pay-off the banks to finance the Fed balance sheet which is composed of U.S. Treasury debt ( a high percentage long duration debt with an average 5% coupon) and Mortgage Backed Securities (also high coupon), and not lend out the $2T plus excess reserves that have been built up in the banking system. Raising the Fed Funds rate would force the Fed to have to sell Treasuries from its balance sheet and putting pressure up on the Treasury curve that the majority of investors are expecting, but also putting supply of Treasuries or MBS on the market for sale. Under this scheme, rates are changed and the banks make more money, but no new supply is introduced. Magic?

    The big deal here is that essentially a large segment of the capital market which is quarantined now with the Fed QE program, may well continue to be manipulated indefinitely into the future. Actual capital flows (lending for real economic expansion, i.e. capital expenditures) into the economy are likely to continue to be constrained, controlled by a small committee of government officials.

    In my opinion, the Fed is in a corner which is caused by the financing needs of the U.S. Treasury, and rather than moving toward free market solutions they are using a playbook which will lock the economy into a slow growth and eventually inflationary spiral due to lack of private economic capacity.
    May 7, 2014. 08:04 AM | 4 Likes Like |Link to Comment