Dave Wrixon

Can't Stop the Market Bulls

So if a stronger currency is good for Japan, why might it not also be good for China?

The Chinese will be watching the Japanese very closely.

Are Financial Stocks Preparing for 'The Fall'?

No, by definition they are inanimate and don't do anything.

If you mean is the market about to collapse? Well, if you didn't already know the answer, you probably wouldn't even ask.

Has the Dollar Hit a Major Bottom?

"The Dollar Sentiment Index for the U.S. Dollar reports just 3% of traders are bullish on the dollar, which is a powerful contrarian signal. According to many experts this is an extreme low in bullish sentiment seen only 5 times in the past 20 years, and has often been the harbinger of the dollar moving dramatically higher against other currencies."

Don't buy this argument. Once in a while the crowd are actually right. The reason we are not reaching an normal market bottom is because the Fed and the Treasury have been working to support the Dollar probably with a good bit of assistance from major Wall Street Banks. The problem is that they cannot possibly hold the line without plunging the US Economy into the Abyss due to the higher interest rates that are going to be required to support the currency. Moreover the US needs a much better trade performance to support the domestic economy. This cannot be done with the dollar at current levels.

The question in my mind is whether they will switch to an orderly but accelerated devaluation or whether they will just cave in? The only hope of holding the dollar in the current range is if they can bring China back on board as a major inward investor. However, this is impossible because, not only is China highly sceptical of the security of its US investments, but is now having to look inward and focus on the development of its own internal economy, which means it just won't have the spare cash that Obama so desperately needs.

Forget the 1930s; We're Reliving 1975 (Part II)

There are similarities and differences.

I think the main problem is Debt which was not such a massive problem in the 1970s, or indeed in the 1930s.

The Magnitude of the problem is probably more similar to the 1930s but there are elements that do bear resemblance to the 1970s.

However, I feel it is simplistic to jump to conclusions about how this will unwind. The event is triggered by Debt on an unprecidented scale, and was initially depressive in nature, but Bernanke has made sure that the it will be a primarily an inflationary contraction.

My guess is that upward pressure on interest rates and inflation will trigger a reversal of the stimulus recovery resulting in an even bigger second leg down. The underlying cause is probably due to one super-power supplanting another, as may possibly been partially the cause in the 1930s. Those that think we are out of the woods or this is mainly everyone else's problem are in for severe shock.

Earnings Season: U.S. Banks Will Make or Break the Rally

Reality suspended.

This preliminary announcement was almost as disingenuous as the Citibank Memo.

It is the below the line earnings that matter, not some BS figure that ignores the write downs.

Where Have All the Buybacks Gone?

Sure if you can guarantee doing it for the term of the loan.

Reality is that most companies are struggling to borrow, when they can despite zero nominal interest rates it doesn't exactly come cheap. And few of them are making a profit at all, let alone one big enough to justify buying back their own stock.

In good times this kind of action would have increased share values. Don't you think they would be doing it now if they could do the same? The truth is this kind of action would gravely undermine the balance sheets of most companies, which could potentially result in disaster.

And well if Moody's are making money after their ratings performance last year, then it just goes to show how fixed Wall Street actually is.


On Apr 11 01:32 AM ozcutty wrote:

> moodys bought back a fair bit of stock last year, but most of it
> was with borrowed money. That poses another question doesn't it,
> are companies right to borrow to buy back? If your business is growing
> at 10% and you can borrow at 5% is it good practice to lever up to
> buy back?

Where Have All the Buybacks Gone?

Yep, you can only buy back if you have an excess positive cash flow.

Not Rocket Science is it?

Where Have All the Buybacks Gone?

Yep, you can only buy back if you have an excess positive cash flow.

Not Rocket Science is it?

Pension Underfunding: The Next Earnings Shock?

Why should this be a shock? Pension funds are invested in stocks. The value of those stocks is part of the adequacy calculation. If the value of the stocks more than halves then it not surprising that fund is coming up short. How old do you need to be to work that one out? 10?

The problem is with Ponzi schemes is that they fall flat on their face when the economic tide goes out. Pension funds are no different.

Top Dividend Yields of the Dow Jones Industrial Average

No you are right on the money. Last years dividends have already been paid. It is next years dividends that are of interest.


On Feb 04 09:21 AM aber wrote:

> hallo , nice article but...
> I really don't understand why BAC is still considered/write-about
> like a dividend stock !
> for what i know , and this is the reason because I "trashed" the
> stock , the next BAC dividend will be (if not cancelled totally)
> just 1 cent x share !
> And what about PFE that declared tu cut in half the next dividend
> following the "wyhet-deal" ??
> Am I wrong ? comment ?

Top Dividend Yields of the Dow Jones Industrial Average

Much of the organization will survive, maybe even the name, but that does not mean that existing equity holder will still have a stake.


On Feb 05 05:02 AM jimko wrote:

> BAC will survive.
> They are all over the country and foreign countries.
> If they fail, some town will be left with no banks.

Top Dividend Yields of the Dow Jones Industrial Average

Don't dividend yields price in bad news? The higher the yield, the lower the share price generally is compared with its historical value because next year's dividend is expected to be lower.

Indeed, high yielding stock should be a red light. It shows that the company is in trouble but the extent of the trouble has probably not been fully factored in. Unless, it the kind of business where somebody is going to flick at switch and suddenly it is 2006 all over again, then it is probably worth giving these shares a wide birth until they have bottom out and are at least showing tentative signs of recovery.

Most investors love income, which is why they obsessed with yields. My father is one of them. I can tell you know that has not protected him during this downturn. Having said that he is not exactly market to market. He rarely sells.

The Great Year-End U.S. Jobs Blowout

But the answer is to make stuff that people want to buy at a price they can afford. Half the stuff coming out of the States is 50% advertising by value. You advertise over-rate crap until the cows come home. It doesn't make it value for money. And only value will sell in the current climate.


On Jan 09 09:45 AM Michael66 wrote:

> People just do not comprehend how much harm they do to the American
> economy when they buy an imported car.
>
> Take, for example, the effect of buying a $50,000 Mercedes here in
> the US.
>
> Approximately 60% of the list price of the Mercedes or $30,000 is
> transferred to Germany. That is $30,000 of American capital. The
> US loses $30,000 of capital and Germany gains $30,000 of capital.
>
>
> This $30,000 of capital is permanently lost to us. We can no longer
> use it to invest in America.
>
> In addition to a transfer of capital, that $30,000 transferred to
> Germany also represents $150,000 of jobs transferred to Germany.
>
>
> Economists figure that when one dollar is introduced or transferred
> out of a country it actually represents $5.00 of jobs gained or lost.
> This is called the “Job Multiplier effect” of capital lost or gained.
>
>
> Multiply $30,000 by the standard job multiplier of 5 and you have
> the sum of $150,000 which is the dollar value of jobs that the $50,000
> Mercedes sent to Germany and that we here in the US have lost.
>
>
> In other words, the purchase of the Mercedes lost America the equivalent
> of three jobs each paying $50,000. Germany gained the equivalent
> of three jobs each paying $50,000.
>
> Currently we are transferring $6,000,000,000 (six billion dollars)
> of capital per day out of the US to purchase depreciating and wasting
> assets. In essence, we are squandering our capital.
>
> This is a disaster in the making.

The Great Year-End U.S. Jobs Blowout

It is this steep because it took those at the top soooo very long to figure it out. Everyone is playing catch up. Just go and get drunk and try to figure it out when you sober up. None of the data is worth crunching at the moment!