Seeking Alpha

Eric Parnell, CFA

 
View as an RSS Feed
View Eric Parnell, CFA's Comments BY TICKER:
Latest  |  Highest rated
  • Stocks: Considering Life Without The Fed 'Put' [View article]
    Hello MartinGale7,

    Thanks for your comment and this is an excellent point. In fact, I see this as a primary risk for participants in financial markets going forward. And this goes for both the bulls and the bears. For on the bullish side, the expectation will be for years that the Fed will continue to come to the rescue, so anything short of that will be a disappointment. Conversely, every time the bears appear to have the market in the crosshairs, some passing comment from a Fed board member runs the risk of turning the market right side up again. So to your point, the risks associated with human decision making and the political pressure on monetary policy makers is likely to be a measurable risk to both sides of the market in the coming years.

    Outstanding point. Thanks again.
    Nov 6 07:56 AM | 1 Like Like |Link to Comment
  • Stocks: Considering Life Without The Fed 'Put' [View article]
    Thanks Svetoslav - I appreciate it!
    Nov 6 07:53 AM | Likes Like |Link to Comment
  • Stocks: Considering Life Without The Fed 'Put' [View article]
    Hello rfernando80,

    Thanks for your comment and excellent point about deflationary forces since the 1980s. bbro does a nice job outlining very similar points above as well. And I think you make a particularly good point that it becomes increasingly difficult to extract positive results from a persistently accommodative policy environment. At some point, a broader cleansing process must be allowed to take place to enable the economy and its markets to arrive at the next stage of sustained growth.

    Great points. Thanks again.
    Nov 6 07:52 AM | 2 Likes Like |Link to Comment
  • Stocks: Considering Life Without The Fed 'Put' [View article]
    Hello bbro,

    Thanks as always for your comments and for sharing your insights. You make a very good point about the phases in the pricing cycle and their relationship to secular business and market cycles over time.

    My only concern with these conclusions is that a good deal of evidence exists that suggests the disinflationary cycle that you are citing here actually got underway several years before 1986.

    Now one could point out the fact that stock valuations were in the process of rising through trough levels during this time period and had not started to become sustainably elevated until 1987, which happened to coincide with the advent of the Fed's 'Put' strategy.

    But if the transition from a high inflation to low inflation scenario over the past few decades is the primary explanatory factor behind why we have seen elevated, what then explains the fact that stocks did not experience similarly high valuations during other major low inflation phases in the past, of which there are several.

    All of this suggests that something else is at work, and the correlations associated with Fed policy including the 'put' over this time period are difficult to ignore.

    And to your response to Svetoslav, any future changes in the pricing environment or the market for that matter will not be the end of the world, but instead the next shift in the long term secular evolution of markets. And hopefully it will be one that is marked by greater health and less policy distortion than in the past. Only time will tell.

    Thanks again for your excellent and though provoking comments as always.
    Nov 6 07:50 AM | Likes Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    Hello mickey99 - As a quick update, this correction has been made in the article. Thanks again!
    Nov 2 08:16 AM | Likes Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    Hello mickey99,

    Thank you very much for your comment on this point. Another reader was kind enough to e-mail me on this same point. Although the four numbers associated with ETF and REIT asset purchases are off by an order of magnitude, they still represent a relatively small purchase amount in the broader scheme of global asset purchases even after the numbers are corrected. With that said, I regret the error and appreciate your mentioning it to me.

    Thanks again mickey99. I genuinely appreciate it.
    Nov 2 08:09 AM | 1 Like Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    Hello Ken,

    Thanks so much for your comment and your compliments. I appreciate it. And I share your views about central bankers and their insistence that QE is the right course for sustainable future growth even though it has failed to accomplish its goals to date. Hopefully we will arrive at a point sometime in the near future where a fresh and different approach will be considered instead, as I worry about the sizable imbalances that have been created from the extraordinary policy initiatives over the last several years and particularly since the summer of 2010.

    Thanks again and great points.
    Nov 1 11:13 PM | 2 Likes Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    Hello dieuwer - Thanks for your comment and you are absolutely correct, as I typically get the DXJ in the list but did not get it included here. Thanks for pointing this out and I apologize for the oversight.
    Nov 1 11:10 PM | 1 Like Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    Hello permanent,

    Thanks for your comment and for raising a good point about commodities. It has been notable how commodities disconnected with the QE cycle along with emerging markets in the summer of 2011, as these segments have stagnated while U.S. stocks found their footing with Operation Twist and then resumed to the upside with QE3. It seems that industrial commodities have been following the same path as China since the summer of 2011. As for gold, while a number of explanations can be provided for the price action over the last few years, it can also be reasonably described as curious. Avi Gilburt on SA done a particularly good job using Elliott Wave theory to predict the price of precious metals.

    Great point. Thanks again.
    Nov 1 11:08 PM | 2 Likes Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    Thanks John. I appreciate it!
    Nov 1 11:03 PM | 2 Likes Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    Hello Michael - Thanks as always for your comment. I appreciate it and hope that you're having a great weekend!
    Nov 1 05:42 PM | 1 Like Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    Hello Michael - Thanks for your comment. I agree that the headline GDP growth number was solid, but underneath the surface the number revealed a weakening consumer, which is critical given personal consumption expenditures are by far the largest component of GDP. The fact that net exports provided a meaningful boost to the GDP number also highlighted the erosion of domestic consumer demand. The GDP numbers coupled with the fact that real median household income remains well below pre crisis levels and showing little signs of future growth and a labor force participation rate that has fallen to its lowest levels since the 1970s suggests that the current economy is far from robust. Adding further to this point, the fact that according to a national survey conducted by Pew Research that 58% say jobs are difficult to find, 79% view the current state of the U.S. economy as fair to poor and 91% believe that the U.S. economy is either not recovering at all (24%) or recovering but not so strongly (67%) further implies that all is not well with the U.S. economy underneath the heady GDP headline numbers. Lastly, one can reasonably wonder why after roughly $1 trillion in fiscal stimulus and nearly $4 trillion added to the balance sheet of the U.S. Federal Reserve why we are not seeing far more sustainably robust and broadly distributed U.S. economic growth figures than what we are seeing today.

    These are just a few among the many reasons why I would continue to classify the U.S. economy as sluggish.

    Thanks for your comment and for raising an important challenge to this reference in the article. I appreciate it!
    Nov 1 05:41 PM | 10 Likes Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    Certainly a now dated reference that somehow found its way into my mind when writing last night. Thanks for pointing this error out.
    Nov 1 05:26 PM | 2 Likes Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    Hello jstratt,

    Thanks for your comment and excellent question. While I continue to believe that the near-term direction for global interest rates will remain lower as long as economic growth remains subdued, we will eventually arrive at a point longer term when interest rates will begin to rise, potentially sharply. Unfortunately, such an outcome will likely bode poorly not only for bonds but also for stocks, as part of the justification of currently high stock valuations is their earnings yield relative to bonds. It will be interesting to see.

    Thanks again.
    Nov 1 05:20 PM | 4 Likes Like |Link to Comment
  • Japan Stimulus: Not My Cup Of Sake [View article]
    Hello tallguyz - Thanks for your comment and kind words. I appreciate it!
    Nov 1 05:13 PM | Likes Like |Link to Comment
COMMENTS STATS
2,372 Comments
2,558 Likes