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Eric Parnell, CFA

 
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  • After The Fed: The Battle Lines Have Been Drawn [View article]
    Hello BDUBS - Thanks for your comment. The 19x P/E number comes from the Standard & Poor's website from the Index Earnings database. I am on a mobile computer today, but will follow up with a link to this file soon.

    Thanks again
    Jun 20 07:14 AM | Likes Like |Link to Comment
  • After The Fed: The Battle Lines Have Been Drawn [View article]
    Hello ValueSeeker2013 - Thanks for your comment and for sharing your thoughts. I think you may be correct, as trading on Thursday morning is setting up very poorly and already putting many of these key battle lines to the test. Some very important trading days the next few days.

    Thanks again.
    Jun 20 07:11 AM | Likes Like |Link to Comment
  • After The Fed: The Battle Lines Have Been Drawn [View article]
    Hello DAG1996 - Thanks. I appreciate it!
    Jun 20 07:10 AM | Likes Like |Link to Comment
  • After The Fed: The Battle Lines Have Been Drawn [View article]
    Hello User 427801,

    Thanks for your comment and I appreciate your thoughts. You are correct that the point here is to highlight that the markets have the potential to go in either direction, although it appears at least this morning that this direction may be decisively down. My point in this article is to highlight the key thresholds for those that are invested across asset classes that one might consider moving to the sidelines if they are decisively breached over the next few days.

    Thanks again for your comment.
    Jun 20 07:09 AM | 15 Likes Like |Link to Comment
  • Fed Tapering Scenarios: The Winners And Losers On Wednesday [View article]
    Hello Freddy,

    Thanks for your comment and for sharing your perspectives. Thanks also for the link to your TRENDLines site. I look forward to exploring the content on your website in more detail.

    Thanks again.
    Jun 18 11:47 PM | Likes Like |Link to Comment
  • Fed Tapering Scenarios: The Winners And Losers On Wednesday [View article]
    Hello WMARKW,

    Thanks for your comment and excellent points as usual. I particularly agree with your point about the dilemma the Fed faces when it comes time to actually sell these securities. This is where the experiment becomes particularly complicated.

    Excellent points. Thanks again.
    Jun 18 11:45 PM | Likes Like |Link to Comment
  • Fed Tapering Scenarios: The Winners And Losers On Wednesday [View article]
    Hello mykie - Thanks for your comment and your kind words. I appreciate it!
    Jun 18 11:43 PM | Likes Like |Link to Comment
  • Fed Tapering Scenarios: The Winners And Losers On Wednesday [View article]
    Hello IT,

    Thanks as always for your comments. And the discussions going on in your Instablog right now are outstanding. I'm just returning here now after having made a few comments over there.

    And congratulations - since this afternoon you are now ranked #5 in the instablog rankings. Well deserved, as you've done a great job in driving and moderating the discussion.

    Thanks again.
    Jun 18 11:42 PM | 1 Like Like |Link to Comment
  • Fed Tapering Scenarios: The Winners And Losers On Wednesday [View article]
    Hello goldnugget,

    Thanks for your comment. A hold on any tapering would not surprise me at all tomorrow for the reasons that you've indicated. And I also agree with you on the consequences of these ongoing monetary actions, particularly once Japan joined in on the activity, as the fallout effects are likely to extend well into the future.

    Great points. Thanks again.
    Jun 18 11:41 PM | 1 Like Like |Link to Comment
  • Fed Tapering Scenarios: The Winners And Losers On Wednesday [View article]
    Hello JMikeK,

    Thanks for your comment. I am also slightly down on TLT, as the position was established in early April prior to the overlooked April rally in bonds (everyone in the media talks about the May/June rise in interest rates but always overlooks the comparable March/April fall in interest rates).

    As for the outlook on TLT, jhooper does an outstanding job as usual laying out the near-term and long-term risks for the asset class.

    Thanks again
    Jun 18 11:38 PM | Likes Like |Link to Comment
  • Interesting Times For All Commodities And Investments!! Chapter 10............ [View instapost]
    Hello IT,

    Here is my take on tomorrow. But instead of crunching the numbers, I'm just going to go with my gut here.

    The Fed announces tapering and discusses it in its press conference tomorrow afternoon. But instead of falling, stocks actually rally on the news while bonds remain steady and PMs sell off. This initial reaction will give the sense that the Fed will actually be able to pull off tapering and the market will be OK with it. But after trading higher for a few days after the Fed meeting (perhaps as long as Monday or even through the end of the quarter), stocks suddenly run out of gas and roll over into what will be a more sustained correction while bonds start to rally and PMs catch a bid including gold and silver finally breaking out above their downward sloping 20-day moving averages. Perhaps this will all be wrong come tomorrow, but this is where my gut is heading into the overnight.

    Thanks again IT. Great instablog discussion!
    Jun 18 11:31 PM | 2 Likes Like |Link to Comment
  • Interesting Times For All Commodities And Investments!! Chapter 10............ [View instapost]
    Hello southgent1951,

    Thanks for your reply. You make a number of excellent points that you argue very well. And I completely agree that interest rates will be heading higher from current levels at some point in the future. I'm still not sure myself if now is the time that it is going to happen or if it is more likely to come at a later date. At present, I continue to believe that it will come later, but perhaps I will be wrong.

    To your points about where interest rates would be today without Fed intervention, here are some of the additional points that I consider. First, 10-year Treasury yields had fallen as far as 2.04% in December 2008, which was before the Fed had launched QE (they had initiated MBS purchases in November but they did not begin to settle until January 2009). This, of course, was an extreme crisis period, but it implied genuine concerns about a deflationary outcome. This leads to the second point, which is if the Fed is truly fighting a deflationary battle, it would imply that U.S. Treasury yields would be far lower than they might otherwise be under conditions of price stability or inflation, and that interest rates could actually be lower than they are now if the Fed had not intervened along the way since deflationary pressures would have been allowed to fully take hold. Lastly, from the late 1800s up until 1966, average long-term interest rates consistently moved in a range between 2% and 5%. It was not until the late 1960s and the inflationary 1970s following the collapse of Bretton Woods and all of the other monetary policy actions during the time that long-term interest rates moved decisively above this range. And it wasn't until 1998 that we first returned to this range and have remained in it for the 15 years since. I'm not saying this is the case, but is it possible that the 22 year period from 1966 to 1998 when long-term interest rates ranged from 5% to 15% was the anomaly and that the cumulative +100 year period otherwise when interest rates ranged between 2% and 5% is actually a return to the long-term normal. Once again, I'm not suggesting this is actually the case, but it is something that I am exploring in the context of the broader interest rate discussion.

    Thanks again for your excellent response. You make a number of outstanding points and I look forward to following your blog discussions going forward.
    Jun 18 11:24 PM | 2 Likes Like |Link to Comment
  • Interesting Times For All Commodities And Investments!! Chapter 10............ [View instapost]
    Hello southgent1951,

    Thanks for sharing this information from TCW. This is excellent material.

    I think it's worthwhile to add a few points to the widespread discussion about the end of QE and how it is likely to impact fixed income markets, as I believe a few key points get missed by analysts. First, when the Fed decides to scale back on Treasury purchases, the assumption that is almost always implied in these discussions is that all else will be held equal. Put simply, the Fed is going to stop buying $45 billion in Treasuries each month and no other market forces are going to adjust or react to this change in the marketplace. But this is never the case, as the entire market ecosystem is impacted. And in recent years, this has included institutions exiting risk assets and unwinding long stock positions that they were taking on by leveraging up the proceeds from the Treasury purchases by the Fed. The cash proceeds from this stock unwind has typically found its way back into safe haven Treasuries at an amount that has been vastly greater than the reduction in Fed purchases, leading to lower Treasury rates during QE off periods instead of higher.

    Second, a reduction in the net addition of Treasury purchases or the elimination of additional Treasury purchases by the Fed is much different than the actual sale of Treasuries by the Fed. As long as the Fed is sitting on the supply and not actively adding supply to be sold into the market, the impact on interest rates is notably different and likely negligible as a result. This is one of the key differences between today and the comparisons to the 1994 scenario.

    Lastly, the association with recently rising interest rates and the potential tapering of QE is misplaced, as the trigger that started interest rates to rise is not correlated at all with the discussions around Fed tapering the way it is for the stock market. Instead, all signs suggest the recent rise in interest rates has far more to do with the increase in implied volatility in the Japanese bond market, particularly since early May when JGB bond rates spiked higher.

    I'm not saying with all of these points that we won't eventually arrive at a juncture where interest rates are heading higher due to Fed policy, but a number of signs suggest that this is not what is happening right now. Then again, perhaps I am wrong. It will be interesting to see.

    Thanks again for sharing these articles. They were excellent reading.
    Jun 18 10:19 AM | 5 Likes Like |Link to Comment
  • Interesting Times For All Commodities And Investments!! Chapter 10............ [View instapost]
    Hello F&GT,

    Some great recommendations here. In particular, T just had a nice bounce off of its 200-day M.A. and QCOM also just responded well to support at $61 per share. And I agree that both set up well from a recurring revenue and dividend growth standpoint.

    Excellent points.
    Jun 18 09:46 AM | 1 Like Like |Link to Comment
  • Fed Tapering Scenarios: The Winners And Losers On Wednesday [View article]
    Hello newbeach861,

    Thanks for your comment and for raising this important point. I think you're absolutely on to something here, particularly given the fact that Bernanke is bowing out of Jackson Hole this year. If the intent was to keep QE in place without any signs of tapering through the summer, it would set up better for Bernanke to attend. But with him almost certainly stepping down in January, it sets the stage for his likely replacement (Yellen) to take the baton on the next stage of Fed policy actions. It will be interesting to see, but I think that you are right that the recent news does nudge this probability a bit higher.

    Thanks again.
    Jun 18 09:41 AM | 1 Like Like |Link to Comment
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