Seeking Alpha
View as an RSS Feed

Eric Parnell, CFA  

View Eric Parnell, CFA's Comments BY TICKER:
Latest  |  Highest rated
  • Apple: A Canary In The Stock Market Coal Mine [View article]
    Hello jossbolton,

    Thanks for your comment. I could not agree with you more, as the point that you have raised here is one of my primary frustrations associated with the ongoing priority of balance sheet expanding monetary stimulus. Other than QE1 that played a key role in pulling the global financial system back from the brink of collapse, there is no evidence that the extraordinarily aggressive policy actions by the Fed and other global central banks is leading to sustained economic growth. Instead, it is helping to inflate asset prices for the minority of individuals that actually own stock at the expense of nearly all individuals that are left to deal with inflated asset prices such as gasoline and food costs. And it is also increasing the risk of another financial accident and crisis scenario in the years ahead, which is troubling in its own right. For these reasons, I share your concerns.

    Thanks again for your excellent comment.
    Mar 16, 2013. 10:39 PM | Likes Like |Link to Comment
  • Apple: A Canary In The Stock Market Coal Mine [View article]
    Hello ndras,

    Thanks for your comment and for your excellent point. You are absolutely right and I worked to try to include enough qualifiers in my article in complete recognition of the points that you are making here, as a number of technical analysts accurately called the top and reversal in Apple at $700 per share. This is the power of technical analysis and why it is so important to include it in the overall analysis framework.

    Thanks for raising this point. I appreciate it.
    Mar 16, 2013. 10:34 PM | 1 Like Like |Link to Comment
  • Apple: A Canary In The Stock Market Coal Mine [View article]
    Hello dancing diva,

    Thanks as always for your comment. You make some excellent points here. I completely agree with you that if Washington can finally see the light and engage in substantive tax reform and make real progress in addressing the long-term budget issues, this has the potential to be a very positive development for financial markets. In the meantime, I am less sanguine about the economic outlook and the strength of corporate earnings and margins. With GDP growth grinding to a halt, corporate earnings turning negative on a year-over-year basis in recent quarters and corporate margins showing signs of rolling over from historical peaks, I am concerned that the overall market could soon find itself on a similar corrective path, particularly following its recent run. It will be interesting to see.

    Thanks again for your excellent points. I appreciate it.
    Mar 16, 2013. 10:29 PM | Likes Like |Link to Comment
  • Apple: A Canary In The Stock Market Coal Mine [View article]
    Hello BORNAGAIN2007,

    Thanks for your comment. This is an interesting point about the market value of Apple relative to the mining sector. And recent history has shown from the likes of Microsoft and Cisco Systems that dramatic surges to claim the title of the largest company in the world by market cap can be soon followed by a peak in the stock price. And to your point, it will be interesting to see how gold responds from here.

    Thanks again.
    Mar 16, 2013. 10:25 PM | Likes Like |Link to Comment
  • Apple: A Canary In The Stock Market Coal Mine [View article]
    Hello Norman,

    Thanks as always for your comment. I appreciate it and agree with you on your view on how the markets might play out under a post peak scenario this time around. Unlike the 2007-08 episode where the market descended then plunged over a short-term period of time, I believe it is more likely that we could see a long drawn out grind lower that may take several years to play out as it progresses across sectors and includes a few shocks along the way. It's only a matter of policy makers either getting out of the way and allowing this corrective process play out so that we can work our way through to the beginning of a new secular bull market phase or the market taking matters into its own hands and correcting despite policy makers endless efforts to try and stop the corrective process. In the end, the market system will be better for it.

    Thanks also for your recent articles on JM Smuckers and Procter & Gamble. I've owned both over the past year and may look to own them again in the future if good entry points present themselves along the way.

    http://seekingalpha.co...
    http://seekingalpha.co...

    Thanks again Norman. I look forward to reading your future articles on SA. Have a great day.
    Mar 16, 2013. 08:48 AM | 2 Likes Like |Link to Comment
  • Apple: A Canary In The Stock Market Coal Mine [View article]
    Hello fishfryer,

    Thanks for your comment and for making a number of excellent points. I agree completely with your perspective on gold and also with your views on Greenspan. I have to question the appropriateness of the former Chairman of the Federal Reserve and the individual who was at least played a substantial role in inflating the past two stock bubbles going on the media rounds claiming that the stock market is deeply undervalued. I'm not sure former Fed Chairman should be in the business of providing such investment advice, particularly given their direct proximity to current monetary policy makers whose dual mandate is to ensure full employment and price stability, not rising equity prices that have proven so unpredictable and unstable over the past decade. But such is the hyper managed policy environment we are operating in today.

    Outstanding points. Thanks again.
    Mar 16, 2013. 08:37 AM | 2 Likes Like |Link to Comment
  • Apple: A Canary In The Stock Market Coal Mine [View article]
    Hello nguyenvanphouc,

    Thanks for your comment and I agree with your point. My intent with the correlation chart is not necessarily to say that the stock market is going to follow the exact same path that Apple set out on six months ago or that the market is on the brink of a -38% decline over the next six months. Instead, the design was to show that both individual securities and broader markets have the tendency to move in familiar patterns in regards to the duration and relative magnitude of rallies. It is also provided to show that even the most revered investment themes can be subject to extended declines even in an environment where such investments are receiving the full support of monetary authorities such as the Fed.

    I appreciate your raising this point and offering the opportunity for clarification. Thanks again.
    Mar 16, 2013. 08:19 AM | 7 Likes Like |Link to Comment
  • Approaching A Major Inflection Point In The QE3 Trade [View article]
    Hello phdinsuntanning,

    Thanks for your comment and for raising some fairly interesting scenarios. I am going to think on these options into the overnight, as you've raised some intriguing points to consider.

    Your handle on SA is also notable - I hope that you are both commenting and sun tanning from a nice place and that it beats the 40 and partly cloudy I'll be seeing tomorrow.

    Thanks again.
    Mar 13, 2013. 11:59 PM | Likes Like |Link to Comment
  • Approaching A Major Inflection Point In The QE3 Trade [View article]
    Hello Michael,

    Thanks for your comment. You are right that MBS purchases associated with QE1 began in late 2008, although just like with QE3 back in September, the liquidity associated with these purchases did not begin to make their way into the system for several months due to the nature of how MBS purchases are settled. But daily U.S. Treasury purchases were not added to the QE1 until mid March 2009. This is an important distinction and I appreciate you raising this question for clarification purposes.

    Thanks again.
    Mar 13, 2013. 11:53 PM | Likes Like |Link to Comment
  • Approaching A Major Inflection Point In The QE3 Trade [View article]
    Hello bobdark,

    Thanks for your comment. You raise an excellent point here. This is one that jhooper has insightfully introduced in the past as well and is one that I think is very important to consider with the current QE3 program. I suspect that even with the changing of the guard at the Fed scheduled for January 2014 that QE3 could continue unabated for sometime, unless of course something happens along the way that either encourages or forces the Fed to step down in the meantime. But to your point, the fact that QE3 is unlimited could cause an altogether different outcome for markets this time around. It will be interesting to see.

    Thanks again.
    Mar 13, 2013. 11:51 PM | Likes Like |Link to Comment
  • Approaching A Major Inflection Point In The QE3 Trade [View article]
    Hello Unsure Now,

    Thanks for your comment and I very much agree. I have genuine concerns about the unintended consequences and long-term damage that may result from the unprecedentedly aggressive monetary policy that we have seen over the last several years. It will be interesting to see how it all plays out.

    Thanks again.
    Mar 13, 2013. 11:39 PM | Likes Like |Link to Comment
  • Approaching A Major Inflection Point In The QE3 Trade [View article]
    Hello Willie119,

    Thanks for your comment and to reiterate jhooper's reply to your comment - amen. I am not intending to suggest here that arriving at the 2.5 month mark is the reason that markets might shift. Instead, I am introducing the point in order to explore what, if anything, might cause liquidity preferences to shift over time during a QE cycle. And you have actually read my mind - I will be submitting an article in the next few days that explores the risks to the stock market today associated with these shock type events (or the perception of shock events in some cases). All it takes is one trading day for the tide in the market to sharply turn, and this could come at any time. And in the end, it may end up taking the form of something that the market is not at all anticipating. Your example about the Japanese earthquake is a good one (although interestingly, stocks actually rallied that day on March 11 and were close to setting an interim bottom a few days later on March 16 following the correction that started on February 22), and I would add to it the outbreak of civil war in Libya in February 2011 and concerns over whether the Greek parliament would approve austerity measures in June 2011 as some others.

    Excellent point and I appreciate you raising it and providing me with the opportunity for clarification.
    Mar 13, 2013. 11:38 PM | 1 Like Like |Link to Comment
  • Approaching A Major Inflection Point In The QE3 Trade [View article]
    Hello SeekingTruth - Thanks for your comment. I appreciate it!
    Mar 13, 2013. 11:25 PM | Likes Like |Link to Comment
  • Approaching A Major Inflection Point In The QE3 Trade [View article]
    Hello flash9,

    This is an excellent point. And as we saw during the unwinding of the tech bubble back in 2000-2002 as well as during the back half of QE2, the Fed's influence on stock prices has its limits no matter how much money they are injecting into the system.

    Great point. Thanks again.
    Mar 13, 2013. 11:24 PM | 1 Like Like |Link to Comment
  • Approaching A Major Inflection Point In The QE3 Trade [View article]
    Hello Abegaz,

    Thank you once again for your comments here as well as on my previous articles. I appreciate your raising this perspective, as I think it is always important to consider both sides of the argument.

    I do agree with you on several points you've made here. We will never know how the market would have responded without Fed intervention during the crisis. And given how far and fast the market fell during the period from September 2008 to March 2009, it is reasonable to think that some sort of regression to the mean would have occurred along the way even without the Fed's support.

    Also to your point, whether it was confidence boosting or had a substantive influence on stabilizing asset prices, I fully supported the Fed's move to engage in QE1, as allowing the system to seize up and collapse was not at all reasonable alternative. But once QE1 was finished, I would have preferred that the Fed stepped aside and allow the thinking that you have presented here to play out instead of entering into QE2, Operation Twist, Twist 2 and now QE3. This way, we would have a much better sense of market equilibrium one way or another and the influence of the Fed would no longer be in question.

    Excellent points as always. Thanks for your comments.
    Mar 13, 2013. 11:22 PM | 1 Like Like |Link to Comment
COMMENTS STATS
2,493 Comments
2,722 Likes