James Byrne

The Economy Is in Recovery Mode

I continue to note the data supportive of a recovering economy and consumer in previous articles Tony. Leading Economic Indicators in the US for one have a terrific predictive record of future growth/contraction. Positive reporting of Purchasing Managers Index reflecting an expanding economy both domestically here in the US and China and India. A pick up in consumption in the emerging markets which plays right to the continued improvement in US exports. There are a number of other data points I've already made note of in previous articles.
I remain aware this recovery is in the early stages and quite fragile and could run out of steam. We need to make continued progress on job losses, the dollar needs to find its equilibrium, the US government needs to get out of corporate board rooms, the Federal Reserve needs to elaborate on/execute an exit strategy. However this liquidity based rally, I believe is turning into something more and will be substantiated by the current earnings season.

Lastly, I too am not sure how much more is left on the upside. If earnings come in much stronger than anticipated, we may experience a blow off rally that stretches us to much loftier levels than justified, I too will be pulling some chips off the table. For now, I stay fully invested and monitor data closely.

I wish you success with all your investments.

The Economy Is in Recovery Mode

I would agree with your comment about the rather rapid depreciation of the dollar. I use the term orderly in the context of the market generally accepting the drop fairly well. I believe the administration is using this weak dollar in hopes of jump starting domestic manufacturing, helping to export our way out of the recession we are exiting. Encouraging signs from the domestic consumption numbers coming out of China recently points to help on the way. As I pointed out in the past (which you mention also) the importance of the US consumer can't be overlooked. His own personal balance sheet is continuing a de-levering and cannot be expected to do the heavy lifting alone. Back on point, certainly a complete breakdown would quite worrisome and unwelcome.

Time for Investors to Remain Cautious but Engaged

HI Albert. I find myself somewhat skeptical, with what appears to be the "massaging" of some economic releases. While some releases seem to defy what appears to be going on in the streets. I can say from personal experiences, the current environment is 1000 times better than it was back in November and certainly March. We've still got some tough sledding to go, and you are correct, rose colored glasses won't cut it. Tough decisions will need to be made on main street, Wall Street and Pennsylvania Avenue. Regulation and enforcement, fiscal discipline along with personal responsibility will all be necessary if we are to steer through this and allow future generations a fighting chance. Returning to a pay/go system would be a step in the right direction. If Clinton could get us on a path toward fiscal discipline and some can point to policies of Reagon-omics as a way towards boosting our economic output, let's put our heads together and figure out the path of least resistance and move.

That last part was my best effort in a bipartisan approach. I am truly agnostic when it comes to politics. A good idea can be generated from the least likely side of the isle, Let's hope our elected are able to identify it when one appears and have the fortitude to buck party lines if necessary for the good of us all..

Markets in Midst of Turning Higher, Winning Over Skeptics

I agree with many comments. As talk has shifted towards the exit strategy for the Federal Reserve, I believe it is way to early. We are, I believe in a stabilizing mode with regard to the economy. The resumption to growth may be seen in 3rd quarter GDP, but there are areas of the economy that still have much work to do. Also in question is the sustainability of any recovery. So at this point in time any talk of pulling back the punch bowl, I would suggest is premature. We currently have an unemployment rate at 9.7% and likely rising above 10% before all is said and done. I believe the opportunity for the Fed to begin a change in policy may not come until the middle of 2010 at best when we should have clear evidence if the recovery is on stable footing or not.

Good points all. Good luck investing.

Keep Bernanke as Fed Chairman?

Again, I agree. Changes have been at the SEC. Chris Cox is gone. Although a public flogging would have been nice, at the least he's gone. We are finally seeing some constructive actions being taken. Enforcement of rules, "naked short sale", and a return in some form of the "uptick" rule are signs of clear change. But, it must and will go much further. Investors look to these regulatory bodies as the gate keeper, or watchdog looking out for the little guy. When they sit idly by, as Chis Cox did while the entire market was on the verge of collapse, well you get to the point we are at right now. Trying to restore trust and confidence to the retail investor that there is a new sherrif in town.

Keep Bernanke as Fed Chairman?

I believe changing chairman at this point in time would be a set back. The complexity of the Fed programs already implemented along with the necessary exit strategy begs for continuity at the helm. The actions taken by the Fed are, arguably working, and equally important, are restoring confidence to the markets. Removing the current Chairman would damage that confidence and the progress made in restoring the the flow of capital.

Bank Balance Sheets: Healed or Ledger Hocus Pocus?

The car analogy in the current environment of, what feels like perpetually falling real estate values, does actually fit. But, I understand your point.


On Aug 13 09:35 PM User 471372 wrote:

> The car analogy is all wrong. A car is a depreciating asset that
> over time becomes worthless. Real Estate is an investment that over
> time appreciates in value.

Bank Balance Sheets: Healed or Ledger Hocus Pocus?

Amending the Mark to Market rules was a necessary band aid at that point in time and should have been done earlier. However, simply because we apply a band aid, doesn't hide the fact there is a wound undeneath. The valuations that were being attatched to the "legacy" assets were in most cases not derived from an efficient, normally functioning market. Natural buyers of these securities, were either hording cash in anticipation of investor redemption requests or some simply became vulture investors. Why unnecessarily pay up for something you needn't? Banks capital was being decimated and they need to raise cash. At the time, the lone buyers were showing, "throw away" bids. Meaning, terrific if I buy them at a severly depressed price, and if you don't sell it to me, if I'm patient enough some other bank in need of cash will. That was the environment back then. Again, the problem didn't vanish, we just kicked that can down the road.

August Opens with a Bang, But Still Not Too Late for Income Investors

Caterpillar made the point I was getting at just the other day. That we are seeing early signs of progress in the economic recovery. Since companies have cut headcount, slashed inventories and capital expenditures when the recovery does come, earnings have the potential to increase exponentially. The CEO,summarize, stated, we've made progress and have further to go. Should the recovery take hold, for 2012 he looks for earnings in the $8-$10 share range, from the $2.50 expected this year.
Again, I agree it is early in this recovery, and I'm quite confident we'll see some setbacks along the way, but I'm optimistic we'll get out of this sooner than most have anticipated.
Good luck on your investing.

August Opens with a Bang, But Still Not Too Late for Income Investors

I'll have to disagree with the "sucker rally" term. Earnings are real. Market valuations are reasonable. What we will need to see at some point, and sooner rather than later, is top line growth. What we are currently witnessing, is an economy in transition. From one exiting a virtual free fall contraction, to one of stabilization. This phase of the recovery will result in a jobless one. One positive result of stabilizing the economy, should be a calming effect and positive response in consumer confidence. Domestic job creation will eventually come, but perhaps not meaningfully until mid 2010. However, as I've wrote about in previous posts, the US consumer is no longer the lone driving force in today's global economy. It won't be easy getting out of this mess we've created, but we will, and investors sitting in cash will have endured the pain on the downside and missed a chance to recoup a good portion of those losses. Worse yet, once inflation starts to rear its' ugly head, the negative real returns for those who sit parked in money market funds will feel the other side of that double edge sword cutting into their retirement savings. Good luck with your views and all your investments.

August Opens with a Bang, But Still Not Too Late for Income Investors

The current evolving recovery story leaves many good companies and their share prices on the cusp of breakout. With the Feds current attempt to force money our of safe havens, with 0-.25% policy for an extended period of time. I believe yield hungry investors will return to higher yielding vehicles, among the many, Limited Partnerships that come tax advantaged as well. Also not mentioned, NRGY has projects in progress due for completion in 2010 that should add meaningfully to the bottom line. Adding to earnings as well as the possibility of increased payouts. That's not taking into account any further acquisitions which, if history is any precursor, should have the same impact. The recovery underway is uncovering many opportunities as well as identifying who the winners and losers will be. I believe NRGY will be one for the win column. Best of luck .

Mulally Gets an A+ as Ford Is on the Rise

I agree. Ford's CEO lined up credit, sold off non-core brands and streamlined costs. GM on the other hand, continued business as usual cranking out outsized gas guzzlers, held onto Hummer way too long to recognize any value and seemed quite taken by surprise why all those annoying bankruptcy lawyers kept calling?

Mulally Gets an A+ as Ford Is on the Rise

Ford is attracting buyers once again as they've introduced cars consumers actually have an interest in purchasing. The new cars are cost competitive and have comparable fuel efficiency ratings to market leaders, Toyota and Honda.

The Recovery - Three Steps Forward, One Step Back

I don't disagree with the point of rising oil prices posing a stealth tax on consumers. I would point to factors leading to the doubling of the price of oil off 2009 lows was more a reflection of hot money once again. As we've witnessed over the last 2 week correction in oil, after the "watchful eye of the CFTC" noticed the sharp spike, and decided to take a look into any speculative froth. Long positions, and hot money in anticipation of any backlash, have been liquidating positions. So, in the face of an incrementally improving domestic economy, along with a healing of the global economy, oil sells off. In my opinion the current supply demand equation does not support prices above $60 and lower prices are on the horizon. However, even if we've simply entered into a sort of "stabilization phase" of the economic recovery, the market can certainly move higher.

Merger Mania or Smart Shoppers?

I understand and agree, it would be an obsticle to overcome. Given the unsatisfactory manor with which the Nextel integration was handled, it certainly does not instill confidence. However, the need to expand the footprint of T-Mobile and upgrade the network may make this potential marriage more intriguing. Sprint, has stumbled through their growth history. If memory serve me, their ION offeing (phone internet, tv) was far ahead of their competitors, after investing over $1 billion, decided to scrap the plan (sounds like GM original electric car development plans). But, they've got new management, are streamlining costs and rolling out new products. The major initiative is the national WIMAX buildout. My point being, both companies are embarking on major buildouts and upgrades to their networks and the expenses would be better shared by the combined entities along with major costs savings achieved in a buyout/merger.
I appreciate your comments. Have a prosperous day.