Seeking Alpha

John M. Mason

 
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  • Will The European Crisis Change Things?
    Wed, Sep. 3 FXE, IEV 8 Comments

    Summary

    • The economies of Europe are not doing well at all.
    • The European Central Bank cannot be the savior of the eurozone that everyone would like.
    • Governments in the eurozone are not strong enough to bring on the reforms needed.
    • Europe will just continue to bumble along facing more years of uncompetitiveness and slow growth.
  • Federal Reserve Is Getting Ready For The End Of Tapering
    Mon, Sep. 1 DIA, SPY, QQQ 11 Comments

    Summary

    • The Fed is right on target to cease its tapering of security purchases in October.
    • The Fed is using reverse repos more and more as a tool to smooth markets.
    • People are still using their financial assets in a very conservative manner because of low interest rates and still high levels of unemployment and part-time employment.
  • Number Of Banks Continues To Shrink: Banks With At Least $1.0 Billion In Assets Control 92 Percent Of Assets In Commercial Banking System
    Fri, Aug. 29 IYF 5 Comments

    Summary

    • The Commercial Banking Systems is losing about 200 banks every year and it lost 52 banks in the second quarter.
    • Most of the banks leaving the banking system are less than $1.0 billion is asset size and they are being merged out of existence.
    • Regulators are overseeing supporting the shrinkage in the banking numbers and are making sure the decline occurs in an orderly fashion.
  • Protecting The Dollar: Response To A Comment
    Thu, Aug. 28 UUP, UDN 3 Comments

    Summary

    • A comment was posted on my August 27 post concerning the grading of Janet Yellen's first seven months as Fed Chair that required a response.
    • The United States does not "protect the dollar" because of the government's effort to maintain full employment and because investors have taken advantage of the subsequent credit inflation created.
    • Unless politicians are able to focus on longer-run issues, policies of credit inflation will continue and the value of the US dollar will continue to decline in the longer-run.
  • Grading Janet Yellen After 7 Months At The Helm
    Wed, Aug. 27 UUP, UDN 16 Comments

    Summary

    • Overall Janet Yellen's time as the Fed Chair has not been bad.
    • However, as federal government deficits loom large in the future and with $2.8 billion in excess reserves in the banking system, the pressure on Yellen to tighten Fed policy grow.
    • One doesn't see the gritty persistence in her to tighten Fed policy in a way that a Paul Volcker might.
  • Can Europe Ever Get Its Act Together?
    Mon, Aug. 25 FXE, VGK, FEZ 7 Comments

    Summary

    • The value of the euro has dropped below $1.32 in the market on the news that French President Hollande dissolved his government.
    • The prevailing question in Europe concerns the ability of eurozone countries to be able to work together to develop coherent and consistent economic plans.
    • With Hollande's move, the further question concerns whether or not eurozone countries can form governments capable of developing coherent and consistent economic plans.
  • Will Merger And Acquisition Business Continue To Boom?
    Thu, Aug. 21 DIA, SPY, QQQ Comment!

    Summary

    • Until this year, M&A activity has been modest in the current economic recovery, mainly due to the uncertainty connected with economic policies of the Obama administration.
    • In the first seven months of this year M&A activity has risen to a level that could reach the peak year of 2007, driven by large "inversion" deals.
    • The Obama administration may be slowing this activity down as it moves to stop "inversion" deals by name calling rather than by working to achieve meaningful tax reform.
  • Steve Ballmer: Missing In Action?
    Wed, Aug. 20 MSFT 69 Comments

    Summary

    • Steve Ballmer announced that he has resigned from Microsoft's Board of Directors, less than one year after he resigned as the company's CEO.
    • Mr. Ballmer oversaw a company that produced large cash flows through retained earnings but did not invest them well, and the company's stock price remained flat during his tenure.
    • His departure, along with Bill Gates dropping off the board in February, clears the decks for new CEO, Satya Nadella.
  • Executive Changes At Bank Of America
    Wed, Aug. 20 BAC 25 Comments

    Summary

    • Changes in the top leadership of Bank of America have been announced by Brian Moynihan, CEO.
    • Thomas Montag becomes the sole chief operating officer, a person who has worked primarily in investment banking and trading.
    • One can only guess from this change that Bank of America is going to give more emphasis to the investment banking side of the business going forward.
  • Financial Innovation Is Taking Off Again
    Tue, Aug. 19 IYF 6 Comments

    Summary

    • More and more financial innovation is taking place in the world today and it is taking place in areas that are not regulated.
    • This drive to more financial innovation is driven by the government's credit inflation attempting to put people back to work again.
    • Smart investors have learned over the past 50 years that dealing in assets has produced greater wealth than producing more goods and services.
  • Are Eurozone Economies Going South?
    Wed, Aug. 13 FXE, FXI, VGK 9 Comments

    Summary

    • Italy is now in its third recession since 2008. Portugal is experiencing deflation.
    • Thursday, August 14, new information on the economies of the eurozone will be released...including data Germany and France.
    • The economic strength of the eurozone is important for the continued economic strength of the United States. Is the US in for a shock?
  • The Fiscal Picture Out Of Washington
    Wed, Aug. 13 DIA, SPY, QQQ 2 Comments

    Summary

    • The Federal deficit is down for the third year in a row.
    • Modest economic growth, higher tax revenues and some slowdown in spending have contributed to the decline.
    • Predictions are for one more year of decline, then deficits will rise to over $1.0 trillion by 2023.
  • The American Banking System At The End Of July: What's Going On?
    Mon, Aug. 11 XLF, FAS, FAZ 4 Comments

    Summary

    • The assets of the banking system continues to grow, but most of the growth is still in cash assets.
    • Foreign-related banks seem to be taking on a major portion of these cash assets and we wonder where the funds are going.
    • Commercial real estate loans continue to increase the "smaller" banks and what happens here will be very important to the health of the banking system going forward.
  • The Future Of Banking... Once Again
    Mon, Aug. 11 IYF 3 Comments

    Summary

    • More and more banking is changing because of advancements in information.
    • There is now a new venture fund called Nyca which is trying to bring together people from the financial sector of New York and technical expertise from Silicon Valley.
    • Blackstone, the major private equity fund, is leading the field in new investments in data and technology in order to change the banking world, and make it more transparent and efficient.
  • A Few Thoughts On The State Of The Financial Markets
    Mon, Aug. 11 SPY, DIA, QQQ 3 Comments

    Summary

    • Three things have happened over the past six months that we need to understand: falling longer-term interest rates; a drop in the stock markets; and a increase in market volatility.
    • Some of these movements have resulted from changes in the economy and changes in economic policy making.
    • Other changes seem to be a result of the "state of the world" today and the uncertainty connected with how it will all work out.
  • Understanding The Rise In Mergers And Acquisitions Activity
    Fri, Aug. 8 SPY, DIA, QQQ 4 Comments

    Summary

    • This year there has been a substantial pickup in mergers and acquisitions.
    • No one seems to have a firm grasp on what this increase means...whether it is a good sign or not.
    • Investors need to be careful how they choose investments at this time and not get caught up in all the publicity surrounding the deals being announced.
  • Evidence Of Structural Problems In The Economic Recovery
    Tue, Aug. 5 DIA, SPY, QQQ 15 Comments

    Summary

    • Neil Irwin in the New York Times has identified five sectors of the economy that can be blamed for "economic weakness".
    • The explanation for these weaknesses can all be attributed to structural changes in the economy.
    • Structural changes cannot be achieved by more federal spending to put people back in the jobs they once held.
  • July Federal Reserve Report: Getting Close To The Paradigm Change
    Sat, Aug. 2 4 Comments

    Summary

    • Tapering continues "on track" and nears its demise.
    • The big question is...what comes after tapering ends.
    • One fear that has arisen is that the movement of funds from short-term interest bearing accounts to transactions-type assets may be reversed creating possible problems for the banking industry.
  • European Disinflation Continues
    Thu, Jul. 31 XLF, FAS, FAZ 16 Comments

    Summary

    • European inflation drops once more... and is expected to drop further.
    • The 10-year German bund continues to trade near historic lows.
    • Investors seem to be saying that economic growth is not going to be very strong, now and in the near future.
    • This is not inconsistent with what is happening in America.
  • Economic Growth Rebounds In Second Quarter: The Good News And The Not-So-Good News
    Wed, Jul. 30 8 Comments

    Summary

    • Economic growth for second quarter is 2.4 percent, year-over-year.
    • The economy did pick up from the first quarter, which was revised up to a 1.9 percent year-over-year gain... not as dramatic as the annualized quarterly increases show.
    • Consumer price inflation picked up to 1.6 percent in second quarter from 1.1 percent in the first quarter.
  • What's Going On? Still A Flight To Safety In Major Bond Markets?
    Tue, Jul. 29 BUND, IEF, IPE 4 Comments

    Summary

    • The yield on the 10-year German Bond has reached an all time low. This has surprised investors in Europe.
    • The yield on the 10-year US Treasury Note has dropped this year. This has surprised investors in America.
    • Risk factors do not seem to explain this situation. Maybe changes in expectations about economic growth in the two regions are an explanation.
  • The S&P 500 Just Keeps On Setting Records
    Mon, Jul. 28 DIA, SPY, QQQ 2 Comments

    Summary

    • The S&P 500 index hit another record last week.
    • It is hard to find economic justification for the levels the index is trading at.
    • Seems like all the money created by the Fed is just circling in the financial sector of the economy.
    • Maybe this is the new financial economy of the information age.
  • The Time Is Near: How Will The Federal Reserve Raise Interest Rates?
    Sat, Jul. 26 23 Comments

    Summary

    • The Federal Reserve is about to end its "tapering" of securities purchases.
    • Federal Reserve officials are debating about when interest rates should be raised.
    • The other real question is "how" will interest rates be raised.
  • Can Microsoft's Satya Nadella Learn Anything From GE's Jeff Immelt?
    Thu, Jul. 24 MSFT 20 Comments

    Summary

    • Jeff Immelt did not change much at GE until the Great Recession hit and then he started making some major changes that were needed at GE.
    • Satya Nadella does not seem to be making many changes at Microsoft even though investors did not seem that happy with the way Microsoft was conducting business.
    • Jeff Immelt did move to make GE a more focused company; might Mr. Nadella learn something from this?
  • Microsoft Earnings Report: Not Much To Say
    Wed, Jul. 23 MSFT 12 Comments

    Summary

    • Microsoft releases its quarterly earnings report and there was not much new information there.
    • Mr. Nadella failed to add anything of substance to his vision of the future Microsoft.
    • Mr. Nadella will have to communicate more in the future in order to retain investors' good feelings... the honeymoon can only go on for so long.
  • The Question For The Stock Market On The Federal Reserve Side
    Tue, Jul. 22 SPY, DIA, QQQ 3 Comments

    Summary

    • Right now investors love what the Federal Reserve is doing even though more and more commentators want the Fed to start moving to higher interest rates.
    • The stock market remains near historic highs even though many indicators, like CAPE, point to the market being over-valued.
    • Even if the stock market is over-valued, the crucial question concerns the timing of a downward adjustment.
  • Why Isn't The United States Growing Faster?
    Mon, Jul. 21 SPY, DIA, QQQ 52 Comments

    Summary

    • More and more analysts and organizations have lowered their estimate of what they believe to be the potential growth of the United States.
    • Estimates of potential real economic growth in the United States are falling to around 2.0 percent...or even lower.
    • Politicians, members of the Federal Reserve, and members of the Obama administration need to understand that this slower potential growth is due to structural problems and cannot be solved quickly.
  • Second Half Economic Outlook: Should I Change My Forecast? Part II
    Thu, Jul. 17 DIA, QQQ, SPY 7 Comments

    Summary

    • A new survey indicates that more economists have dropped their forecast for economic growth this year.
    • There still is reluctance to see the unemployment problem as a structural problem as Larry Fink of BlackRock does.
    • Furthermore, it looks as if the lame-duck stage is hitting the Obama administration, which will further limit what the federal government might be able to do to help the economy.
  • Mr. Nadella Makes His First Major Move At Microsoft
    Thu, Jul. 17 MSFT 18 Comments

    Summary

    • Microsoft CEO, Satya Nadella has announced that up to 18,000 employees at Microsoft will be cut over the next year.
    • A large part of this restructuring will be connected with bringing the mobile phone area acquired from Nokia into Microsoft.
    • Mr. Nadella will also use this re-structuring effort to help create the culture that he believes is necessary to support his vision of the Microsoft of the future.
  • Second Half Economic Outlook: Should I Change My Forecast?
    Wed, Jul. 16 DIA, SPY, QQQ 3 Comments

    Summary

    • Growth possibilities for the second half of 2014 have not really changed when looking at the fundamental issues.
    • Labor participation rates are down, bank lending for economic growth is not picking up, and bond markets are pessimistic about future economic growth.
    • Finally, with a lame-duck president for his last 2 1/2 years, Washington will be doing little or nothing to help things along...leaving the only game in town to the Fed.
  • The U.S. Banking System Is Behind The Times
    Fri, Jul. 11 XLF, FAS, FAZ 6 Comments

    Summary

    • The United States banking system is being accused of a failure to modernize sufficiently, and is falling behind England, India, and Africa in its operational platform.
    • Changes are taking place in the private sector with respect to payments systems and peer-to-peer lending.
    • How this is going to work itself out - and be regulated - is anybody's guess right now, but the evolution of the system could include some developments that would result in safer banking.
  • Bank Lending Growth Is Not All That It Seems
    Thu, Jul. 10 XLF, FAS, FAZ 2 Comments

    Summary

    • Lending by commercial banks is up year-over-year. Business lending is also up.
    • A good portion of the lending is going to pay dividends, buy back stock, and acquire assets, not spur the economy along.
    • The "smaller" banks continue to hurt and continue to drop out of the banking system in large numbers.