Seeking Alpha

John M. Mason

 
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  • Has Apple Kicked Off The New Banking Era And Caused eBay To Finally Deal With Reality?
    Thu, Oct. 2 EBAY 8 Comments

    Summary

    • The whole financial industry is on the verge of major structural changes, including even the laggard banking component.
    • PayPal has a tremendous possibility to be a major player in the changes that are coming and can be a great investment opportunity.
    • Now that things are starting to change so fast in this area, the question is about whether or not PayPal can move to become the player it possibly can be?
  • Debt: Still An Issue
    Tue, Sep. 30 KBE, RKH, KBWB 1 Comment

    Summary

    • A new report by the International Center for Monetary and Banking Studies has a new warning about the world's debt situation: world debt is still rising in relation to GDP.
    • Economic growth is slowing in some areas while others are in process of raising interest rates; both threaten to make the debt situation worse.
    • All solutions seem to be problematic in one way or another. Investors need to consider the consequences of each of the policy choices available.
  • The Federal Reserve Through September: What Happened?
    Mon, Sep. 29 SPY, DIA, QQQ 4 Comments

    Summary

    • Quantitative easing is supposed to end in October but Fed purchases of securities rose to almost $40 billion in September.
    • There were some large "operational" factors that impacted the Fed's balance sheet in the month that had to be "offset".
    • Bottom line: the Fed's "tapering" will end in October, on schedule.
  • Is Volatility Back In Style?
    Fri, Sep. 26 SPY, DIA, QQQ 1 Comment

    Summary

    • The world is experiencing a great deal of disturbance, and this is getting translated into the financial markets.
    • We are seeing volatility increase across all markets, and this is likely to be the case in the next couple of years.
    • Policy makers are contributing to this volatility, and will continue to do so in the near future.
  • How Sure Is A Bet On The Decline Of The Euro?
    Thu, Sep. 25 FXE, UUP, EUO 6 Comments

    Summary

    • The value of the euro just broke $1.27, a decline from $1.39 earlier this year.
    • The eurozone economies seem to be moving toward recession, and price deflation seems to be a real threat.
    • Mario Draghi, president of the European Central Bank, has sworn that he will do everything possible to prevent another recession and price deflation.
  • When Will Interest Rates Rise And What Will Cause Them To Rise?
    Wed, Sep. 24 14 Comments

    Summary

    • The market is waiting and trying to guess when interest rates are going to rise and how fast they will rise.
    • The best scenario would be for the economy to pick up sufficient steam to cause loan demand to put pressure on short-term interest rates.
    • Right now, given the new predictions of the Fed: economic growth may not be strong enough to put pressure on short-term interest rates for a relatively long period of time.
  • Europe Headed In The Right Direction: Does It Have Time?
    Mon, Sep. 22 FXE, FXB 2 Comments

    Summary

    • Matteo Renzi in Italy and Manuel Valls in France are preparing to reform and restructure their economies.
    • Mario Draghi, president of the European Central Bank, must keep the eurozone economies afloat and avoid deflation.
    • Germany, the driving force behind these European Union efforts, must stay strong and stay disciplined in order to save the currency union.
  • European Central Bank Tries To Put Money In Banking System, But The Banks Don't Want It... Now
    Sat, Sep. 20 FXE, EUO, ERO 3 Comments

    Summary

    • The European Central Bank gave banks the opportunity to borrow at a very low rate, but they didn't borrow much.
    • One reason for the low borrowing is the not-so-good state of the European economy.
    • Another reason is that European banks are going through an Asset Quality Review and probably don't want to lend much right now... especially to any questionable borrowers.
  • What Does A Central Bank Do When A Central Bank Can't Do Anything?
    Thu, Sep. 18 DIA, QQQ, SPY 29 Comments

    Summary

    • Quantitative easing at the Federal Reserve ends in October.
    • Growth in the United States in expected to be only modest, growth in Europe is falling, and the IMF says that economic growth in the world is stalling.
    • What the central banks...and the governments of the world...can do seems to be limited...at best.
  • Stock Markets Go To New Highs On Federal Reserve Policy Decisions
    Wed, Sep. 17 SPY, DIA, QQQ 3 Comments

    Summary

    • The Federal Reserve sees its policy rate staying constant well into 2015.
    • Members of the Fed's Open Market Committee just don't see much economic growth over the next four years.
    • Investors continue to "go with the Fed" and push up stock prices to new highs.
  • The Economic Growth Picture: Industrial Production In August
    Tue, Sep. 16 DIA, SPY, QQQ Comment!

    Summary

    • Industrial production continues to increase at a modest pace indicating that the economy is continuing to expand.
    • Capacity utilization in manufacturing seems to be near a peak for this recovery.
    • Is this another indicator that the US economy has structural problems that will continue to constrain economic growth going forward?
  • Microsoft Buys 'Minecraft'! Hmmm!
    Mon, Sep. 15 4 Comments

    Summary

    • Microsoft has just announced that it is purchasing the videogame "Minecraft" from Mojang AB.
    • The founders of "Minecraft" are not coming to Microsoft with the company.. they want to give their attention to new products.
    • The acquisition does not help to clarify the direction that Satya Nadella, CEO of Microsoft, is taking his company.
  • Concerns About The Euro
    Mon, Sep. 15 FXE 3 Comments

    Summary

    • Mario Draghi, president of the ECB, is asking EU members to take on some responsibility for economic discipline and economic reform.
    • The problem is that the EU has a monetary union but they don't have a organizational "union" that will make the group of countries a unity.
    • The United States needs the EU to bring itself together for its own economic health.
  • The Federal Reserve Has Another Meeting Next Week: The Focus On Labor Markets
    Sat, Sep. 13 7 Comments

    Summary

    • Janet Yellen, Fed Chair, has indicated how important the labor statistics are to her in making monetary policy.
    • The question still exists about whether or not the monetary policy can really impact unemployment and other "real" economic variables.
    • More and more economists are studying whether or not the problems in the labor market might be structural in nature.
  • Bank Lending Through August: Commercial Real Estate Lending At Smaller Banks Continues To Thrive
    Tue, Sep. 9 IYF 2 Comments

    Summary

    • Commercial real estate lending continues to grow rapidly and the smaller banks further underwrite the construction industry.
    • Business loans at the largest banks in US continue to rise but support M&A activity, stock buy backs, and hedge fund and private equity transactions.
    • Foreign-related institutions are reducing the US cash being taken off shore.
  • Looking At The Federal Reserve From The Perspective Of A Hedge Fund
    Mon, Sep. 8 DIA, SPY, QQQ 13 Comments

    Summary

    • The Federal Reserve has created many opportunities for some people to make a lot of money over the past five years.
    • Hedge funds look for the incentives the Federal Reserve creates and then acts to take advantage.
    • The Federal Reserve needs to look at its actions from the viewpoint of a hedge fund to make sure its policies are doing what they are intended to do.
  • Job Hiring Lower Than Expected, But That Is Good News!
    Fri, Sep. 5 2 Comments

    Summary

    • Nonfarm employment rose by 142,000 in August, lower than expected.
    • These numbers are going to jump around and we shouldn't get all worked up about them.
    • The economy is growing, unemployment is dropping, under-employment is stabilizing and the expansion continues into its sixth year...not bad.
  • Economic Expansion In U.S. Continues But Growth Remains Modest
    Thu, Sep. 4 DIA, QQQ, IWM 2 Comments

    Summary

    • Federal Reserve's Beige Book indicates economy continues to recover but at a modest pace.
    • The important thing is that the economy is growing as fast as it is and seems likely to continue on into 2015 and possibly 2016.
    • This will make the "Obama recovery" one of the longest recoveries on record.
    • However, there still remains a lot of work to do on the economy.
  • 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.