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Keith Springer
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Keith Springer is the author of "Facing Goliath: How to Triumph in the Dangerous Market Ahead," radio host of "Smart Money with Keith Springer" on 1530 KFBK, editor of the Smart Money Newsletter, a market technician, a financial writer, multinational philanthropist, and... More
My company:
Springer Financial Advisors
My blog:
Keith Springer's Financial Blog
My book:
Facing Goliath: How to Triumph in the Dangerous Market Ahead
  • The Storm Before The Calm -Stocks bored until earnings season starts

    With summer dropped on us in a flash, the economy sputtering and no earnings news, stocks have entered the summer doldrums early. This is not uncommon in between earnings season as stocks move more on corporate earnings and with earnings season a couple of weeks away, stocks just seem bored. Well, maybe not bored, as it has been a horrendous couple of months for the market, but with no good news to drive prices higher.

    Investors are clearly worried about the slowing economy, and they have every right to be. Although it shouldn't come as a huge surprise as I've discussed what we should expect for the economy repeatedly in newsletters past as well as in great depth in my new book (which just went to print), Facing Goliath. Nevertheless, in the short term its earnings that move stocks and earnings have been stellar. Certainly at some point the slowing economy will become a drag on stocks... but not yet, there is a lag... before the drag.

    When earnings start to be announced in a few weeks, I suspect they will be better than expected. Not only is corporate America doing better than average America in general,  but recent disappointing economic announcements have tempered investor optimism and will likely bring down expectations even further, opening the door for positive earnings surprises.

    The big question is what kind of further stimulus Bernanke, the Fed and the Obama Administration come up with. Certainly there will be some with at least a QE Mini-me. However, with the economy clearly in danger and with the election not far off, more will likely be done. There are a lot of stories swirling around on what the administration is considering as additional stimulus, with the New Republic reporting that advisors are looking at a temporary cut in the payroll taxes to boost hiring. Not a traditional QE program, but one nonetheless.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jun 10 1:31 PM | Link | Comment!
  • War of the Worlds
    There is an epic battle brewing out there, and it’s not Mother Nature creating havoc with our nation’s weather. The issue is the dichotomy of a rising stock market and a clearly worsening economy. This has led many investors to ask the question: “Can Stocks Rise in a Horrible Economy?

    The answer is and has been a simple “yes”. Stocks move on corporate earnings while the economy is a much more complicated beast. Currently, the economy is being affected by the natural demographic cycle of an aging population, who is spending less, combined with a severely over indebted population desperately in need of balance sheet repairs. This is creating less demand in the economy. Less demand leads to less supply of goods and services needed, so fewer people are required to produce those reduced goods. That will keep the unemployment rate extraordinarily high and make a true economic recovery elusive.

    However, stock prices correlate more to earnings and earnings have been stellar. This is, in large part, due to the great shakeout going on in our economy where companies are fighting for survival. They hoard cash and strengthen their balance sheets by cutting costs and laying people off and/or not hiring. It is survival of the fittest, making the larger corporations better able to survive an economy like this, at the expense of smaller less efficient companies. Some will be bought out, some will merge and some will go by the wayside. Anyway you look at it; it leads to fewer jobs and a slower overall economy but with very selectively efficient corporations left standing.

    There are also several other Gail force headwinds we’re up against. Housing is in a veritable depression and will remain that way for at least several more years. Our deficit is growing to a level that would rival a banana republic and inflation is biting all of us in the butt. These issues, and more, will continue to hold the economy back and eventually bring down stock prices, but not before at least one more quarter of exceptional earnings. In fact, the recent barrage of negative news will likely have a positive effect on stocks, as it is bringing down expectations to the point where we could get overwhelming positive earnings surprises, which will take the market to new highs. At that point however, it is very possible that we could be at peak earnings for this cycle and time to get defensive.

    Although, all bets are off if the Helicopter Ben and the Federal Reserve come through with another round of stimulus or QE “whatever”. With the election coming up, they will have no choice but to do something. The market is simply addicted to stimulus and at the very least, they will continue with QE Mini-Me. This fact was echoed yesterday when Moody’s Investors Service announced that they may downgrade the debt ratings of Bank of America Corp, Citigroup Inc and Wells Fargo & Co, due to the end of government support for the banking system initiated during the financial crisis.

    While stocks have some life in them, once we get near earnings season, investors have to be invested properly and make sure they are getting the best returns with the least amount of risk possible. Investing is not an all-in or all-out game and it is critical to invest for need, not for greed!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jun 03 2:04 PM | Link | Comment!
  • Spartan’s, Prepare for Glory! -Why Greece Matters
    It appears the Greeks of today will only find glory the same as their Spartan ancestors: through intense conflict and ultimately death. In modern terms that means default, austerity and depression. In reality, this means little to the global economy as Greece wouldn’t even be one of the largest cities in California. The problem is a contagion. Much like what happened in the US with Lehman Brothers. It wasn’t that Lehman was so important on their own, it was that everybody was tied to them in some way.

    This has led Moody’s and Fitch to announce that a restructuring of Greek sovereign debt would be considered a default and lead to further destabilization across Europe, stating that, “A Greek debt default would hurt other peripheral Euro-zone states and could push Portugal and Ireland into junk territory.” While the Greek government has moved to accelerate sales of state assets to raise 6 billion Euros, the leader of the main opposition party in Greece, in true Greek fashion in a hopeless fight to the death, has stated that he would oppose the latest round of austerity measures. Prepare for glory!

    This has become so important to us at home in the US for 4 reasons:

    1. As bad as things seem in the US, they’re worse across the pond! This leads to…

    2. …A stronger dollar. The Euro problems accompanied with the end of QEII will push the dollar higher. I discuss this in my commentary a few weeks ago “QE Mini-Me, The Dollar and Inflation.” And of course, a stronger dollar…

    3. …Has led to lower US stock prices, at least in this Fed stimulus bull market. However, there is one stealth issue which is that…

    4. …No news is bad news. Now that we are now past earnings season and there is no more good news for stocks to push them higher until the next earnings releases start to pop up.

    All of these issues are creating strong headwinds for stocks, but very good for bonds.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    May 25 12:08 PM | Link | Comment!
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