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Lawrence Fuller  

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  • This Is Why The Stock Market Is Tumbling [View article]
    What interval do you speak of Salmo? Seasonal?
    Mar 12, 2015. 08:44 PM | Likes Like |Link to Comment
  • Beware Chasing QE [View article]
    Ah, the $64,000 question! How does the Fed reverse the damage it has done? I think its too late. It has AGAIN allowed, if not encouraged, so much leverage to build up, but this time in financial markets, and it must be unwound, which is not pleasant. I think it understands this, but has no idea to what degree. The best that it can hope for is a very slow unwind, good luck. The experiment begins in June I imagine with the first rate increase, followed by a second and a third incremental 25 basis points. It must also allow its portfolio to run off, and hope the market will absorb the new debt we are issuing each along with the near $3 trillion that has to be rolled over in the Fed's portfolio of holdings.
    Mar 12, 2015. 07:46 PM | 1 Like Like |Link to Comment
  • Beware Chasing QE [View article]
    The Federal Gov't doesn't fund itself at the overnight rate. It issues treasury debt all along the yield curve. The Fed's OMO lowered those rates across the board. I also think another objective of the Fed was to rebuild the balance sheets/ and bottom lines of the banks/investment banks largely responsible for the financial crisis.

    Listen, we just have a ideological disagreement as far as the Fed is concerned, and that's ok. I respect your opinion, but I simply think this institution does far more harm than it does good.
    Mar 12, 2015. 06:20 PM | Likes Like |Link to Comment
  • Beware Chasing QE [View article]
    I beg to differ on that front. I think one of the objectives of QE was to finance the deficits we ran from 2008 to the present, and keep the borrowing costs of the federal gov't manageable. As for Fed policies, it is limited in what it can do, and I think it has stepped beyond the bounds of what it should be allowed to do. The problems in the US are ones that the Fed can not, and should not, be addressing - they are structural and need to be addressed with fiscal policy.
    Mar 12, 2015. 05:28 PM | Likes Like |Link to Comment
  • Beware Chasing QE [View article]
    I think that ZIRP and QE were brilliant at the beginning. Yet they were largely due to the Fed's inability or refusal to regulate. ZIRP and QE should have bought Congress time to address our issues with fiscal policy. Instead, they did what they always do - nothing. What they did do was nothing more that silly consumption-based stimulus that simply stole forward demand. If the Fed had normalized policy long ago and ended QE soon after the expansion had started, we wouldn't be in the mess we are today.

    We would have had to address our mammoth debt and deficit issues, because the Fed wouldn't have circularly financed the gov't and made the deficit look better than it really is.
    Mar 12, 2015. 04:57 PM | Likes Like |Link to Comment
  • Beware Chasing QE [View article]
    I'll tell you what I would have done - I would have told Congress, and the political cabal in every other country, to get off their ASSES and do their jobs. I would have said, we are no longer going to bail out your repeated failures. Adopt pro-growth policies - stop the wasteful spending - invest instead of promoting consumption. All QE does, much like an illicit drug, is delay facing reality.
    Mar 12, 2015. 03:29 PM | 1 Like Like |Link to Comment
  • Beware Chasing QE [View article]
    Hi Eric,
    Good article. I wrote about the currency hedged DXGE and HEDJ in January, but took too cautious an approach with both, which have soared ytd. I reluctant to chase them. I think you are dead on with money flowing into US Treasuries (TLT), as there will be a lot of institutional investors that have loaded up on Euro sovereign debt in front of the central bank buying that started this week, and they will sell the debt for a profit, and likely turn around to buy Treasuries. The spread between German 10 year and US 10 year is at a 25 year high. Better yields and the currency benefit to boot.
    Mar 11, 2015. 03:42 PM | 3 Likes Like |Link to Comment
  • This Is Why The Stock Market Is Tumbling [View article]
    xpan,
    You are correct, that this is my opinion, but its not a blind guess.
    I'm not talking about leverage in the derivatives market. I'm talking about leverage in securities.
    Mar 11, 2015. 11:06 AM | 1 Like Like |Link to Comment
  • This Is Why The Stock Market Is Tumbling [View article]
    Inverse index funds that do not use leverage is the simplest way to hedge long positions, if that is suitable for your risk tolerance.
    Mar 11, 2015. 09:48 AM | Likes Like |Link to Comment
  • The Earnings Recession Of 2015: Stock Market In Danger? [View article]
    SanDiegeoNonSurfer,
    You have to open the drop down menu for "index earnings" and then download the excel spreadsheet. The spreadsheet has several pages and there is one that breaks down the market by sector.
    Mar 10, 2015. 11:38 AM | 1 Like Like |Link to Comment
  • The Earnings Recession Of 2015: Stock Market In Danger? [View article]
    dc597
    Pensions are a labor expense in my view, just like salaries and bonuses. Some companies smooth out the liability, while others don't. The major reason for the liabilities is the steady decline in long-term interest rates, which lowers the discount rate, and increases the liability, so I don't agree with companies that say, "we don't need to account for this liability because interest rates will eventually go up and the discount rate will too, then we won't have to put another $1 billion in our pension fund." Rates may not go up for a long long time.. No one knows. That's like having an adjustable rate mortgage and when interest rates rise you simply dont pay the extra interest, deferring payment to down the road - and assuming it won't hit your net worth in the long term.
    Mar 10, 2015. 07:28 AM | 2 Likes Like |Link to Comment
  • The Earnings Recession Of 2015: Stock Market In Danger? [View article]
    I wasn't referring to GAAP, only operating earnings. If you hear an earnings number for the S&P index, it is almost always operating earnings, not GAAP.

    Consensus is a moving target in my view, and it is also almost always a reference to operating income - as earnings are reported over the course of several weeks , the consensus number is updated, and it includes earnings that have been reported as well as earnings that are expected.
    Mar 9, 2015. 09:41 PM | Likes Like |Link to Comment
  • The Earnings Recession Of 2015: Stock Market In Danger? [View article]
    If you include pension expenses as Howard Silverblatt does at S&P Dow Jones Indices, then Q4 was down yoy. If you don't, as the consensus views, then earnings are up 4% or so. The significance of Q1 and Q2 is that now the consensus (the squishy number) is down yoy. It would be even worse if you included pension expense, though we don't know what that will be.
    Mar 9, 2015. 09:33 PM | Likes Like |Link to Comment
  • The Earnings Recession Of 2015: Stock Market In Danger? [View article]
    Douglas,

    It is the largest line item considered an "unusual expense" that is not included in the mainstream calculation of operating earnings. There is no standard, as there is for GAAP, in calculating operating income. So basically, a bottoms up analyst or a top down aggregator can exclude what ever he or she wants to calculate the number. That's why you see variation from Thompson to FactSet to S&P IQ to S&P Dow Jones.

    There is currently a $800 billion pension liability outstanding, thanks for ZIRP. The plunge in the discount rate has ballooned pension deficits despite the rise in the stock market. That's not peanuts.
    Mar 9, 2015. 08:25 PM | Likes Like |Link to Comment
  • The Earnings Recession Of 2015: Stock Market In Danger? [View article]
    House of Cards is a gem, on episode 4.
    Mar 9, 2015. 02:58 PM | Likes Like |Link to Comment
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