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Michael Shulman  

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  • Is Gold Set for a Pullback? [View article]
    Gold: Is the Trade Over?
    The gold trade stalled today and technicians see a retrenchment coming. That may be true – but the gold trade is on for the short and the long term, and here is why.
    • Currency devaluations are happening and will continue as central bankers print money to stimulate sagging economies and monetize deficits. They are happening simultaneously – the US dollar, the euro and the yen, with the pound to take a hit in November after the government announces a new budget and the Bank of England agrees to print money as a reward.
    • As all currencies devalue, commodities, including gold, are the bastion of value traders see as immune to devaluation.
    • Gold is also the perceived residue of value in times of uncertainty – a Chinese instigated trade war, geopolitical risk in the Middle East, gridlock in the US after the fall elections and so on.
    • Gold still sells for less now than it did, adjusted for inflation, thirty years ago at its peak.
    • The world’s greatest technician, Louise Yamada, does not believe gold will be in a “bubble” until it hits $5,200 an ounce.
    Oct 7, 2010. 01:37 PM | 2 Likes Like |Link to Comment
  • In a trade war with China, Eric Weiner picks a winner, and it's not the U.S. Simulations show America would be distracted by side conflicts, while China's capable of inflicting real pain without feeling it at home, simply by shortening the maturities of its Treasury holdings.  [View news story]
    China has limited if any impact on the price of Treasuries -- the last auction saw three times as much demand as offered, inflicting any damage would destroy value in China's reserves, this belief is misguided. A trade war is coming for righteous reasons -- free trade is really free and fair trade, and we have, in the past, made concessions to predatory exporters such as Japan and South Korea for strategic, political reasons. We have tried doing the same with China as North Korea armed itself, Pakistan and probably Iran with nuclear weapons, something the Chinese can stop, literally, overnight. And the world, not just the US, cannot continue to tolerate radical theft of intellectual property and the hollowing out of core industries forever. The trade war is coming and the loser will be China. They already have a restive population -- hit their export industries hard and let's see what happens.
    Oct 7, 2010. 01:25 PM | 5 Likes Like |Link to Comment
  • Consensus Earnings Growth Doesn't Justify Share Price for Some Tech Bellwether Stocks [View article]
    Your comments on Apple indicate you shun numbers. Apple,; the company, is unique in almost and product market in that it has the best product yet small market share growing rapidly. It has less than 10% share in the US, and less than 4% worldwide, of cell phones, and is growing share. It has less than 5% market share in the corporate computer market -- and is the only company growing share. Recent ChangeWave surveys show the iPad is now sanctioned or will be be purchased by 11% of all businesses -- an astonishing number representing mainstream market acceptance penetration. The company has a of room to grow. The stock is trading at less than half it's historic multiple, weighed down by its share price and market cap. But based on numbers the stock based on current market conditions is worth $650-$750. I do not own it. And I am guessing yo do not own any Apple products.
    Oct 6, 2010. 09:15 AM | 5 Likes Like |Link to Comment
  • China's Surprising Unemployment Problem [View article]
    There are three kinds of Chinese college graduates. Students educated abroad, employable. Students at one of a handful of Chinese universities with meaningful standards AND near the top of their class AND studying the sciences,most often employable, The other 90%-95% of graduates - not readily employable by western standards, they have been run through colleges, sort of like quasi-professional college athletes in the US.
    Sep 8, 2010. 11:19 AM | 5 Likes Like |Link to Comment
  • Infrastructure Spending: A Good Investment in Any Case [View article]
    Infrastructure is a terrible investment for it does nothing to boost real productivity or growth and that is what is required to pay off the debt incurred to pay for the infrastructure itself. The argument better roads shave time off of transporting goods is silly. Fifty billion dollars would build and fund ten federal colleges of math and science, each with 10,000 students, and could be free forever. This would enhance productivity, produce teachers in subjects we sorely lack, and push back college tuition inflation. Fifty billion would fund the creation of 5000 medical clinics that would offload emergency rooms and Medicaid mills, lease out 5000 vacant commercial office buildings and actually save the government money. Fifty billion in infrastructure spending is aimed at unionized workers in all fifty states and factory workers in Indiana, Illinois, Michigan, Wisconsin and Ohio. And that fifty billion will be spent via Davis-Bacon, which means $40 an hour wages when local market conditions are for $15-$20.
    Sep 8, 2010. 08:38 AM | Likes Like |Link to Comment
  • Is Dell a Value Trap? [View article]
    Tech companies invest for the deep future and invest against future competitive threats, something companies that end up being value companies need not do. Cloud computing is coming -- it is here in many places -- and eventually specialized systems for cloud computing will eat away at the only seriously profitable market they serve -- servers. Tech companies are not about cashflow, discounted ROI and other metrics used by value investors. And when they use their cash to keep shareholders happy, they die. Then again, it can easily be argued Dell is no longer a tech company, it is a late stage assembler of technology parts.
    Sep 8, 2010. 08:33 AM | 3 Likes Like |Link to Comment
  • ISM Soars Past Expectations, Easing Recession Fears [View article]
    Who wrote the headline? The ISM is hardly soaring; manufacturing is less than one fifth of employment, the key to preventing the double dip I believe is already upon us' as you wrote, new orders show a double dip coming. Then again, everything is about the headline and it probably got people's attention.
    Sep 2, 2010. 01:34 PM | 3 Likes Like |Link to Comment
  • Employment Data Calls for an L-Shaped Recovery [View article]
    There is a near tragic lack of understanding of how the US creates jobs. Jobs follow a) capital and b) cash. Between 2002 and 2007 43% of new jobs were created due to residential construction. We are down more than 80% in residential construction - new home starts - and the rest of the math is simple. These workers migrated towards construction due to distorted capital flows to the sector and the destruction of other medium and low skilled jobs due to China;s entrance into the WTO. It was the logical response of the economy and workers. Based on current default rates and existing inventories, housing will not bottom until 2013 -- and jobs in that sector will not increase for that reason. The other great engine of jobs -- cash - came from the government, government supported health acre and government supported defense. and this has reversed itself as 44 states are in deficit,not to mention Uncle Sam. Health care jobs are stagnant and will contract as cost cutting becomes a reality. The draw down in Iraq and eventually Afghanistan and other cutbacks in the Pentagon budget will hit employment related to defense.So what is left? Blow dried pundits keep talking about manufacturing and exports - well, manufacturing is less than 20R% of the economy and an even smaller part of the work force. Bottom line - we are in store for a "New, Not Normal" for as long as a decade if we do not address trade imbalances with China and fix public finances.
    Sep 1, 2010. 11:00 PM | 4 Likes Like |Link to Comment
  • The Real Lesson From the Great Depression: Fiscal Policy Works [View article]
    FDR's policies absolutely did not work based on economic metrics but were a spectacular success in convincing people their government cared, the system of governance was working and capitalism was still a much better than alternative than anything else. The data you quote are misleading, were not properly collected and do not reflect savage declines in wealth,national income and even lifespans. Simply put, this aristocrat with a cigarette holder and a near foreign accent was a wild success in that he convinced everyday people he was on their side but also limited in what he can do. But his policies and programs came up way short of the success you attribute to them -- and this kind of belief just leads people to believe there are tools left for the Obama administration to solve our mess. They do not exist. We did not waste all that money building underutilized factories or creating new technologies -- we blew all that money in unproductive assets, houses. We spent our national capital on things that will not boost economic growth productivity. So the private sector is out of short term tools as well.
    Aug 31, 2010. 10:52 PM | 4 Likes Like |Link to Comment
  • More Evidence That Housing Has Stabilized [View article]
    The author has abandoned what he learned in third grade -- not reading and arithmetic. Sir, just look at the shadow inventory of homes not yet listed bu in default or foreclosed, look at current default and late payment rates, do some math and you see another 6-7 million foreclosures in the next 1-30 months. At least. What do you think these will do to home prices? The unwillingness of people programmed to be bulls to do simple math is maddening and at times irresponsible.I am not a bull or a bear - I am an agnostic who actually skipped third grade, so I use fourth grade math to come up with my view.
    Aug 31, 2010. 10:45 PM | 3 Likes Like |Link to Comment
  • Consumer Confidence on the Rebound [View article]
    Anyone who thinks the a reading this low from the Conference Board survey means a change in sentiment must be a congenital bull. The indicator is so low a macro approach to this and the Michigan confidence number means consumers are truly in the pits. And since the survey is phone based, and the two groups of people hit hardest by the recession, the working poor and young people, are not properly represented among a universe of respondents who must have a land line telephone to be surveyed.
    Aug 31, 2010. 10:42 PM | 1 Like Like |Link to Comment
  • From Daniel Loeb's poison pen: Many people see the subprime collapse and bank bailouts as "failures of capitalism rather than a result of a vile stew of inept management, unaccountable boards of directors and overmatched regulators not just asleep, but comatose, at the proverbial switch... It is easy to see why so many people have concluded that the entire system is rigged."  [View news story]
    Most everyone I hear talking about capitalism believes that unfettered markets and capitalism are the same thing. They are not.If anyone would bother to read Adam Smith, he believed markets only functioned properly when all participants had equal access to perfect information related to activity in the marketplace. He would have been the first to argue derivatives, SIVs and "tranches" of "tranches" or mortgage backed securities were designed to jeep players in the dark and this problem could only be solved by a ruling hand. i.e. the government. Think about it -- imagine if Chris Cox had woken up at the SEC and not allowed banks and AIG to use Enron-like SIVs, subprime might have been a big problem but there would have been no crash. Imagine if the government licensed and policed mortgage brokers the way they do stock brokers and there was public information on how many mortgages generated by a specific salesperson were going bad...would these two regulations cripple capitalism in the US?
    Aug 31, 2010. 10:40 PM | 4 Likes Like |Link to Comment
  • Bernanke: Don't Worry, I Will Save the Day [View article]
    Bernanke is not oblivious to his pouch being empty - he is exercising whatever ability he has to calm people and to re-state, vigorously, the Fed will "do what it takes" In David Wessel's wonderful book "In Fed We Trust" that is the theme -- Bernanke and Geithner and Paulson - do whatever it takes to keep the world financial system. This extended past TARP to fake stress tests. That being said, I agree the Fed has little if any ammo left to intervene successfully in the economy but most traders and investors are ignorant of this or simply do not care, it is, after all, a traders' market.
    Aug 27, 2010. 01:08 PM | 1 Like Like |Link to Comment
  • Jobless Claims Gets Back on Track [View article]
    The double dip is here, upon us. If you loo at the labor force participation rate -- the real generator of total national income, consumer spending and economic activity -- it has seen the sharpest falloff since 1946. If you look at dropouts from the labor force as unemployed, the rate is 22%. When last year's GDP sees its final revisions about two and a half years from now, growth will be 1%; we are already in negative growth territory. We have to be, given employment levels, stagnant hourly wages and stagnant work weeks. A facile look at the data helps no one.
    Aug 26, 2010. 11:07 PM | 3 Likes Like |Link to Comment
  • Wal-Mart's Report: A Red Flag for Retail Sector Investors [View article]
    Sorry, but the XRT is a highly diversified ETF that IS NOT dominated by Wal-Mart -- it is not even a top ten holding and no holding is more than 2% of the ETF's holdings. This took me less than thirty seconds to check on Yahoo....
    Aug 20, 2010. 08:46 AM | 1 Like Like |Link to Comment