Do Income Investors Have Anywhere To Hide? [View article]
I would add another caveat. Watch American Greed every night and be aware of scams. The low interest rate environment is going to make "risk free sure return" Ponzi scams much more attractive to investors and I am bracing myself for an onslaught of these frauds in the next few years as the memories of Madoff wear off.
One of the problems with analysis in this area is that strong economies with strong exports tend to have currencies which get stronger. So the question is - did the strong currency lead the economy to strengthen or did the strong economy lead the currency to strengthen ? For a variety of reasons, I think that the latter hypothesis is much more reasonable. So the fact that he can point to countries with appreciating currencies and strong economies does not tell us much about the impact of a strong currency. The United States is in a unique position because the dollar is the global reserve currency and I think that there is a serious danger of an overvalued dollar.
Cisco Is Using Its Balance Sheet Constructively [View article]
In fairness, sometimes these kinds of things can reveal deeper structural problems in a company. I don't think that there is evidence of it in this case. I notice that there seems to be a lot of anti-Cisco activity on the internet and I am not exactly sure what motivates it.
A strong currency is a double edged sword. In the early 1980's, tight monetary policy produced a strong currency, got inflation under control but also devastated the auto, steel, and rubber industries and produced the Rust Belt. I remember always trying to buy lots of clothes when I was traveling abroad. My wife and I priced it out and decided that a week in London seeing plays was cheaper than a similar week in NYC - transportation included. There are undeniably negative impacts on exports, industries that compete with imports, and tourism. Of course, these impacts do not show up in statistics within 24 hours of changes in relative currency values - they occur over a period of time and may even lead to irreversible changes as domestic industries are dismantled because they become uncompetitive. On the other hand, a strong dollar helps keep inflation under control. Right now, deflation seems to be a bigger potential problem than inflation so the anti-inflation impact of a strong dollar is a mixed blessing. My concern is that with no German currency and with a weakening yen, the dollar (like the last man standing after a bar brawl) could strengthen a considerable amount in a risk off wave of sentiment and that this would tip the balance into deflation as well as reducing GDP due to a decline in exports, a decline in tourism and the replacement of domestic production with imports. It is another reason that I do not think we will see higher interest rates for a very long time. By the way, the yen was in the 250 range when I started working on international trade cases in the 1970's and 125 when I traveled to Japan in the early 1990, so it has still appreciated against the dollar on a net basis over a long period of time.
Cisco Is Using Its Balance Sheet Constructively [View article]
I guess the question is whether this is so unusual compared to what generally occurs in large companies where there are going to be situations of spouses and children of executives in adjacent industries. It does not strike me as particularly troubling.
Cisco Is Using Its Balance Sheet Constructively [View article]
I understand your point but I would say two things: 1. it is possible that there is an innocent explanation - it is not remarkable that two people in the same industry would be married and CSCO is so large that its activities touch many other companies and 2. the amount involved is immaterial to CSCO's financial performance.
Clean Energy Fuels: The Important CNG/LNG Distinction And What It Means For Investors [View article]
LNG should not create a transmission/distribution system bottleneck issue. LNG plants can be operated off peak and LNG can be stored. LNG is actually used to help supply peaks in places like New England at the end of pipeline systems because it can be stored.
Clean Energy Fuels: The Important CNG/LNG Distinction And What It Means For Investors [View article]
The Saudis still have significant ability to throttle back production and stabilize prices. On the other hand, they might want to temporarily lower prices so that they could really stick it to their enemies in Iran. Prices are still very dependent on developments in the Middle East. If we get an all out regional Sunni/Shiite shoot out, prices could really skyrocket. On the other hand, if we get Rafsanjani as the new President in Iran and a normalization of relations, we could have a long period of stability.
Clean Energy Fuels: The Important CNG/LNG Distinction And What It Means For Investors [View article]
I don't think this is likely. CNG demand will materialize gradually and in urban areas with robust distribution systems. It is more likely that a spike in the demand for natural gas as a power plant fuel could create this kind of issue - for example, the extreme demand created by a heat spell which required lots of power plants to operate flat out for an extended period of time.
Is Lowering The Real Interest Rate The Solution For The U.S. Economy? [View article]
It would be better to engage in targeted fiscal policies designed to create jobs and get money in the hands of people who will spend it, but there is no political will to go in that direction. This is the "second best" choice. The third alternative is to do nothing, although a deflationary depression to unfold and relive the 1930's.
Clean Energy Fuels: The Important CNG/LNG Distinction And What It Means For Investors [View article]
That sounds about right 32 cents is a little less than one sixth of $2 and one mcf equals roughly 8 gallons of gasoline. The higher natural gas well head price would probably have a small impact on the transmission and distribution cost of natural gas - I assume that compressors used by natural gas pipelines burn natural gas.
Clean Energy Fuels: The Important CNG/LNG Distinction And What It Means For Investors [View article]
It's a reasonable question. I think that they would definitely take a hit and margins on LNG would tighten. Customers would feel less need to order LNG trucks but some might continue to order them to diversify risk and protect against an oil price spike. Of course, at lower prices various forms of petroleum production (tar sands, expensive off share products, etc.) are likely to decline over time. It is certainly a risk factor and one thing to keep an eye on.
The Problem Of The Strong Dollar: Investment Implications [View article]
I think that my concern is beginning to be played out in the markets as the dollar strengthens. We will see where this all takes us. It is of course another reason that we are unlikely to see the Fed raise interest rates for a long time.
The Problem Of The Strong Dollar: Investment Implications [View article]
A couple of big differences - 1. much, much higher interest rates in 1981 as the Fed struggled to get inflation down and 2. EM/Asia countries have much higher levels of dollar reserves and better balance sheets today (probably in reaction to the mess which occurred in the 1990's).
The Problem Of The Strong Dollar: Investment Implications [View article]
Of course this has been a big plus for Yum Brands (YUM) which is a good play on China. There were some other surprises on the trip - no General Tso's Chicken anywhere in China!! I wondered out loud whether he was a Nationalist Chinese General and they stopped making his chicken for political reasons but that is apparently not the explanation. A real mystery. And the Colonel keeps growing in China - very, very popular.
Do Income Investors Have Anywhere To Hide? [View article]
The Biggest Loser Wins [View article]
Cisco Is Using Its Balance Sheet Constructively [View article]
The Biggest Loser Wins [View article]
There are undeniably negative impacts on exports, industries that compete with imports, and tourism. Of course, these impacts do not show up in statistics within 24 hours of changes in relative currency values - they occur over a period of time and may even lead to irreversible changes as domestic industries are dismantled because they become uncompetitive. On the other hand, a strong dollar helps keep inflation under control.
Right now, deflation seems to be a bigger potential problem than inflation so the anti-inflation impact of a strong dollar is a mixed blessing.
My concern is that with no German currency and with a weakening yen, the dollar (like the last man standing after a bar brawl) could strengthen a considerable amount in a risk off wave of sentiment and that this would tip the balance into deflation as well as reducing GDP due to a decline in exports, a decline in tourism and the replacement of domestic production with imports.
It is another reason that I do not think we will see higher interest rates for a very long time.
By the way, the yen was in the 250 range when I started working on international trade cases in the 1970's and 125 when I traveled to Japan in the early 1990, so it has still appreciated against the dollar on a net basis over a long period of time.
Cisco Is Using Its Balance Sheet Constructively [View article]
Cisco Is Using Its Balance Sheet Constructively [View article]
Clean Energy Fuels: The Important CNG/LNG Distinction And What It Means For Investors [View article]
Clean Energy Fuels: The Important CNG/LNG Distinction And What It Means For Investors [View article]
Clean Energy Fuels: The Important CNG/LNG Distinction And What It Means For Investors [View article]
Is Lowering The Real Interest Rate The Solution For The U.S. Economy? [View article]
Clean Energy Fuels: The Important CNG/LNG Distinction And What It Means For Investors [View article]
Clean Energy Fuels: The Important CNG/LNG Distinction And What It Means For Investors [View article]
The Problem Of The Strong Dollar: Investment Implications [View article]
The Problem Of The Strong Dollar: Investment Implications [View article]
The Problem Of The Strong Dollar: Investment Implications [View article]