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  • An Old School Look At The Zero Interest Rate, And Its Influence On Stock Investing  [View article]
    Thanks for your contribution. The more frenzied the bulls become and the VIX disappears into nirvana, the more I tend to avoid the froth and try to listen to the old-schoolers. You guys should be listened to more often. The wheel cannot be reinvented.
    Mar 17, 2012. 10:35 AM | 2 Likes Like |Link to Comment
  • Apple: A Small Dose Of Reality  [View article]
    I actually followed that link. Is this some kind of religion akin to Scientology?

    I mean come on:

    "The greatest company the planet has ever seen. Why is the stock so under priced? Because it hasn't yet clicked that Apple is the most amazing company ever created"

    how are you going to argue with that?
    Mar 15, 2012. 09:32 PM | 1 Like Like |Link to Comment
  • Apple: A Small Dose Of Reality  [View article]
    Hmm I'm on the sideline here, but generally have a very bearish outlook on the world economy: China's landing is not so soft, Europe is not saved but in the process of falling apart (for those interested look at national central bank target2 imbalances) and the US is living off borrowed time. For those not aware, your government is spending 1$ for every 35c collected. Not even Greece is that bad.

    What would a global recession mean for Apple? Demand for their products will fall sharply and profits will drop sharply, simply because less people will be able to afford their outrageous pricing.

    The growth trajectory is very dependent on a recovering world economy - especially at their pricing and I simply don't see it.

    Their size has reached a point where there are not more people out there that can buy their product - at least not at a 20% growth rate. Sales growth will come from where? There are only so many gadgets you can plug into your body.

    Their products are replaceable, they can be copied and the barriers to entry are not a deterrence. The larger the margins are, the more competitors will be crowding into that market space. Great brand, but a brand alone will not be there so protect your backside forever.

    Still an impressive company, albeit with very questionable business practices - margins need to come from somewhere and most probably one of the best stocks to have in a long term portfolio, but there are too many reasons out there that could cause a major correction.

    Usually shorting Apple is suicide, but at the moment that price is begging me to take a bite.
    Mar 15, 2012. 08:32 PM | 1 Like Like |Link to Comment
  • Property woes that hit the rest of the world years ago are now being felt in Australia where home sales volume fell 7.3% in January to an 11-year low. Household debt-to-income ratio of 150% is higher than the U.S. prior to the financial crisis and funding pressures are forcing banks to hike mortgage rates even as the central bank cuts.   [View news story]
    Australia running at higher interest rates that the US. Expect debt service to be significant in AUS.
    Mar 15, 2012. 09:51 AM | Likes Like |Link to Comment
  • Financial Fitness: A Key Requirement For A Durable Recovery  [View article]
    What would you expect with ZIRP?

    But since overall debt volume has increased dramatically, it creates a heightened sensitivity to interest rates and locks it down into a perpetual zero rate freeze, which means it cannot be used as a balancing mechanism on a macro economic level. The Fed has painted itself into a corner or at the very least has taken away room to manoeuvre.
    Mar 15, 2012. 07:28 AM | 1 Like Like |Link to Comment
  • Mixed Signals Confusing For Euro, U.S. Dollar Currency Traders  [View article]
    Were you around pre-€ ?

    I was and I can remember a very strong Deutsch Mark and a strong export oriented German economy. Forex is but one component of many for a successful export industry. To export a finished product you need to import the raw materials. Net currency effect is much smaller than most believe. One of the major export drivers over the last decadefor Germany was not forex, but zero real wage growth compared to 20-30% growth in PIIGS.

    Those that believe that export driven growth comes from a weak exchange rate, just need to take a look at the US. The $ is losing ground faster than any other major currency over the last years. Has it done the trade deficit any good? On the contrary, your trade deficit is constantly growing and has taken on titanic proportions.

    Germany is probably the country that can most easily afford an exit. And they should and going by voter sentiment, they will - maybe not next elections, but the following. If I had to pick one country that would leave the failed € project first, it would be Germany (bar that Greek basket case).

    Take a look at the Target2 imbalances that are piling up. This screams disaster approaching. The € collapse is a certainty in my opinion. Just to add some perspective here: I was an outspoken €-phile less than a year ago.
    Mar 14, 2012. 10:02 PM | Likes Like |Link to Comment
  • The ECB Is On The Right Track, The Bundesbank President Is Not  [View article]
    LTRO was not only implemented to save the peripheral banks, but also to find a way to keep the PIIGS afloat while keeping within the ECB statutes.

    What has happened, is that the ECB has with its programme replaced the private investor market - either directly or indirectly through peripheral banks buying treasuries to deposit them as collateral at the ECB. The ECB has not only taken on all the sovereign risk, it has also crowded out the private investor through rates well below what the market is willing to pay, thereby creating a two-way dependency between the peripheral and the ECB, where no one can survive without the other.

    That requires an exit strategy, or should the peripherals remain on ECB life support forever? How will they rid themselves of debt? So far all I'm seeing is more debt being piled on. There is no pressure to do a thing. Credit is cheap again. The ECB has become the lender of last resort..... no scratch that. Germany has become the lender of last resort.

    If I were German, I'd do everything politically possible to get out of that devils pact. LTRO is economic suicide for Germany.
    Mar 14, 2012. 12:03 PM | Likes Like |Link to Comment
  • More on the current account: The Q4 deficit of $124.1B was the largest in 3 years. For 2011, the current account deficit summed to $473.4B against $470.9B in 2010 - the 2nd consecutive increase - dashing ideas one of the results of the financial crisis would be to balance global imbalances. (tables, .pdf)   [View news story]
    Who cares? I'm sure Bernanke is already working on a master plan, most probably something involving QE.
    Mar 14, 2012. 11:05 AM | 1 Like Like |Link to Comment
  • Roger Lowenstein pens an epic love letter to Ben Bernanke in The Atlantic. "The left hates him. The right hates him even more. But Ben Bernanke saved the economy - and has navigated masterfully through the most trying of times." Whatever one's opinion of the man thankfully not yet being called "The Maestro," stuff like this tends to come a lot closer to market tops than bottoms.   [View news story]
    ...into a giant whirlpool
    Mar 14, 2012. 11:02 AM | 7 Likes Like |Link to Comment
  • Roger Lowenstein pens an epic love letter to Ben Bernanke in The Atlantic. "The left hates him. The right hates him even more. But Ben Bernanke saved the economy - and has navigated masterfully through the most trying of times." Whatever one's opinion of the man thankfully not yet being called "The Maestro," stuff like this tends to come a lot closer to market tops than bottoms.   [View news story]
    you are confusing "markets advancement" with saving the economy.

    The one is an asset bubble, the other would be a balanced budget, balanced current account, average higher job quality, lesser income inequalities, less people on food stamps and living in tents and more products actually being produced in the US instead of just getting consumed or ending up as inventory.
    Mar 14, 2012. 10:54 AM | 10 Likes Like |Link to Comment
  • Precious metals continue a decline that picked up steam when the positive results of the Fed stress tests began to leak out. It's hard to imagine QE3 coming about if the Fed believes a depression could hit and banks would still be solid enough to return capital to investors. Gold -2.1% to $1,659. Silver -1.1% to $33.19.   [View news story]
    ZIRP is here to stay. No way back.
    Mar 14, 2012. 08:35 AM | Likes Like |Link to Comment
  • My Two Cents On Market Nonsense  [View article]
    Best rant of the month.

    Good to see others are still just as cynical and wary and haven't all been transformed into lemmings.
    Mar 14, 2012. 05:31 AM | 12 Likes Like |Link to Comment
  • Feb. Retail Sales: +1.1% vs. +1.2% expected, +0.6% (revised) prior. Ex-auto +0.9% vs. +0.7% expected, +1.1% (revised) prior.   [View news story]
    QE, TWIST and a deficit where only 30% of public expenditures are covered by tax receipts. What do you expect? If that can't fuel retail sales, nothing can. The million $ question though is: how long can this be sustained?
    Mar 13, 2012. 04:55 PM | 1 Like Like |Link to Comment
  • Germany's ZEW Economic Sentiment Indicator increases by 16.9 points to 22.3 for March, marking the highest reading since June 2010 and the 4th consecutive month the sentiment indicator has trended higher.   [View news story]
    The € per se has not been to the benefit of Germany as many like to believe. I've lived and worked in Germany pre - and post € and what has happened in general, was that Germany maintained their large export surplus - that admittedly grew even larger, but at the expense of lesser direct investments. That money ended up and Spain and Ireland and was one of the main contributors to the property bubbles. For Germany, the ECB interest rate was too high, for places like Ireland it was too low. The common currency and common interest rate created giant imbalances that have simply grown and were never addressed. The ECB is patching up the cracks with our European version of QE, but it can't hide the fact that this whole project is a disaster.

    What has made Germany so competitive beyond what is was already, was the incredible wage restraint by unions and labour, coupled with labour reforms that liberalised the labour markets. Germany experienced no real wage growth in the last 10 years, compared to the rest of the €-zone where real wages grew between 20 and 30%. The competitive gap is so large now, that no amount of liquidity can prevent the inevitable collapse. When that happens will be decided either by the ECB or the voters.
    Mar 13, 2012. 02:48 PM | Likes Like |Link to Comment
  • Is Germany Actually Preparing To Leave The Euro?  [View article]
    It might be new in English speaking circles, but on German speaking forums (for us Swiss, Austrian and Germans), this is already being discussed to a lesser degree. The sentiment has already turned extremely sour over the last year. The only ones desperately holding on to the €-idea, are the politicians, the rest of us have already written the project off.

    But I agree. This notion can well be pivotal to the worlds economic future.
    Mar 13, 2012. 02:28 PM | 2 Likes Like |Link to Comment