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Canuck Economist

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  • Weighing The Week Ahead: Is The Fed At A Crossroads? [View article]
    Thanks Jeff for very good weekend reading once more; I really like your evidence-based approach and most importantly, allowing your readers to easily check the sources for ourselves. Chart 7 from the Jolt report was the most interesting for me in your article today and it made me want to review the report itself - Chart 3 was even more interesting as it provides the absolute numbers underlying the ratio - persuades me that this cycle has the potential to go much further yet. Being Canadian, it was easy to verify what was seriously wrong in your brain teaser. Thanks again.
    Dec 15, 2013. 09:25 PM | Likes Like |Link to Comment
  • Caterpillar Announces Sales Are Way Down: Time To Get Long [View article]
    Cat is a good company; it has potential; however, the cutbacks in production tell you that there will also be further cut in sales; this co is going to test below $80 and I dont know where it will end up could be $77 but it could also be $50; I am not touching this one until I see commodity indexes turn around.
    Nov 24, 2013. 08:40 PM | Likes Like |Link to Comment
  • ModernGraham Valuation Of Caterpillar, Inc. [View article]
    Benjamin: sorry but I don't get it.

    Your conclusion says: "Caterpillar is a very strong company based on its financials, and may be suitable for the defensive investor (and hence an enterprising investor as well). "

    However, your analysis says :
    "2.Sufficiently Strong Financial Condition - current ratio greater than 2 - FAIL".....and again fails on the first two financial tests of 7 items (test for defensive and enterprising investors); they are:
    "1.Sufficiently Strong Financial Condition, Part 1 - current ratio greater than 1.5 - FAIL
    2.Sufficiently Strong Financial Condition, Part 2 - Debt to Net Current Assets ratio less than 1.1 - FAIL"

    Conclusion is completely at odds with your analysis! Did I miss something?
    Oct 31, 2013. 07:34 PM | Likes Like |Link to Comment
  • McDonald's partners with Kraft to sell bagged coffee [View news story]
    Interesting. I read that we are at very low price of coffee and maybe even going lower. In Canada, McD is having a sale on brewed coffee; the small cup is free, the larger cups are very low prices.

    It will be interesting to see how the ground coffee gets priced versus other coffee brands and if McD will use coffee as a loss leader. The fact that McD has a vast network of outlets may impact other coffee sellers e.g., Green Mountain Coffee Grinders. My guess is that this will probably play in favour of McD and against coffee sellers.
    Oct 31, 2013. 06:52 PM | Likes Like |Link to Comment
  • Can Facebook Survive Changing Demographics? [View article]
    Sorry, but I think your article tries to bring a concern which was talked about a year ago which is simply not true according to the studies from the company. It is also not according to what I know from personal experience - my entire family keeps in touch via Facebook; old and young alike; why we even have a couple of dogs who have accounts. I am not aware that any of the adults have a twitter account so between the two companies, I would take the one that is more encompassing. What about you?
    Oct 27, 2013. 08:36 PM | 1 Like Like |Link to Comment
  • Chipotle: Where Is The Top? [View article]
    Matt, your analysis left me cold. Everything you say about the company is actually quite positive; I almost thought you were a booster in disguise.

    Your main point is that it does not fit the rule-of-thumb that has served you well in the past; you do not explain the conceptual basis for the rule or why it has served you well.

    So, if the company continues to grow at the 21.5% for another 10 years how big would that be? what does that imply for the share price three years hence.

    I have done well with this company to date and I am sure there is a correction down the road but will hold on for a while longer - I keep hoping they will push for an international expansion but I like their noodles restaurant idea in the meantime - I think it has legs. Give that segment four years and we will be looking at a lot of additional capital gains on share price.
    Oct 13, 2013. 08:37 PM | Likes Like |Link to Comment
  • Will Facebook's Earnings Catch Up To Its Valuation? [View article]
    Good analysis but wrong conclusion. Had the author done a similar article when the company went public, he would have come up with a similar conclusion and he would have been wrong, as he is wrong now. The reason being is that you cannot see or forecast innovation but you can look at a history of innovation and extrapolate to see what kind of numbers are possible. This is a similar situation to Apple. The only time Apple did not expand was when Steve Jobs was not there (see how the company has gone down and will continue to go down as it cannot keep up with the competition). I say Buy! and should the shares repeat the last week's performance, I will use the dips to buy more.

    When you look back in three years, FB will look like a real bargain.
    Oct 10, 2013. 06:36 PM | 6 Likes Like |Link to Comment
  • Natural Gas Price Briefly Hits 2-Month High After Bullish Inventory Report, But Stay On Sidelines [View article]
    Hard Assets Investor: not sure I buy your take, prices normally rise over the next couple of months as winter demand starts. In my view, exports will start to kick in soon; the price relationship with fuel oil is way out of whack still. If your trade horizon is longer than a month, I would be on the long side (which I am).

    The Article by CDM above is very good-worth a read, it should have also looked at the oil-natural gas price ratio to add to its case. Seems to me that the facts on natural gas could not be much worse and almost every factor indicates a turn around. I will not be surprised to see natural gas climb past $6/mcf in the next two years.
    Sep 21, 2013. 07:37 PM | 1 Like Like |Link to Comment
  • Chipotle's iOS app creates a buzz [View news story]
    As much as I like Chipotle, the add just did not connect with me.

    I really like Chipotle and have made good money since the last large dip in price last September. I also eat there and think their burritos are the best of all I have tried so far and their service is prompt and efficient. We just spent some time in Chicago and we were happy to be able to eat their food.

    I have seen the You Tube commercial put out by the company; lots of people I know have heard about it and liked it but not sure that it compelled them or me to get the game. I found the advertisement to be a very negative advertisement.

    The add tells me reasons why I should not go to the competition is it Taco Bell or MacDonald's they are aiming for? It does not tell me why I should go to Chipotle. It almost reminds me of a US right-wing political advertisement (these don't play as well in Canada) it might actually turn-off some of their regular customers.

    I was not persuaded (and have no evidence) that the competition is as terrible as they portray; nor do I have the belief that Chipotle is a two bit outfit, street vending kind of operation - actually I admire how they run their restaurants and the quality of the food. Instead spending on these campaigns, I just wish they would hurry up and open up some locations in my city as the competition and imitators have already carved up some of the better locations.

    So the bottom line is that the add did not connect with me.
    Sep 17, 2013. 11:09 AM | Likes Like |Link to Comment
  • (Almost) Kudos To You, Mr. Cook [View article]
    Dear Juggler, your article has not persuaded me to go long on Apple.

    What I hear from you is that the company is better off remaining a high priced phone maker - it cannot afford to compete against itself by bringing in a low cost phone as it would cannibalize its earnings (economists would say that it cannot come up with a way to do price discrimination - and that is actually a BAD thing). Unfortunately, the evidence is that reliance on current iPhone earnings will not grow the company; the market for phones is limited and - like Alice in Wonderland - it will have to run faster and faster just to stay in place!

    As I remember the story, this was a company that kept bringing in new, innovative products in successive waves, very strong on design and marketing. The copycats could only continually bite at its heels but it kept on running always well ahead of the pack. I have not seen any new innovative products in the last 3 years or was that four?

    Remember? In the last round with Jobs, Apple started with improving personal computer designs; followed by the music players, movies, then on to communication, phone - until it caught up and surpassed blackberry, also music downloads. The dogs are catching up with better, less restrictive products e.g., Google's Android, and as you note, it finds itself painted in a corner in that it cant even afford to compete on price without killing its revenues.

    Steve Jobs unfortunately is dead and no one in the company seems to have the same capacity for innovation, for successfully developing new, truly new product, and new deliveries in its pipeline (oh yes....a new watch has been rumoured!).

    I would rather stay out of Apple; others may do what they have to; that is what makes a market! Good luck to you!
    Sep 16, 2013. 11:09 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Will Bernanke Change Course? [View article]
    Jeff, many thanks for your posts, I count on your analysis-based opinion, and a steady hand in a world dominated, in the press at least, by paranoiac opinion.

    I have a question, I subscribe to the analysis that the Fed has little direct influence on financial markets but a very large influence indirectly; evidence of this is that everyone pays attention to the musings of the Board and any announcements. So it seems to me that over the past 2-3 months, we have seen interest rates increase as a result of the mere mention of the so called "tapering". However, it seems that the market has gotten ahead of itself. I have made a decent return by going long on TBT over this period; I have been considering selling my holding once the much predicted "announcement" by Bernanke is made (sell on news). My question is, if you agree that the bond market has gotten ahead of itself; by how much do you think that is? Will the announcement be a good opportunity to sell TBT?
    Sep 15, 2013. 03:39 PM | Likes Like |Link to Comment
  • Silver Bottom Likely Seen [View article]
    I would say worldclass777 has some good arguments. This is supply-demand at work, even though some of the players may be government finance types trying to get a better return than holding US cash. Now that the US dollar fundamentals are starting to improve, there will be less demand for commodity hedges.

    What miners do in the short term will hardly have an impact when the overhang of physical stuff is so large. I don't know enough to venture a guess as to what the silver price will go to when we see capitulation, but I suspect it is a LOT lower than current levels once the holdouts throw in the towel. As for Gold, the price still seems pretty high to me - for Gold as for Silver, we will want to see Mining companies lower their very aggressive expansions and even see closures before the beginning of the end.
    Aug 6, 2013. 06:09 PM | Likes Like |Link to Comment
  • What To Do Now With Caterpillar: Buy Or Stay Away? [View article]
    Thanks for your take on CAT. I agree that this is a well managed company; they have made every effort to keep costs down and sales up. However, this is a highly cyclical company, depending heavily on mining - much more than the other companies in your comparison so be careful how you draw your conclusions. The mining markets have not been doing well and I think we have not seen the worse yet for metal prices; what is more, we have only seen the start of the adjustment by mining companies - keep an eye on the announcements of the likes of copper and gold companies like Barrick; same for companies in potash and fertilizer. You say that they are growing in South America? That was last year. Have a look at all the cutback announcements on the part of the mining companies there.

    Your strategy is good, the timing is not very good however. October is only three months away; in my view, CAT has a full year or two of bad news ahead and you may see prices continue to go past the $75 level. I think it would be less risky to be short on the stock at this point; I did not see you identify any reason that would cause Caterpillar to recover in the next year.
    Aug 6, 2013. 10:42 AM | 1 Like Like |Link to Comment
  • Interests And Income [View article]
    Very good observations. I wonder this is paired with an analysis of who pays for said transfer payments, by group, not in percentage terms but in aggregate terms - including businesses, but also parcelled by size. Remember Apple? been a big source of investment income for many but not contributed much directly. There is an imbalance on who is contributing to the community's expenditures. I think the middle class is contributing more than the wealthy and the policies have been reducing the importance of the middle class - not a sustainable world!
    Aug 4, 2013. 10:41 AM | Likes Like |Link to Comment
  • Famed Short Seller Hates Caterpillar, I Don't [View article]
    The data you presented makes me want to short this stock.

    I think Chanos scored a good one here; the capital expenditure cycle for mining is just starting to deteriorate. I will wait until I see a better commodity price outlook for mines and once announcements of project closures slow down or even reverse course. There seems to be evidence of a slowdown in China and other emerging economies. CAT is a main player in what clearly is a cyclical industry, why I to invest in sector still very near the top of its cycle?
    Jul 28, 2013. 09:28 PM | 2 Likes Like |Link to Comment