The End Of The Consumer? What The Long-Term Decline Of Consumption Means For Investors [View article]
What is the portion and growth rate of Consumer companies international, non domestic revenue and operating income?
just curious, because if the non US revenues and operating income is growing at a healthy rate, due to corporate expansion, then the analysis might just be missing the key piece of information. . .
Gold, like every other asset class is bought or sold with fiat currency. So, if there is inflation, transfer into gold at $1,000 and after 5 years at 10% inflation, you get $1,610 in fiat currency, Likewise, if there is deflation, transfer into gold at $1,000 and after 5 years of 1% deflation, you get $950 in fiat currency. What the gold market traders are believing is that there is more deflation coming, and that the quantitative easing is not big enough yet to overpower structural job losses to technology and outsourced manufacturing at some emerging market labor rates. Why? because corporate incentive plans don't care if you employ your customers or you employ someone else's customer, but in the end, if you employ someone else's customers, the country will turn into an island state, where the locals are on welfare, and the plutocracy has wealth from machines or someone else's customers. . .
The Fed Is Not Pushing Stock Prices Higher [View article]
When the fed buying bonds, money no longer has to come out of the real economy to fund the government, so money that would otherwise go to bonds out of the real economy remains in the real economy, hence increasing available money in the real economy. People who used to buy bonds, now are buying other assets, hence the fed INDIRECTLY is helping money flow into the stock market. But there is no direct purchases. There is the literal interpretation of fed actions actually buying equities versus the indirect effect interpretation of fed actions helping previous bond buyers to buy other assets instead.
The fed understands that with this much structural unemployment, and the velocity of money being so slow, there is little risk of run away inflation. The other point is that the stock market represents world wide earnings, not just domestic earnings. The proportion is getting bigger of intl earnings versus domestic earnings. People tend to commingle the two, and those that do are more influenced by the local economy and less influenced by individual equity analysis, which means that they are missing the equity boat.
AAII Sentiment Survey: Both Optimism And Pessimism Below Average [View article]
Current bullish less historical average -0.6 Bearish historical average less current -1.9 Current Neutral less historical average +2.6
Net Change to historical average +0.1 negative = more bearish than average, positive = more bullish than average
I would say just about the average which is expected with negative domestic and intl macro issues weighing on psychology versus increasing earnings all in domestic and international, and rising equity prices, netting to the smallest of bullish percentages. . .
of course, how one ranks neutral over and under is key, but given neutral after several years of price appreciation, would be more bullish than bearish. . .
How To Remain Solvent Longer Than The Market Is Irrational [View article]
Excellent! in that case, you may have a potential customer, as I have used fundamental and economic variables to successfully forecast the valuation ratios to forecast future stock market movement!
How To Remain Solvent Longer Than The Market Is Irrational [View article]
<<Your comment seems to represent a common misunderstanding of how the FAST Graphs tool functions. >>
Then the articles are missing something in their description of the use of FAST graphs. . .
That being said, I agree whole heartedly with understanding of revenue/earnings growth, and how that translates to the P/E metric, but as the first year finance students learn, you can go bankrupt with a high growth company very easily, as the balance sheet management is also an important measure of the future success.
If FAST graphs would add TEV, total enterprise value as a function of operating income and/or operating cash flow, then you would have a very big winner in understanding company valuation fluctuations over time against both the income statement and the balance sheet.
Cash Hoards On The Sidelines And The Great Rotation: Old Myths Meet A New Reality [View article]
This exact phenomina occurred with the great dutch tulip crises. the cash all ended up with the tulip farmers, but no additional cash was created, regardless of the prices of the tulips. what changed was the population's desire for purchasing tulips, behavioral finance 101.
the major take away of the article is not about the money sidelines and stock prices, its about the liquidity preference of the potential equity buyers. But there is a small oversight in the author's article, there is a currency preference for USD or not, which would affect the amount of USD cash on the sidelines, or in the USD ledger system. Lets hold the currency preference out of the discussion.
However, a higher liquidity preference is both a reality and a psychology outcome of the popping of an asset bubble. Behavioral finance at its best. The reason for higher liquidity preference is due to the imported deflation by US companies with the opportunity for global mfg in lower cost of living countries. By definition, this corporate decision results in a reduction of the country's aggregate income, meaning less disposable income, meaning higher preference for liquidity, meaning less willing to purchase or hold equities, within the us economy as a whole.
The problem with understanding economic money flows is that the simple economic models are too small to account for all the variables, and all the variables shift in significance constantly based upon different decisions of the governments and business and individuals. The author is merely discussing one concept of hundreds within a specific context, but the real take away is the concept of liquidity preference for cash versus liquid assets versus illiquid assets. . . the follow-on article needs to be about the liquidity preference forecast. . . and how to change it if beneficial to the domestic economy. Otherwise, the US will follow the path of socialist europe, as that is our destination in the new technology age, as there will never be enough service jobs to employ everyone productivity.
How To Remain Solvent Longer Than The Market Is Irrational [View article]
scooter5 and Bruce7b eloquently describe why I fundamentally disagree with CC's articles. they are miss the underlying product / business model life cycle forecast, either from growth to maturity valuation transitions or maturity to declining outlook valuations. . . equities always have a product forecast life cycle valuation component to it, most recently displayed with stocks like AAPL. This CC seldom addresses as a part of solid fundamental analysis.
Cold Late Winter Still On Tap And Potential Effect On Energy Markets [View article]
Started looking last night at releasing my UHN hedge due to being on the upside of winter temperatures, and am hoping to squeeze out a bit more price, for weather plus a small increase in trucking usage. . .
not sure I will get much though. . . $37 would be ideal!
No Margin For Error: Margin Debt, Quantitative Easing, And Future S&P 500 Returns [View article]
If the government is trying to stimulate consumption demand, indirectly through the wealth effect of QE, that will work as long as there is not too much excess productive capacity in the domestic economy. If there is too much excess productive capacity, consumption demand will not increase very quickly to remove the QE effects and have a positive GDP without QE support. Productive capacity in a service economy is labor.
The problem is that private capital will continue to invest in labor substitution capital equipment to maintain or increase profitability at low levels of demand and revenue growth.
The unintended consequence in the domestic economy will the continued shrinkage of employed population as a percentage of the population. At some point, domestic demand will stagnate permanently, and at a future point to that, demand will start to decline.
Then QE will either be permanent or the US dollar will collapse. This view is long term, more than 10 years. . .
One Less Good Reason To Be Bearish On Inflation [View article]
"Savers are not losers under ZIRP. HOARDERS are losers. Savers, i.e., INVESTORS are winners. Being a hoarder is a luxury we can no longer afford. We have paid people to do nothing with their money for so long that they think they are entitled to get something for taking no risk. They were being paid not to spend, period. Now, we don't need to pay them not to spend, so we are not paying them not to spend. They have no right to complain. You can bleed for parasites if you wish. I think they need to grow a pair and risk it all on a nice diversified portfolio of preferred utility stocks, reits, MLPs, and blue chip multinationals. They need to buy a freakin' mutual fund and stop whining. "
Best explanation of the current condition, i am copying this to my favorite demogogues!
One Less Good Reason To Be Bearish On Inflation [View article]
And the goods employment peaked at the same time, late 70's 1980 - http://bit.ly/WtpVLb and the only reason why good employment peaked again in the 90s is due to the data communications new industrial infrastructure, both buildings and network/computers.
However, the datacom industrial production revolution has past its peak in the US, and so until there is another industrial production employment boom, demand created inflation growth is less likely.
Inflation is never the result of a single variable, but of multiple influences, including macro, fiscal and monetary. To assume inflation level dependency on a single variable is the limitation of the human mind.
Caymen island economy is looking more and more likely as a final outcome . . . corporate hq residences with reported revenue and profits with a local economy who services it and consumes locally produced goods and services.
One Less Good Reason To Be Bearish On Inflation [View article]
# 4 is my vote. Velocity won't increase for a long time due to slack in the service economy, and continued job loss in the mfg economy. US mfg employment is near or at the levels in the 1940, 60 percent of the top in 1980. without mfg jobs, there are only service and public service jobs. public service jobs need to shrink, and the slack in the service economy is huge, because that's where the domestic jobs are for the unemployed. and until foreign mfg cost plus transportation is greater than domestic mfg, its all about the service economy.
The company for which I work is 50% service, with hopes of automating the inspection portion. . . .
Medical Marijuana: Get Out Now [View article]
The End Of The Consumer? What The Long-Term Decline Of Consumption Means For Investors [View article]
just curious, because if the non US revenues and operating income is growing at a healthy rate, due to corporate expansion, then the analysis might just be missing the key piece of information. . .
The Gold Emperor Has No Clothes [View article]
The Fed Is Not Pushing Stock Prices Higher [View article]
The fed understands that with this much structural unemployment, and the velocity of money being so slow, there is little risk of run away inflation. The other point is that the stock market represents world wide earnings, not just domestic earnings. The proportion is getting bigger of intl earnings versus domestic earnings. People tend to commingle the two, and those that do are more influenced by the local economy and less influenced by individual equity analysis, which means that they are missing the equity boat.
AAII Sentiment Survey: Both Optimism And Pessimism Below Average [View article]
Bearish historical average less current -1.9
Current Neutral less historical average +2.6
Net Change to historical average +0.1
negative = more bearish than average,
positive = more bullish than average
I would say just about the average which is expected
with negative domestic and intl macro issues weighing on psychology versus increasing earnings all in domestic and international, and rising equity prices,
netting to the smallest of bullish percentages. . .
of course, how one ranks neutral over and under is key, but given neutral after several years of price appreciation, would be more bullish than bearish. . .
sportsguy
How To Remain Solvent Longer Than The Market Is Irrational [View article]
thanks for writing and responding!
sportsguy
How To Remain Solvent Longer Than The Market Is Irrational [View article]
Then the articles are missing something in their description of the use of FAST graphs. . .
That being said, I agree whole heartedly with understanding of revenue/earnings growth, and how that translates to the P/E metric, but as the first year finance students learn, you can go bankrupt with a high growth company very easily, as the balance sheet management is also an important measure of the future success.
If FAST graphs would add TEV, total enterprise value as a function of operating income and/or operating cash flow, then you would have a very big winner in understanding company valuation fluctuations over time against both the income statement and the balance sheet.
sportsguy
Cash Hoards On The Sidelines And The Great Rotation: Old Myths Meet A New Reality [View article]
the major take away of the article is not about the money sidelines and stock prices, its about the liquidity preference of the potential equity buyers. But there is a small oversight in the author's article, there is a currency preference for USD or not, which would affect the amount of USD cash on the sidelines, or in the USD ledger system. Lets hold the currency preference out of the discussion.
However, a higher liquidity preference is both a reality and a psychology outcome of the popping of an asset bubble. Behavioral finance at its best. The reason for higher liquidity preference is due to the imported deflation by US companies with the opportunity for global mfg in lower cost of living countries. By definition, this corporate decision results in a reduction of the country's aggregate income, meaning less disposable income, meaning higher preference for liquidity, meaning less willing to purchase or hold equities, within the us economy as a whole.
The problem with understanding economic money flows is that the simple economic models are too small to account for all the variables, and all the variables shift in significance constantly based upon different decisions of the governments and business and individuals. The author is merely discussing one concept of hundreds within a specific context, but the real take away is the concept of liquidity preference for cash versus liquid assets versus illiquid assets. . . the follow-on article needs to be about the liquidity preference forecast. . . and how to change it if beneficial to the domestic economy. Otherwise, the US will follow the path of socialist europe, as that is our destination in the new technology age, as there will never be enough service jobs to employ everyone productivity.
How To Remain Solvent Longer Than The Market Is Irrational [View article]
sportsguy
Cold Late Winter Still On Tap And Potential Effect On Energy Markets [View article]
not sure I will get much though. . . $37 would be ideal!
No Margin For Error: Margin Debt, Quantitative Easing, And Future S&P 500 Returns [View article]
The problem is that private capital will continue to invest in labor substitution capital equipment to maintain or increase profitability at low levels of demand and revenue growth.
The unintended consequence in the domestic economy will the continued shrinkage of employed population as a percentage of the population. At some point, domestic demand will stagnate permanently, and at a future point to that, demand will start to decline.
Then QE will either be permanent or the US dollar will collapse. This view is long term, more than 10 years. . .
sportsguy
One Less Good Reason To Be Bearish On Inflation [View article]
"
Best explanation of the current condition, i am copying this to my favorite demogogues!
sportsguy
One Less Good Reason To Be Bearish On Inflation [View article]
eloquently said, and I agree.
One Less Good Reason To Be Bearish On Inflation [View article]
and the only reason why good employment peaked again in the 90s is due to the data communications new industrial infrastructure, both buildings and network/computers.
However, the datacom industrial production revolution has past its peak in the US, and so until there is another industrial production employment boom, demand created inflation growth is less likely.
Inflation is never the result of a single variable, but of multiple influences, including macro, fiscal and monetary. To assume inflation level dependency on a single variable is the limitation of the human mind.
Caymen island economy is looking more and more likely as a final outcome . . . corporate hq residences with reported revenue and profits with a local economy who services it and consumes locally produced goods and services.
One Less Good Reason To Be Bearish On Inflation [View article]
The company for which I work is 50% service, with hopes of automating the inspection portion. . . .
sportsguy