"Interest rates are to asset prices sort of like gravity to the apple," said Warren Buffett at the Berkshire (BRK.A) annual meeting last week. "When interest rates are low there is little gravitational pull on asset prices ... To buy $85B/month (is) easy. Don't know what would happen if they tried to sell $85B/month." Peter Boodell's comprehensive notes from the Buffett and Munger Q&A. [View news story]
If they tried to sell 85 billion per month, wouldn't that mean someone would be buying 85 billion per month and it would be easy?
Book Review: Bernanke, 'The Federal Reserve And The Financial Crisis' [View article]
Low interest rates, regulation and additional reserves haven't been successful as judged by employment. Bernanke knows the power of these measures is quite limited. He has called on Congress numerous times to use fiscal stimulus. Thus he is certainly a Keynesian. The reason employment growth is so tepid is that demographic factors (such as OECD/China aging populations, persistently high energy prices and technological efficiencies) are creating headwinds that monetary policy can't solve. Government finds itself in a position of having to cut back on fiscal policy due to the Bush tax cuts and increased transfer payments precipitated by the recession. In essence, all parts of the demand equation are restrictive: government, consumer and business. The result has been a persistent staggering decline in the velocity of money. Because monetary policy is limited and because there is nothing that can be done to force businesses and consumers to demand more goods, government is the only possible source of demand. And there are only two things it can do: lower regulation and spend. Lowering regulation is advisable, especially rationalizing the tax code, bit isn't likely due to contentious politics. Spending, at least deficit spending, is at a limit. That leaves only ONE THING LEFT: non-deficit spending, i.e. literally printing money. I recommend a grocery card for every consumer making less than 100,000 dollars per year. Sounds arbitrary, but it's either that are the ship sinks.
Gartner Indicates That MSFT May Be In Some Serious Trouble [View article]
Microsoft's path forward to success is really very simple as has been outline ad nauseum for over ten years. Split the company into consumer and business. Jettison web services, no chance of success. Consumer should focus on improving Windows experience. That does not mean make the interface like AAPL's which in my opinion is garbage. What it means is to completely open the APIs to the app world, while at the same time completely sandboxing the OS for maximum security. Give control to apps; take control from individuals. This is what AAPL has done. It makes the most money. I agree that the PC growth is past, but I think the laptop/tablet growth still has huge potential when people realize they want the screen and the power. In fairness, I have never seen Windows RT or a Surface.
How Congress Could Fix Its Budget Woes, Permanently [View article]
When the demand for money is declining (as is happening today -- see St. Louis Fed velocity chart), it it the government's responsibility as the owner of that currency to create more to maintain stability. It's that simple. The author is completely correct. Print it. The Fed does not print money, as so many nutjobs like to say. It simply converts savings into reserves.
The AAII Investor Sentiment Survey in a graph shows the sharp rise in bullish sentiment occurring alongside the rise in stocks since mid-November. The bulls are at their highest level since March 2011. The bears are at the smallest since a year ago. [View news story]
Among Nick Grealy's energy predictions for 2013 is California as the next great North American shale producer, which has the capability to reinvigorate the Golden State's economy over the next two to three years. Some areas will welcome production and others, as in the Monterey area, will make the battles in upstate NY and the Midi look easy, Grealy writes. [View news story]
If Ca does become a shale boom, I hope they store the waste water far away from the fault zones...like Nevada
Sell the news? As word leaks out about the outlines of an agreement, Bill Gross says a fiscal cliff deal is no cause for celebration. Capital gains, dividend, and income taxes are all headed higher, with maybe a wealth tax too. "Reduce risk." Perhaps. Tax hikes aren't fun, but markets seem to hate uncertainty even more. [View news story]
Bill Gross couldn't prognosticate his way out of a paper bag.
S&P 500 futures +0.4% don't yet suggest a positive tone to tomorrow's open. Futures continued to fall Friday following the close of stock trading. The gain this evening just brings the S&P back to where it stood at 4PM Friday afternoon. Earlier: Still no deal. [View news story]
We'll get progress and certainty when one party controls both branches. Doesn't matter which one.
First, it was the fiscal cliff. Now, get ready for the "container cliff," as the threat of a longshoremen's strike that could close 15 major ports along the Atlantic and Gulf coasts - including the port of New York and New Jersey - has the shipping, manufacturing and retail industries warning of a "devastating blow" to the supply chain. Like the fiscal cliff, the deadline is approaching fast: Dec. 29. [View news story]
Describing his decision to again dissent from the FOMC decision, the Richmond Fed's Jeff Lacker paints a picture of a man with views 180 degrees different than his fellow board members. "A single indicator cannot provide a complete picture of labor market conditions," he says, wondering how a group of learned men and women can derive major policy decisions from the headline unemployment rate. Lacker is out as a voter on Jan. 1. [View news story]
Why isn't monetary policy tied to velocity of M2. When the economy needs more money, inject. When velocity increases, take out.
Monetary policy becomes inflationary only when the reserves make it into the accounts of real people who spend it, causing the velocity of money to increase dramatically. I think we can all agree that this is not happening... http://bit.ly/x0cMMT Forget the platinum coin. Just print the money and pay the debt off. I suspect that anyone who bought government debt at .06% interest rate isn't going to run out and spend the money after that debt is called.
The disconnect between analyst sentiment (bearish) and the direction of stocks continues to grow, notes Ryan Detrick, hoping to combination represents a contrarian buy signal. [View news story]
If you look carefully enough at this chart, you can see analysts aren't always wrong.
The Hidden Impact Of Solar: Why You Should Care [View article]
Davewmart, Your references are correct regarding the relative cost of power; however, what you are missing is the observation of what people are actually doing: 1) shutting down coal and nuclear due to extremely high environmental cost/risk; 2) building out solar installations in mass number. Investors need to know what is happening, not what should happen in some ideal world. Solar is reliable and plentiful and getting cheaper. The stocks of many solar companies have been beaten down to below net current asset and even cash value. Don't you think it wise to try to pick a winner in that category? It's kind of like desalination. Of course desalination makes no sense unless there is no alternative, but cities (San Diego) are interested because they understand the risks of relying on current water supply.
"Interest rates are to asset prices sort of like gravity to the apple," said Warren Buffett at the Berkshire (BRK.A) annual meeting last week. "When interest rates are low there is little gravitational pull on asset prices ... To buy $85B/month (is) easy. Don't know what would happen if they tried to sell $85B/month." Peter Boodell's comprehensive notes from the Buffett and Munger Q&A. [View news story]
Book Review: Bernanke, 'The Federal Reserve And The Financial Crisis' [View article]
Gartner Indicates That MSFT May Be In Some Serious Trouble [View article]
How Congress Could Fix Its Budget Woes, Permanently [View article]
Ignore plunging consumer confidence at your peril, suggests SoberLook, as stock prices are pretty well tethered to it (or is it the other way around?). In any case, divergences don't seem to last for very long. [View news story]
The AAII Investor Sentiment Survey in a graph shows the sharp rise in bullish sentiment occurring alongside the rise in stocks since mid-November. The bulls are at their highest level since March 2011. The bears are at the smallest since a year ago. [View news story]
Among Nick Grealy's energy predictions for 2013 is California as the next great North American shale producer, which has the capability to reinvigorate the Golden State's economy over the next two to three years. Some areas will welcome production and others, as in the Monterey area, will make the battles in upstate NY and the Midi look easy, Grealy writes. [View news story]
Sell the news? As word leaks out about the outlines of an agreement, Bill Gross says a fiscal cliff deal is no cause for celebration. Capital gains, dividend, and income taxes are all headed higher, with maybe a wealth tax too. "Reduce risk." Perhaps. Tax hikes aren't fun, but markets seem to hate uncertainty even more. [View news story]
S&P 500 futures +0.4% don't yet suggest a positive tone to tomorrow's open. Futures continued to fall Friday following the close of stock trading. The gain this evening just brings the S&P back to where it stood at 4PM Friday afternoon. Earlier: Still no deal. [View news story]
First, it was the fiscal cliff. Now, get ready for the "container cliff," as the threat of a longshoremen's strike that could close 15 major ports along the Atlantic and Gulf coasts - including the port of New York and New Jersey - has the shipping, manufacturing and retail industries warning of a "devastating blow" to the supply chain. Like the fiscal cliff, the deadline is approaching fast: Dec. 29. [View news story]
The top 10 dividend-yielding stocks from the "ultimate stock pickers" at Morningstar: GSK, COP, INTC, LLY, NVS, MRK, PM, PFE, SYY, JNJ. [View news story]
Describing his decision to again dissent from the FOMC decision, the Richmond Fed's Jeff Lacker paints a picture of a man with views 180 degrees different than his fellow board members. "A single indicator cannot provide a complete picture of labor market conditions," he says, wondering how a group of learned men and women can derive major policy decisions from the headline unemployment rate. Lacker is out as a voter on Jan. 1. [View news story]
Platinum Coin Easing [View article]
The disconnect between analyst sentiment (bearish) and the direction of stocks continues to grow, notes Ryan Detrick, hoping to combination represents a contrarian buy signal. [View news story]
The Hidden Impact Of Solar: Why You Should Care [View article]