Jolly_Rancher's Comments

Three Intermodal Transportation Stocks to Play an Economic Recovery

Wed, 25 Nov 2009 22:19:50 -0500

I can add a few transportation related stocks...

TAL shipping containers, will benefit from increased trade, management reducing debt, well below book.

TNP tanker shipping, will benefit from economic recovery and the trend toward double hull ships, profitable, well below book.

TA truck stops, well below book, will benefit from recovery increased trucking

I own none of the above.

Newsletter Writers Are Increasingly Bullish

Wed, 25 Nov 2009 14:14:40 -0500

The level of bullishness among newsletter writers isn't really as important as what the readers do with the advice. Measure that and you'll have something upon which to make a better judgment. I suspect that most individual investors aren't in the mood to heed bullish advice.

The White House is considering a bipartisan panel to tackle the swelling U.S. deficit, with the hope of bringing Republicans and Democrats together to make tough decisions about how to cut costs or raise revenue in areas including Social Security, Medicare and taxes.

Wed, 25 Nov 2009 11:17:41 -0500

History tells us that a Democratic president and a Republican Congress can reduce the deficit, though the total debt keeps on rockin up and away.

Investors Still Nervous, Despite Equity Rally

Tue, 24 Nov 2009 17:54:15 -0500

60% rally from the low, while not misleading, is definitely hype. What if you looked at the current S&P price as still 57% below it's all time high? True, it doesn't look like the rally has a whole lot further to go, but it also doesn't look like a huge drop is imminent. For the reasons you mention, and economic reasons.

Why are T-Bill Yields Again Approaching Zero?

Fri, 20 Nov 2009 12:50:19 -0500

Because the "buyers" are purchasing through mutual funds whose managers are obligated to buy the assets. That's their function.

On Nov 20 12:19 PM Russian wrote:

> Following the author's and previous commenter's logic, why would
> anyone park his cash in T-bills at a negative rate and lose on money
> on this trade? Why not just keep cash as cash with no prospects of
> losing anything at all?

Why are T-Bill Yields Again Approaching Zero?

Fri, 20 Nov 2009 11:21:23 -0500

Your chart shows that, after the crash in rates and a subsequent rise, T-bill rates have been declining since late Feb 2009. Mutual fund flows tell us that during 2009, about $278 billion has been plowed into debt funds while only a few billion has been earmarked for equity funds. Much of that $278 billion is probably sitting in short term maturity funds. Upshot?? Investors are STILL in panic mode. They have completely missed the stock rally since March 2009. I believe that many are looking to return to equities in 2010 on a pull back which is one reason why I think that big pull back isn't going to happen. Another reason why the big pull back isn't going to happen, is that inflation will be negligible over the next two years. Why? Interest rates aren't the be all and end all cause of price expectation. First, high energy (and other commodity) prices are dampening economic development. Second, there is no new investment in this country. The US is experiencing massive over-capacity in just about every industry. Businesses will not invest when expected risk adjusted return is negative, regardless of interest rates. Third, there is a massive over supply of labor, housing, commercial real estate, etc while at the same time consumer and government balance sheets are in dire shape. Businesses with manageable debt that can succeed in our "stasis" economy, either by cutting costs or exporting or growing or taking advantage of pricing power (energy complex), will do well, and that's a very large number of companies which comprise the indexes.

Norman Fosback's measure of measuring equity-fund cash reserve levels - which measures the difference between actual cash and prevailing interest rates - is more bullish now than any time since the early '90s.

Fri, 20 Nov 2009 09:55:44 -0500

This fact, combined with the huge net outflows of 2008 and minimal net inflows of 2009 into equity mutual funds, and what we have here is an extended bull market -- not a one way ticket or a straight line up -- what definitely a bull market.

Gold's Dueling Parabolas

Mon, 16 Nov 2009 09:50:05 -0500

Whenever a commodity or equity goes "fractal" or parabolic, it is time to sell.

U.S. mutual fund inflows year-to-date hit $314B in October, compared with the $154B investors yanked in 2008, according to Morningstar's monthly report (.pdf). On the month, funds gained $40B, but equity funds lost $8B - a second straight monthly decline. In fact, U.S. stock funds are off $4.4B YTD, global stock funds are up $16B, while bond funds have taken in $296B.

Thu, 12 Nov 2009 15:50:18 -0500

This more than anything indicates the level of bearishness among investors.

Fed chief Ben Bernanke's in a no-win situation in deciding when to say no to "extraordinarily easy money" and boost interest rates, Miller Tabak's Peter Boockvar says. "The risk trade dynamics change for the worse if he signals that rates won’t stay 'exceptionally low' for an 'extended period,' and he risks further inflaming asset inflation if he stays put."

Wed, 04 Nov 2009 11:22:55 -0500

The Fed doesn't have to raise rates because the energy complex is doing the job of dampening the economy for him. This happened in spring 2008. When the price of oil went to $147, arm chair economists stated that the Fed needed to raise rates to squash inflation. Instead, the Fed rightly lowered rates. Imagine the resulting disaster if the Fed had raised rates. The Fed is doing its job. What the government needs to do is "unhook" the economy from oil, for example, by increasing incentives for very fuel efficient cars and imposing serious penalties for fuel hogs. There should also be incentives to buy vehicles that use natural gas, and incentives for utilities to build nuclear power plants. It's pretty simple.

Instead of struggling to hold customers, banks that were on the verge of collapse are having trouble keeping up with their new ones, says James Surowiecki. The hassle of switching to a new bank is just one reason why big banks stay big.

Tue, 27 Oct 2009 11:28:01 -0400

"The people of this country made it what it is. NOT the government. The more you centralize power, the less the people have a say in how things go. THAT is our problem."

Leave the "people of this country" out of the debate. Let's talk about bankers which as a group have brought this country to its knees during the 1830s, 1870s, 1930s and 2008s. Get my drift? Bankers have shown that when the opportunity arises they'll weasel as much as they can from the system, leaving the government with the tab and masses of people unemployed. I think it's time to nationalize the banking system, and put the snake oil salesmen out of business.

Meanwhile, in his always entertaining monthly missive, Pimco's Bill Gross makes the case that asset appreciation in U.S. and other G-7 economies has been artificially elevated for years. Gross says the risks of betting on a V-shaped recovery far outweigh the rewards. "Out, out, brief candle."

Tue, 27 Oct 2009 10:36:27 -0400

At least he's consistent. Said the same thing back in March 2009.

Instead of struggling to hold customers, banks that were on the verge of collapse are having trouble keeping up with their new ones, says James Surowiecki. The hassle of switching to a new bank is just one reason why big banks stay big.

Mon, 26 Oct 2009 17:44:43 -0400

The problem with the banking system is that the banks are too small. Rather than have thousands of banks offering competitively higher rates to attract deposits by investing in overly risky assets, then engaging in silly schemes to hide or pawn off those risky assets, there should be ONE BIG bank, a monopoly, that can be easily regulated. Banks are the equivalent of what mints were centuries back and as such should have monopoly status along with monopoly regulation. Seems obvious to me that banks are pretty much an extension of the government, especially since government is expected to bear much of the risk. 1) Allowing private enterprise the right to enter into risky contracts while government guarantees those risks is part of the problem. 2) Allowing bank managers huge salaries and bonuses regardless of outcome, while government takes the risk is also part of the problem. Converting banks into one regulated monopoly would take care of that problem. Granted, that monopoly might not be very efficient, but what we have now has systematically brought this country to its knees SEVERAL times.

The idea of solving too-big-to-fail by splitting banks back into investment and lending components won't work, says Fed Governor Daniel Tarullo: It doesn't prevent risky lending, and the investment sides would then become too big to fail themselves. He says higher capital levels, special charges related to systemic importance, and covering all systemically important firms (not just commercial bank owners) are all required.

Wed, 21 Oct 2009 14:05:46 -0400

Actually, I think bigger is better and safer because bigger is more easily watched. It's hard to keep track of 1000 bankers all playing sleight of hand with shareholder equity, tax payer money and government authorization to print US dollars.

A new study finds a disconcerting trend in bankruptcy filings: More than 50% of small business bankruptcy filers were current with one or more of their lenders when they threw in the towel. The speed and silence with which they're going under is deeply worrying to lenders, who historically have managed default risk by closely monitoring delinquencies.

Mon, 19 Oct 2009 14:40:50 -0400

I think the reason is that creditors have been extremely aggressive in quickly seizing assets, especially liquid assets. The business stands a better chance of surviving bankruptcy if it can preserve its liquid assets.

Spending on home remodeling is showing signs of stabilizing, according to a study by Harvard's Joint Center for Housing Studies. Home improvement spending seen down 12.6% to $105B this year, not quite as bad as the 13.6% drop in 2008. Center sees a potential return to growth by Q2 2010, but notes distressed sales are discouraging homeowners from undertaking nonessential projects.

Thu, 15 Oct 2009 15:11:50 -0400

For those who don't see the home as an investment, but rather see the remodeling as necessary. For instance, we needed a roof, so we had the roofer who was also a remodeler put in a patio which we needed. It wasn't a matter of investment; we wanted to expand our living space.

On This Week today, Alan Greenspan played down the recent spat of weaker than expected data: "It is true, the last couple of weeks that some of the numbers that are coming in have been a little bit soft. But this is what a recovery looks like."

Mon, 05 Oct 2009 14:19:47 -0400

The graph shows that the fiscal shape we're in is a combined team "effort" of the current and previous presidents, though I wonder why the vertical black line that would separate Obama and Bush terms is MIA. I think that line would make the picture a little clearer.

But to your point, I agree completely; it is not too late to enact policies that encourage investment, and repeal those laws that encourage blatant useless consumerism. For example, the home interest deduction should be phased out, while the business deduction for investment in the 50 states should be 1.5x.

On Oct 05 09:41 AM jpiretti wrote:

> People who doubt Jolly Rancher need to google US Debt/GDP 1933-2008.
> You will see a parabolic rise in 1981 to 1992 and again in 2001 with
> a slight decrease during the Clinton years. What it tells me is the
> investment we made in our economy by cutting marginal rates and investment
> distribution rates gave us a negative real return and that was reflected
> in the Federal balance sheet. I believe in low taxes, but I also
> believe that they must be targeted towards R&D, capital and infrastructure
> spending which create a robust multiplier effect as opposed to cutting
> rates for trust fund kids.
>
> On Oct 04 09:59 PM Jolly_Rancher wrote:

On This Week today, Alan Greenspan played down the recent spat of weaker than expected data: "It is true, the last couple of weeks that some of the numbers that are coming in have been a little bit soft. But this is what a recovery looks like."

Sun, 04 Oct 2009 21:59:03 -0400

You mean like the huge deficit and the tapped out consumer during the 1991 recession that disappeared by the end of the decade -- so much so that the government started buying back notes and GASP! bond dealers worried about the supply? Of course, history never repeats, but this looks pretty similar to me.

On Oct 04 09:43 PM EX-AD-MAN wrote:

> The ruckus over Alan Greenspan's mutterings reminds me of how the
> wise men in ancient China would collect their 3 year old emperor's
> tiny poops in a bowl, and then pick it over with a magnifying glass,
> looking for "signs."
>
> History repeats, like a trucker with gas.
>
> Jolly-Rancher: What does a USA recovery look like when the last of
> the borrowed money is spent, and no foreigners are willing -- for
> GOOD REASON -- to lend anymore? Wake up and take a look around. If
> it isn't made in China, it's borrowed in China.

On This Week today, Alan Greenspan played down the recent spat of weaker than expected data: "It is true, the last couple of weeks that some of the numbers that are coming in have been a little bit soft. But this is what a recovery looks like."

Sun, 04 Oct 2009 21:11:27 -0400

Greenspan is correct. This is what a recovery looks like. There was no end to the b$tchin and moanin during the 1991 recovery, so much so that Bush was not re-elected. Remember "it's the economy stupid." Back then, the Bush administration tried to tell people that the recovery was real, that this is what they look like, but no one listened. Then Clinton took full credit later when it became obvious. Unfortunately, too many investors won't believe this is a real recovery and will panic sending the indexes down 10 to 15 percent. Let's get it over with.

Access Pharma: MuGard, Pipeline Make for Appealing Acquisition Possibilities

Wed, 30 Sep 2009 07:35:07 -0400

Hey. we know you're long ACCP. But are you adding more on this sell-off to $2.75 to $3.00?

Something's Rotten in the State of Sequenom (But Who Really Cares?)

Tue, 29 Sep 2009 08:23:56 -0400

All small cap biotechs are susceptible to Sequenom's type of failure. As a matter of fact, most of them are scam's, juggling phony small molecules to the delight of pie-in-the sky investors. There must be 500 companies working on immunotherapeutic or peptide small molecule or etc cancer drugs. Even if a quarter of them make it, how many will make money?

Big Pharma's Future Death Spiral?

Sun, 20 Sep 2009 10:16:37 -0400

Most of Big Pharma has been in a serious bear market since 2005-6 -- and some since 2000! So it's really impressive that Stefan Loren goes out on limb now, haha, predicting disaster. True , Pfizer is one of the most poorly managed of the bunch, so it's easy to hold up high as a basis for an ongoing bearish argument, but really the picture isn't quite as dreary as it looks for the rest of BP.

First, drugs are cheaper than hospital procedure, and drugs are getting better. Though not a by any means perfect substitute, this is a simple concept that will drive drug company profits.

Second, BP has a plan to grab some of those generic profits by partnering with generic companies to take their off-patent drugs generic. The consumer benefits by getting the "real thing" rather than a similar drug. This will deflate the generic companies a bit.

As for small biotech, now is a great time to invest in the ones that have real drugs in the pipeline.

Not exactly scientific, but David Rosenberg has proof we're still headed lower: "You know that when you have Ben Bernanke and Ken Lewis both saying the same thing - the recession is over - one of them can't possibly be telling the truth." Rosenberg warns markets will soon awaken to the reality of a new, frugal U.S. consumer.

Wed, 16 Sep 2009 11:35:08 -0400

A frugal US consumer is EXACTLY what the world economy needs...rebuild balance sheets...reduce commodity demand. Unfortunately it would have been better if the US consumer hadn't been hog-tied into this frugal situation after running up a haystack of debt, instead achieving current status voluntarily, But people are people.

Toyota (TM) plans to cut capacity worldwide by 10% - 1 million vehicles - according to a Nikkei report. Its production volume is expected to fall to 6.7M vehicles in 2009.

Tue, 25 Aug 2009 14:03:39 -0400

Evidence that the Alternative Transportation Program is working as expected.

China: Exactly Where Japan Was in the 1980s?

Sun, 23 Aug 2009 22:23:43 -0400

Yes, you hit the main points to contradict the article. But the main point to contradict your comment is that the Chinese government is not stable. They are creating a mess and therefore in for much pain, just not the kind of pain Japan is going through -- somewhat more intense short term pain.

On Aug 23 07:11 PM Vladimir Senkov wrote:

> Vitaly,
> While I agree with several points you made and China is by no means
> "perfect", there are huge differences between China and Japan, so
> I have to disagree with your conclusions.
>
> It's going to take a long time to compare China to Japan in any reasonable
> level of detail, but 50000ft view is:
>
> Japan: imports substantially all commodities that it consumes.
Ch...
> has natural resources of its own
>
> Japan: expensive labor
> China: plenty of cheap labor
>
> Japan: limited geographically
> China: plenty of space to grow
>
> Japan: limited militarily, must rely on the US to trade
> China: has means to control seas and ports that it needs to control
> in order to trade

A dramatic visual of how an earnings-less rally can produce a historic P/E ratio.

Fri, 21 Aug 2009 12:23:15 -0400

But is boom time investor psychology priced in?

On Aug 21 12:19 PM tunaman4u2 wrote:

> Not only is recovery priced in... but boom times ahead is priced
> in.

While stocks are pricing in 4% GDP growth for 2010, corporate bonds and Treasury markets are betting 2% growth is more likely. David Rosenberg sides with the latter, and cautions that even if stock markets are right, it's already priced in.

Thu, 20 Aug 2009 11:13:47 -0400

Famous last words!

The idea that deflation is bad for us is a lemon - and too many of us bought it, says Bloomberg's Matthew Lynn. It might be just what heavily indebted economies need right now.

Tue, 18 Aug 2009 14:37:53 -0400

A little inflation... a little deflation...a little disinflation - okay. But no stagflation please.

"Everything in moderation, nothing in excess"
Socrates

Worrying about a selloff, but perhaps not yet: Anything can happen, but as long as government stimuli remain in place an extended down move seems unlikely.

Tue, 18 Aug 2009 12:10:09 -0400

Add a few more things to the list....

As long as inflation is subdued and the US consumer is focused on its balance sheet rather than consumption, reducing the trade deficit, keeping interest rates low...

As long as the growing world economies continue provide an export market....

As long as businesses continue to reduce debt, improve cash flow, and keep inventories low....

Today's "simply awful" retail sales should be a wake-up call for those who think this recovery will be fueled by the need to replenish depleted inventories, David Rosenberg says. "We can have all the inventory building in the world but it can't last without a revival in final sales."

Fri, 14 Aug 2009 12:22:41 -0400

Ask the Philadelphia Fed how the economy grows while more people become unemployed:
www.philadelphiafed.or...

The answer is government expenditures + exports in a low inflation environment + low dollar + slight rebuild of inventories -- consumers improve balance sheets while keeping spending unchanged. Savings go up.

On Aug 13 03:33 PM PCScipio wrote:

> Jolly, with consumption 70% of GDP, how do you have a recovery without
> retail?